Finding the perfect home and negotiating a deal that both parties can agree to is a huge accomplishment. But as stressful as that process is, waiting for closing day to arrive can be just as nerve-racking. Anything can happen from the time of offer acceptance to the day of closing, so it’s important to keep your head up and make sure you don’t do anything that could potentially sabotage the entire deal.

As a buyer, here are 6 things that you should know before the deal finally closes.

1. The Final Walk-Through Still Needs to Be Done

The home may have been in a certain condition when you last saw it, but things can change between then and the day of closing. Whether the sellers neglected the home or a natural disaster hit, anything can happen that could compromise the property.

Luckily, a final walk-through is a standard clause in the purchase contract in California. This will give you the opportunity to make sure all the major systems are working, no damage was done to any part of the home during escrow, the necessary agreed-upon repairs were made, and the seller has vacated the premises. If you do come upon an issue during the final walk-through, you’ll need to address it right away. 

2. Your Mortgage Still Needs to Be Approved

You may have been pre-approved for a mortgage, but the real approval process starts after you’ve signed a purchase agreement. Just because you’ve filled out and submitted a mortgage application and provided all the necessary documents to your lender doesn’t mean you’re automatically approved.

That’s the whole purpose of including a financing contingency in your real estate contract – this provides you with an opportunity to secure financing before closing so you’re not stuck with an extremely expensive asset that you can’t afford to pay without a home loan.

Many lenders will continue to verify credit, assets, and income right up until the last day of escrow. That’s why it’s important not to make any major purchases on credit (such as a new car), apply for a new credit card, or change jobs before you have solidified your mortgage approval. Don’t make any financial moves that could throw a wrench in your mortgage approval process.

2. You Could Be Stuck With a Higher Mortgage Rate Than Initially Quoted

You may be quoted a specific mortgage rate from your lender, but that number could change by the time the deal closes. That’s because mortgage interest rates fluctuate every day, and the rate that you’ve been quoted won’t stand forever. Your lender will lock in your mortgage rate for a certain amount of time, usually 30, 45, or 60 days.

However, after the lock expires, you’ll be given the most up-to-date rate. In some cases, it could be higher, and in others, it could be lower. It may even stay the same. The point is, it’s important to understand that there’s a possibility that you may be given a slightly different interest rate if the lock expires.

4. Title Needs to Be Successfully Cleared

Before title is transferred to you, it needs to be cleared first. There could be any number of issues with the title of the property you just agreed to buy. Perhaps there is a lien on title that the seller hasn’t taken care of yet, or maybe there is an additional person on title that needs to be part of the transaction that wasn’t initially included.

Usually, title clearance occurs without a hitch, but there may be instances where an issue is present that needs to be dealt with before the title can be transferred.

5. There Are Tons of Documents to Sign

When closing day finally arrives, be prepared to sign a lot of paperwork, including the deed, affidavit of title, transfer tax declarations, loan estimate, and closing disclosure. The actual closing can take place at the lender’s office or at the escrow company’s location. 

6. Post-Closing Agreements

You’ve successfully closed! At this point, you’re the rightful owner of the home and can move in. However, there may be some post-closing agreements that need to be fulfilled, such as specific repairs or property tax reimbursements.

There may also be seller rent backs to deal with if there was an agreement to allow the seller to rent the place before they move into their new home. This is a unique situation, but handling it is made easy thanks to the Purchase Agreement Addendum (PPA) that Californians have at their disposal to deal with situations like these. This addendum modifies the original purchase contract and deals with short-term seller rent backs that are less than 30 days.

The Bottom Line

Once you and the seller agree to all the terms of the purchase agreement, the work isn’t over yet. There are still plenty of things that need to be taken care of before closing day arrives. The good news is that your real estate agent will be there every step of the way to guide you through the process and make sure all steps are taken to ensure a successful transaction for all parties involved.

Renting out your own apartment is exciting and liberating, especially when you’re just moving out on your own for the very first time. There are various expenses that you don’t necessarily have to worry about that come with homeownership, including mortgage insurance, property taxes, maintenance fees, and others.

However, there are still plenty of other expenses that you will likely be responsible for covering aside from your monthly rent. It’s important to be aware of these expenses and factor them into your budget in order to make sure you’re comfortable and capable of handling these expenses.

Before you sign that lease, make sure you include the following costs in your overall monthly budget.

Storage Fees

Many apartments come with a storage locker as part of the overall unit and associated rent. However, some units don’t. If your apartment doesn’t have a lot of space, or the storage locker that comes with it is too small to fit some of your larger items, you might need to rent out extra storage space.

Depending on your location and the size of the storage space, you could be looking at spending anywhere from $30 to $200 a month for the extra storage facilities.

Security Deposit

It’s no secret that the majority of landlords require an up-front security deposit on top of your advanced rent payment, which is usually a few hundred dollars. The good news is that you can get that money back when you move out, but don’t expect to see a penny if you leave the place in shambles. If there are any repairs or improvements that need to be made before you vacate, the money needed to make such changes will come directly from that deposit. It can also be used to cover any back rent, damage, cleaning, or key replacement.

In addition, some apartments and landlords charge non-refundable move-in fees that you won’t get back, even if you leave the place in pristine condition. Make sure you read the fine print on your lease to see what money paid is refundable, and what isn’t.

Renters Insurance

Homeowners aren’t the only ones who are responsible for insuring their belongings. While the unit itself is the responsibility of the owner to insure, you are responsible for any coverage for your belongings, including your furniture, electronics, or any other valuables that don’t come with the apartment. You don’t necessarily have to take such insurance coverage out, but it would be in your best interests to do so. Not only that, your landlord may require it.

The good news is that renter’s insurance is typically a lot cheaper than property insurance, and can cost as little as $10 a month, depending on how much coverage you need. In the event of a fire or theft, you’ll be financially compensated for any losses suffered.

Utilities

Before you sign a lease, make sure to find out if utilities are included, or if they’re extra. While many rent prices include utilities – such as electricity, gas, water, sewer, garbage, cable, telephone, or internet – others don’t.

If the particular apartment you are planning to rent out does not include utilities, find out how much they are first. Your landlord should be able to provide you with that information, after which you can include that figure in your budget and see if it’s something you can comfortably afford.

Improvement Projects

Some leases may stipulate a requirement for vacating tenants to bring the unit back to a certain condition before being released of all obligations under the agreement. If such a stipulation is part of your lease, you should expect to take on certain tasks to bring the unit back to its original state. That can include painting the walls or making any minor repairs to floors and other components. Such improvements cost money, which should be factored into your overall budget.

Pet Deposit

If you plan on moving your pet into your unit, your landlord may require a one-time up-front deposit in order to compensate for any potential damage that your furry friend causes.

Moving Fee

This isn’t reserved just for rentals, but you’ll need to account for any moving fees associated with filling your new apartment with all your furniture and belongings. Even if you don’t hire a moving company to take care of the moving and decide to handle it yourself, you’ll still need to buy packing and moving materials like boxes and tape, and you may even need to rent out a van to make the job easier.

The Bottom Line

Renting is often the most affordable option for those who are just getting their feet wet in the real estate market. However, there are still plenty of expenses to cover aside from the monthly rent. Make sure you’re aware of such fees and tack them onto to your budget to make sure you’re signing a lease that you’re comfortable with.

This week took me to Dawali Mediterranean Kitchen. Located at 1625 N Halsted, this spot is both surprising and unique. I came in on Saturday night, planning to see a movie afterward at the nearby Arclight Theatre. The restaurant was packed, every table bustling with patrons eating before a show at Steppenwolf. Although there is a limited number of tables, the hostess was cheery and efficient and I was seated within 10 minutes of my arrival.

I began with the Ful Mudammas, a house specialty. This distinctive dish is a puree of spiced fava beans, lemon, and garlic. Served warm, it comes with a basket of piping hot pita bread. The dip has a wonderful texture and is very flavorful. It is a definite must-try! For my entrée, I tried the Chicken Shawerma sandwich. The chicken was spicy and moist, surrounded by crunchy, fresh vegetables, and wrapped in a pita pocket. The tahini sauce on the side was also quite tasty. On my way out, I spotted a small bowl of what looked like sprinkles at the host stand. They are actually candy-coated fennel seeds, with a lovely anise flavor. Quite a refreshing way to end my meal!

Because of its stellar location and intimate atmosphere, Dawali is sure to be a busy spot on the weekends. Even with a large number of patrons, the atmosphere is casual and calm. The restaurant is  BYOB, with no corkage fees. Prices are extremely reasonable, ranging from $4.95 for their falafel sandwich to $15.95 for the most expensive combo plate. Open Tuesdays through Thursdays from 11 am-930 pm, Fridays/Saturdays from 11 am-1030 pm, and Sundays from 11 am-930 pm.

RACHEL HOOVLER & DEAN’S TEAM CHICAGO

When it comes time for you to shop for a mortgage, you’ll be faced with plenty of options, one of which is whether to “lock” or “float” your mortgage rate. What do each of these mean, and what are their differences? More importantly, which option is best for you?

Locking Your Rate

Locking in your interest rate essentially means that you will be bound to a specific interest rate throughout the term of your mortgage. You and your lender have a specific window within which to close the loan, which is typically anywhere between 15 to 60 days.

If you lock in your rate within this time period, that is the rate you will be bound to throughout the mortgage term. It will always remain the same, even if the market rate fluctuates. A locked-rate mortgage essentially means that you are guaranteed a specific interest rate on your mortgage. Your interest rate will not change, even if mortgage rates dip or spike over the term of your mortgage.

This is obviously advantageous if rates increase at some point. However, it also means that you will miss out on potential savings if the rates decrease.

It’s important for you to understand the difference between a rate “quote” versus a rate “lock.” A lender may quote you a certain rate when you apply for a mortgage, but that doesn’t necessarily mean that’s the rate you will be able to lock into. The rate can change from the time you’re quoted to the time your mortgage closes. Be sure that you fully understand whether or not you’re locked in; if you are, confirm what the interest rate and terms are in writing.

Borrowers often choose to lock in their rates because they like the peace of mind knowing that their monthly payments will always stay the same. This makes it a lot easier to budget. If your tolerance for risk isn’t very high, then locking in is likely a more sound option for you.

Floating Your Rate

If you choose to float your interest rate, you are assuming the risk that the rate will either increase or decrease at some point before your mortgage closes. Obviously, if rates drop, you will benefit; on the other hand, your lender will benefit if rates rise. If you are not locked in and “float” your rate instead, you need to be willing to assume this inherent risk.

During the time frame within which you and your lender have to close the home loan, the rates can rise, fall, or remain where they are. The longer this time frame is, the higher the chances of fluctuation in the interest rate.

If rates have been on the decline lately and are anticipated to continue on this downward trend, you might want to consider floating your rate if you believe rates will be lower by the time your mortgage closes compared to what they are today. This is the predominant reason that most borrowers choose to float their interest rate on their home loan. If interest rates have been on the decline, floating your interest rate makes sense, depending on the length of time that you have to lock in the rate.

If the rate drops, you can either choose to continue to let it float, or get in touch with your lender to lock the rate. On the other hand, if the rate starts rising, you will need to decide if you want to risk letting your rate continue to float, or to lock it in now to avoid any further potential increases.

Floating your rate might make sense if you are only planning on keeping your home for a short period of time, in which case you will only be keeping your mortgage for a short time period.

You should understand the potential consequences of letting your rate float too high. If rates rise so high that you will no longer be able to afford your monthly mortgage payments as a result, you are essentially “floating” yourself out of your mortgage. At this point, your lender will likely not approve your home loan, so make sure you are very vigilant with the interest rates if you choose to float your rate.

Locking With the Option to “Float Down” the Rate

You lender may be willing to extend a locked-in rate with the option for you to float the rate down if interest rates happen to decrease at some point during the lock-in period. This can give you the opportunity to take advantage of a lower rate and protect against an increase.

This type of arrangement does come at a cost, as it is typically more expensive than a locked-in rate mortgage without the option to float down the rate. Consider the costs associated with such an option before choosing it, if your lender offers it at all.

The Bottom Line

Consider what your specific goals are, how high your level of risk tolerance is, and how interest rates are currently behaving before you choose between locking or floating your mortgage rate. Your real estate agent and mortgage specialist will be able to fill you in on the current market to help you make a more sound decision.