From Under Contract To Clear to Close (And All The Steps In Between)
You found your dream home. ✅
Completed your inspection. ✅
Your appraisal came back glowing. ✅
The keys are now yours right?!
Well… not exactly.
There are a few more steps in the home buying process before you find yourself at the closing table.
And trust me – as a realtor, we are JUST as excited as you are to make it to that point.
But the “under contract” phase is important too!
Think about it like this: if you’re making your grandma’s famous family dessert recipe for the holidays and you skip one step, it won’t turn out the same.
Same goes for your home buying process.
You can’t skip any of the important steps if you really want to walk away with keys in hand. 🔑
Speaking of all the important steps, on the blog there’s a series covering each one so you know exactly what to expect and what steps to take wherever you fall in your home buying journey.
If you’re in the beginning stages, click here, and then read here once you’re pre-approved. After that, read here so you know what happens once you find your dream home.
In this blog post specifically, you’ll learn what exactly it means to be “under contract” on a home and what to expect before you hear those magic words: clear to close. ✨
What Happens Before You Close On A New Home
Being "under contract" on a home means that you as the buyer and the seller you’re working with have reached an agreement on the terms of the sale and you’ve both signed a contract outlining those terms.
From there, that’s when you go through the appraisal and inspection process and when both of those boxes have been checked, you move into a waiting phase.
During this phase, it’s your lender’s time to shine!
Your lender will be in major contact with you prior to closing to ensure they have everything they need to get you to that closing table as fast as possible.
After your appraisal is received, your file goes into “underwriting,” which is where it’s reviewed by the underwriters of the bank that determine if the loan conditions have been met.
Common Documents Needed By Lenders Before Closing
Typically during underwriting, the bank will request a few more documents from you, so it’s wise to have the following easily accessible:
Updated bank statements – it’s no secret that it takes some time to close on a home, so your lender will likely request updated statements at different points in time to ensure they have the most accurate information.
Updated pay stubs – if your income changes at all during the home buying process, the bank will want to see that too, so your lender will ask for any updated pay stubs during this time.
Gift Letters – if you’re receiving funds from a loved one or family member to purchase your home, your lender will have a framework for you to use to explain these funds to underwriting.
Letters of Explanations – these are documents often requested by mortgage lenders during the home buying process written by you as the borrower to clarify or explain specific aspects of your financial situation or certain events that might raise questions or concerns for the lender. This could include things like past credit issues, employment gaps, large deposits, etc.
Home Insurance Information – it’s a typical requirement from mortgage lenders that you have adequate insurance coverage as a condition of the loan, so taking the time to shop and find the best policy for you is key during this time
How To Speed Up The “Under Contract” Phase
Most home buyers want to know how they can speed up this process and get to the closing table faster.
And as someone who has bought my fair share of homes, I totallyyyyy get it!
While some things are completely outside of your control, there are a few things you can do to ensure that you have the smoothest home buying process possible:
1. Communicate and then communicate some more
Communication is going to be your largest asset in any home buying process.
If something is requested of you, just know that it has to go five layers deep before it's actually approved, so time is truly money at this point.
Communicate with your lender, respond to their requests, and when you don’t understand something – ASK. There’s no silly question!
2. Be prepared
Honestly the whole reason I write these blogs is so that YOU can be prepared as a home buyer!
There’s nothing worse than getting into a situation where you don’t know what to expect and you’re completely blindsided.
When you can have a general idea of what you’ll need, you can show up prepared, thus speeding up the process.
3. Work with trusted professionals
Lastly, one of the best things you can do for yourself during a home buying process is to work with professionals that have been highly recommended and that you trust.
There are people out there who unfortunately don’t have your best interest at heart and are simply trying to earn a buck.
But on the flipside, there are also some really amazing people out there who will bust their butts to make sure that you get a fair deal and get into the home of your dreams in a timely manner.
It’s all about finding and working with THOSE people!
(And psst: if you’re buying in Billings, lucky for you I’ve got a wholeeee list of trusted professionals that I personally know and call on every single time.)
The Timeline of Closing On a Home
Now for the question you’re really wondering… “how long is this going to take?!”
And for this, I’m going to say two words that you’re probably going to eye roll at but it’s true: IT DEPENDS.
I know, I know, but hear me out.
Your closing timeline depends on two main things:
The extent and complexity of the items requested of you
How long it takes you to obtain those items
So, I say this with all of the realtor love in my heart – at this point in the process, it really is on YOU!
Of course your agent and lender will be there every step of the way to make sure you’re obtaining the right documents and to answer any confusing questions you may have, but ultimately it’s up to you to submit what your lender needs (per the bank's request).
Assuming you submit all of your documents in a timely manner, the closing timeline can be as little as 30 days (this is a home buyer’s dream), but realistically you’re looking at 45-60 generally speaking!
Once the underwriting has all the items they requested and are satisfied with the results, you’ll get to hear those magic words that every real estate agent and home buyer loves to hear: CLEAR. TO. CLOSE. 🥳
Those three words mean that your file has final approval from the lender and you can officially buy the home of your dreams.
What Happens At Closing
Once you’re cleared to close, we schedule your closing and depending on where you live, that will look different for everyone.
In Montana, we close at title companies, but some states use attorneys or closing offices.
Regardless of your format, the closing appointment is where you will sign ALL the documents that will transfer ownership of the home to you and is where you pay your down payment and closing costs.
This money will need to be a certified check made out to the title company and should include all of your costs added together.
Closing costs typically include your lender fees, your appraisal (if you didn't pay upfront), and the title company's fees, which can be anywhere from 1-3% of your purchase price.
Your earnest money will be credited to you and deducted from your total amount due.
Prior to your closing appointment, your lender will give you an estimate of your total out of pocket costs so you can come prepared with the required payment to walk away with keys in hand!
This entire process only takes about an hour and during the appointment, the title officer will explain to you what you’re signing.
When it's all said and done, they will deliver the information to the courthouse and it will be “of record” meaning you’re officially a homeowner! 🎉
Ready To Start The Home Buying Process?
By now I know what you might be thinking… this feels like a LOT! And when you’re reading all of this at once, it definitely can, so I get it.
But what I want you to know is that your real estate agent is the person that works with you from start to finish to make this process feel way less overwhelming and will help you get connected with all of the crucial people needed who have been vetted and trusted.
That’s the #1 reason that you want to work with a local agent who is established in your area and KNOWS 👏🏼 THEIR 👏🏼 STUFF 👏🏼
So, whaddya say? Are you ready to begin the home buying process?
If you’re local to Billings, CLICK HERE to get started and I’ll help you get started on the right foot.
And if you aren’t local to Billings, good news for you – I know people. 😏
Connect here and I’ll get you in touch with a trusted agent in your area to start the home buying process with ease!
