Friday, July 26, 2019 / by Barry Owen
From the moment we achieve the Binding Agreement, we are FULL THROTTLE with the goal of having as many of the contractual conditions satisfied as possible within the first 2 weeks.
Tn REALTORS - Our TN State Association has served us well in this regard by baking into the Purchase and Sale Agreement performance deadlines that help all of us continue forward momentum.
The 14th day after Binding Agreement is a deadline for some important details which, prior to these deadlines being present, often were not addressed until the last minute. Historically, this resulted in unnecessary stress added to the already stressful moving pieces that go with completing last loan related requirements, coordinating packing and moving all the while still needing to go to work and feed the pets.
Notify the Lender of "Intent to proceed": Remember that the Buyer selected a lender in the beginning of the process and received a Loan Approval Letter? The Purchase Agreement allows the Buyer to change lenders and/or loan products as long as the changes do not affect the Seller (financially). Day 14 is the deadline for the Buyer to commit to a lender. Of course, the Buyer does not have to wait til the last minute :-)
Buyer to provide proof to lender of available funds to close per the loan estimate.
Once the Lender receives this Intent to Proceed, the agreement requires the Buyer to request the appraisal be ordered and fee paid.
Secure evidence of of hazard insurance: This is the Home Owner's Insurance policy. The reasoning behind requiring this early in the process is that the Insurance underwriting process considers many factors to determine the rate . . . Including the creditworthiness of the Buyer, age and condition of the house, as well as "premiums" for the property being in a "high risk area" (Flood plain). It is completely possible that these premiums could escalate the cost of the insurance enough that it could throw off the Buyer's Debt:Income ratio resulting in . . . denial of the loan. So . . . We want the Buyers to obtain the Insurance policy early enough in the process for us to "adjust accordingly if necessary".
One thought worth thinking is one of gratitude for the smart people who have built this Purchase agreement to be preemptive.