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Unpacking the Mortgage Process: Home Inspections, Appraisals, & Closing

Apr 4, 2022 Mortgage Speak

Home inspections, appraisals, and closings, oh my! Aspects of the homebuying process can seem frightening, so knowing what to expect can prepare you for what’s ahead. Here’s a breakdown of three vital parts of the process.

Home Inspection
  • This is the last opportunity to check for defects within the house prior to committing to the purchase
  • Usually takes place 7-10 days within initial offer
  • The home inspector is typically hired and paid by the buyer
  • The home inspection takes approximately 2-4 hours to complete
  • The inspector will look at plumbing, electricity, and overall foundation of the home
  • The inspector will send the buyer an inspection report with their findings; this includes pictures, analysis, and recommendations
  • Home inspections are not required (unless required by a specific down payment program); however, they provide the buyer with important opportunities to minimize unpleasant surprises and difficulties
  • Depending on the inspection report, buyers can use it for negotiation on features that need repair or replacement
  • An appraisal is an evaluation of the property by a third party
  • Buyers usually cover the cost of the appraisal
  • Lender orders appraisal prior to closing to ensure home is worth at least as much as what the buyer is committing to paying; buyers are not permitted to select their own appraisal company
  • The appraiser will compare recent sales of similar properties, market trends, and conduct an in-person inspection of the home; this is different than the home inspection
  • If the appraised value matches or is higher than the contract price, the transaction can continue as planned
  • Some sellers will lower the listing price to match the appraisal; other sellers may disagree with the appraisal and refuse to negotiate
  • If a seller refuses to negotiate, the buyer can either make up the difference or request another appraisal; it’s up to the lender to approve the second appraisal; if denied, the buyer can walk away from the deal
  • The appraisal process can take days to weeks to complete; if the buyer or seller requests a second appraisal it will take longer
  • The appraisal is important because it allows both the lender and buyers feel comfortable with the investment
  • The closing process finalizes the home purchase
  • During closing buyers sign several legal documents and pay any additional fees; some fees are recurring costs like property tax; others are one-time closing cost expenses that can include:
    • Loan origination fees
    • Application fee
    • Mortgage broker fee
    • Title insurance
    • Appraisal fees
    • Title search fee
    • Other miscellaneous payments
  • Our ReadyClose process allows you to sign the majority of your closing documents from home, saving you time in the process!

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