Once you have that signed purchase contract in hand, there are many processes that need to occur before you get from accepted offer to the closing table.
The first is that your lender wants to know all about the property, including who owns it and if there are any liens or claims against it. They do this by what is called “ordering title,” a process by which a representative from a title company pulls ownership papers from the county recorder’s office.
Should there be any type of lien against the property, it will show up here. And this will need to be addressed before anyone can lend money against it.
The other thing the lender needs to know is the true value of the property. As the lender will only lend money against the lower of the appraised value or the contract price, an appraisal is required; in case the borrower defaults on the mortgage and the property needs to be sold, the lender wants to know what sales price to expect.
Finally, the lender will need to further verify your income and asset information. Depending on how much of this information you were asked to provide at application, this may amount to quite a bit, and could include tax returns and details of bank deposits.
Once all these steps are completed, and the lender is confident that both you and the property meet all the criteria that is required so you can move forward, a commitment letter will be issued to the seller, indicating the lender is ready to move toward closing.
At closing, the seller releases the property, and the buyer assumes ownership. The buyer also will sign paperwork for the lender, reconfirming the terms of your loan. After this, you are “officially” a homeowner, and you can collect the keys to your new home.