Bob Melvey

Managing BrokerWindermere Real Estate

The Financing Process

Once you have approved of the home inspection, the only hurdle left is financing. Since you have taken care of most of this by getting pre-approved, completing the process only takes about two or three weeks. The three main items needed are an appraisal on the home, a preliminary title policy showing that the property is free of liens or other clouds on the title, and a binder for hazard insurance.

Appraisers know the purchase price when they do their appraisal, so it is rare for an appraisal to come in above or below the agreed upon price. The main concern with appraisals has to do with work orders. Quite often, appraisers set a value on a home conditioned upon certain repairs being made. If the repairs are not completed, the appraisal is not acceptable to the lender and the financing is not approved.

This can be a problem if your desire is to get a good buy on a home that needs work, with the intention of fixing it up yourself later. I have met many appraisers on site and have a very good idea of what will and will not get called as a work order. I will council you during the offer preparation as to how to deal with these issues.

Clear title is usually not difficult to obtain. In my thirty years in the business I have only had one transaction fail due to unmarketable title. You will have an opportunity to review the preliminary title policy prior to signing your closing papers.

I strongly advise you to begin the process of selecting a hazard insurance agent early on in the transaction. Getting an insurance binder is more difficult than it used to be. Some insurance companies will not provide coverage if a home has knob-and-tube wiring. One won’t even provide coverage if a home has lath and plaster walls! Fortunately, there are other companies that are more realistic, and I can give you recommendations as to who to contact.