Home Offer Accepted: What Happens Now?
Your home offer is accepted—now what? Understand the vital stages from contract to closing, ensuring a confident journey to homeownership.
An accepted offer on a home marks an exciting milestone, but it also signifies the start of a structured process toward homeownership. This period involves several steps designed to ensure the transaction proceeds smoothly and protects the interests of all parties. Understanding these upcoming stages can help you navigate the path forward.
Understanding Your Accepted Offer
When a seller accepts your offer, it becomes a legally binding purchase agreement, also known as a sales contract. This document outlines the transaction terms, including the purchase price, closing date, and earnest money. Earnest money, often a percentage of the purchase price, shows your intent to buy and is held in escrow until closing.
The purchase agreement includes various contingencies, which are conditions that must be met for the contract to proceed. A financing contingency allows you to withdraw without penalty if you cannot secure a mortgage. An inspection contingency permits professional evaluation, allowing renegotiation or contract exit based on findings. An appraisal contingency protects you if the home’s appraised value is lower than the agreed-upon price. Review all terms and deadlines carefully, as these contingencies have specific timeframes.
Conducting Property Due Diligence
After the offer is accepted, due diligence begins, verifying the property’s physical condition and legal standing. A professional home inspection is a first step, where a qualified inspector examines the property’s structure, systems, and overall condition. This process typically costs between $300 and $500. The inspector provides a detailed report, usually within 24 to 48 hours, highlighting any potential issues, from minor repairs to significant structural concerns. These findings can lead to negotiations with the seller for repairs or credits, or allow you to withdraw from the contract using your inspection contingency.
A home appraisal determines the property’s market value to assure the lender the loan amount is justified. An independent appraiser conducts this evaluation, typically costing between $300 and $500. If the appraisal value is lower than the purchase price, the lender may not approve the full loan amount. Options include renegotiating the price with the seller, the buyer paying the difference in cash, or withdrawing from the sale if an appraisal contingency is in place.
Concurrently, a title search uncovers any liens, encumbrances, or other issues affecting clear ownership. This search ensures the seller has the legal right to transfer the property without outstanding claims. Securing title insurance protects you from future claims against the property’s title that may arise from undiscovered issues, such as errors in public records or undisclosed heirs.
Finalizing Your Mortgage
Securing your mortgage transitions from pre-approval to a complete loan application and final approval. Lenders require financial documents to verify your eligibility. This includes updated income verification, such as recent pay stubs and W-2 forms, and several months of bank statements. Employment verification is also a standard requirement, confirming your job status and income stability.
Once documentation is submitted, your loan application enters the underwriting process. Here, the lender reviews your financial health and the property’s eligibility to approve the loan. An underwriter assesses your creditworthiness, debt-to-income ratio, and the home itself to determine lending risk. This review can take anywhere from a few days to several weeks.
A loan commitment letter is a formal document from the lender stating their intent to provide financing. This letter is stronger than a pre-approval and outlines the loan amount, interest rate, and term. It often includes conditions that must be met before final funding, such as a satisfactory appraisal or proof of homeowner’s insurance. Meeting these conditions within the specified timeframe is important to ensure your loan is ready for closing.
Approaching Closing Day
As closing day nears, several final steps ensure a smooth transfer of ownership. A final walkthrough of the property is conducted, typically within 24 to 48 hours before closing. This verifies the property is in the agreed-upon condition, negotiated repairs are complete, and the home is vacant and clean. It also confirms all fixtures included in the sale are present and no new damage has occurred.
Prior to the closing meeting, you will receive a Closing Disclosure (CD), a five-page form detailing the final terms and costs of your mortgage loan. Lenders must provide this document at least three business days before the scheduled closing date, allowing ample time to review it. This review period enables you to compare the final terms with the initial Loan Estimate and identify any discrepancies.
The closing meeting is where all parties sign the necessary legal documents. Typically present are the buyer, seller, real estate agents, and a closing agent or attorney. Key documents signed include the promissory note, your promise to repay the loan, and the deed of trust or mortgage, which secures the loan with the property. The deed, transferring legal ownership, is also signed and recorded with local authorities. The final exchange of funds occurs, covering the purchase price and closing costs, and upon completion, you receive the keys to your new home.