Picture this: you have found the home you’ve always dreamed of owning. You’ve looked it over several times, imagined where everything would go, and decided to move forward with trying to make it yours. You will probably have to give the seller a few offers until you get to a price you both can agree upon. But once you do, it’s yours, right?
Unfortunately, that is not the case. After you put an offer on the home, you still don’t technically own it, and there are more steps you need to take to make it your own. If your offer is accepted, these are the additional steps between making an offer and closing on your dream property.
Get a Loan and Property Appraisal
This is a no-brainer, right? Buying a home is one of the biggest financial purchases you will ever make. And if you’re trying to make an offer on a home, you should have already been pre-approved for a loan prior to making an offer. Making an offer with pre-approval from a lender shows the seller that you can finance the overall purchase.
Another important step is appraising the property. The mortgage lender wants to know just how much the property is worth. More specifically, he or she wants to make sure the amount of money the bank is lending isn’t drastically different from what the home is actually worth. Therefore, the lender will have an appraiser determine its worth.
Hire a Home Inspector
After you’ve made an offer, it is highly recommended that you hire a home inspector to inspect the property and its systems and appliances. In fact, most buyers make an offer contingent on inspection. The inspector will be able to tell you about the current state of the home and what systems may need to be repaired. From there, you may ask the seller to have these things fixed, replaced, or to drop the price of the home so you can pay to have them repaired after closing.
Contact the Title Company
After inspections, the title company will do a search to make sure there are no liens against the home, and that you will lawfully own the home if you purchase it. Once the search is done, you will receive the title company’s findings. If there are no outstanding liens on the property, you can move forward.
If the contract of sale includes a home warranty, the title company will purchase a home warranty for you. This will be billed to the seller, the agent or you through closing costs.
Contract of Sale Becomes Official
Once all these steps have been completed, the contract of sale is made official, and the “underwriting” begins. This involves a deep dive into your financial history to ensure you will likely be able to make a down payment and fund subsequent mortgage payments. Usually, closing is 30-60 days after the offer is accepted to make sure the underwriters check everything.
Complete these Last Few Steps
- Home insurance: When purchasing a home, you will have to get home insurance. Your insurance will be factored into your mortgage payment, and the money will be taken out each month to go into an escrow account. From there, the taxes and fees will be paid annually.
- Funds for down payment: Ensure that you have the funds necessary to make the down payment on your home. Whether the funds are in your bank account or wired to an escrow account, they need to be available on closing day.
- Final walk through: Within 48 hours before closing, you will go through a final walk-through of the home. Be sure to inspect any repairs the seller made, and make sure everything looks good. If you have any questions or concerns about anything, now is the time to speak up.
Sign the Paperwork!
Congratulations! You made it to closing! Now, you will sign the paperwork at the title office and get the keys. You are now the proud owner of your new home!
As you can see, there are several small steps along the journey from making an offer to closing. It is a very important process designed with all parties of the transaction in mind. If you are preparing to buy a new home, these are items and steps to be aware of as you move through this process.