EARNEST MONEY DEPOSIT (EMD)
When we find you that dream home the first step in the buying process is to submit an offer to the seller. A sample of the offer form can be seen below. When the offer is submitted to the listing agent, an initial EMD must be presented. The value of the deposit varies based upon a number of factors including multiple offer situations and overall negotiation strategy. It would be wise to plan on writing a check for at least $1,000.00.
An additional EMD is usually submitted at the time of the signing of the Purchase Contract. The amount of this deposit is often predicated upon the type of mortgage financing that you may be seeking. It is common that the additional EMD equate to a total of 5%-10% of the overall purchase price.
The EMD is always held in an escrow account either with the listing brokerage firm or with the seller's attorney. Typically, these escrow accounts are non interest bearing. The escrow funds will be released as part of the overall closing process. Unless a buyer executed an addendum (discuss in a future email) to the Offer from shown below, the funds that are given as part of the EMD will not be refunded to the buyer should they elect to not go through with the purchase. The EMD funds would be given to the seller under those circumstances.
Don't be intimidated about buying your next home. Having a general understanding of the overall process will be critical in managing expectations. This is really just a guide to provide some perspective on that will happen when we find your next dream home!
Offer to Purchase:
This is the initial legal document that is provided to the Seller outlining the price and conditions you have set for the potential purchase of the home. This is a legally binding document and serves as the foundation for the actual Purchase Contract.
If you have elected to have a home inspection contingency, you will need to schedule the home inspection upon the acceptance of your offer. Usually the home inspection is conducted within 7 days of the accepted offer. This timeline allows for any items found during the inspection to be incorporated into the Purchase Contract.
The official Purchase Contract is usually scheduled to be executed within 7 to 10 days after the Offer being accepted. This is just a guideline. It is not uncommon for that timeline to be shortened if the documents have already been drafted.
As part of the mortgage process, your lender will coordinate with a 3rd party appraiser to conduct the appraisal that is needed in order to underwrite your loan.
Mortgage Application and Contingency:
Once the Purchase Contract is executed, you will be able to move forward with the full mortgage loan application. Should you elect to obtain a mortgage to purchase your home, it is very important to submit ALL of the documentation your lender is requiring as quickly as possible. This will assist in a timely closing and more importantly the ability to meet the Mortgage Contingency Deadline.
If you have elected to have a Mortgage Contingency, your lender will need to issue you a Loan Commitment Letter prior to the Mortgage Contingency deadline outlined within the Purchase Contract. A Pre-Approval Letter and a Loan Commitment Letter are not the same thing.
Homeowner Insurance Policy:
Your lender may require the homeowner policy to be coordinated as part of the overall loan documents. If not, you will still want to have your policy in place for the date of your closing, when you take ownership of the home. Even if you are not occupying the home right away, you will want your insurance policy active from the date of your closing.
Coordinate with your Moving Company:
It is always wise to start the moving coordination as soon as you can. Depending on the time of the year or even the day of the month, moving companies may have scheduling challenges.
Final Walk Through:
Depending on the scheduled time of the closing, your final walk through might be scheduled for either the morning of or the evening before. The final walk through is your opportunity to ensure that the home is in the same condition as it was when your offer was submitted.
The day has finally arrived. The specific closing day and time is usually refined during the previous weeks. Once the lender has issued the "Clear-to-Close", the lender is prepared to fund the loan and you will be able to complete the purchase and move into your new home and then invite us over for dinner!
The timeline above generally takes anywhere from 30 to 45 days. If you have a great team behind you, this can be a very streamlined process. Your team should include a great Realtor, proven Mortgage Lender that can close on time and an attorney that practices Real Estate law.
If you have any questions on the information above don't hesitate to email, text or give us a call. You can also just fill out the contact info on this pages as well.Read More