Offer Accepted on House, Now What?

An accepted offer on a house is a significant milestone in the homebuying journey. This transitions a prospective buyer into a committed one, initiating a series of financial and legal procedures. Navigating these steps requires attention to detail and adherence to timelines, ensuring a smooth progression toward homeownership.

Initial Contractual Steps and Earnest Money

Upon offer acceptance, the focus shifts to the purchase agreement, a legally binding document outlining the sale terms. This contract specifies the agreed-upon price, lists contingencies like inspection, financing, and appraisal, and sets the closing date. It also details items included or excluded from the sale, which buyers should thoroughly review, often with assistance.

The earnest money deposit is a significant financial commitment, demonstrating the buyer’s intent to purchase. This deposit, typically 1% to 3% of the sale price, is usually held in a neutral third-party escrow account. The funds are held until the transaction concludes. If the transaction progresses, this earnest money is applied towards the buyer’s down payment or closing costs.

If the deal falls through due to a contract contingency, such as a failed inspection or appraisal, the buyer typically receives a refund of their earnest money. If the buyer defaults without a valid contingency, the seller may retain the earnest money as compensation. Adhering to contractual deadlines for these initial steps is important, as these agreements are legally enforceable.

The Due Diligence Period: Inspections and Appraisal

The due diligence period is an investigative phase where the buyer assesses the property’s condition and value. A comprehensive home inspection evaluates the structural integrity and functional aspects, covering systems like electrical, plumbing, and HVAC. Buyers should select a qualified inspector and carefully review the report to identify significant issues. This may necessitate further specialized inspections for concerns like pests, radon, or septic systems.

Concurrently, an independent appraisal is conducted, primarily for the lender’s benefit. The appraiser provides an unbiased opinion of the home’s market value, ensuring the loan amount is justified by the property’s worth. This valuation is influenced by comparable sales, the property’s condition, and its location.

A lower-than-expected appraisal can have financial implications, as lenders typically will not finance more than the appraised value. The buyer may need to renegotiate the price, contribute additional cash, or terminate the agreement if permitted by the appraisal contingency. Both inspection and appraisal contingencies protect the buyer, allowing withdrawal or renegotiation without forfeiting the earnest money deposit.

Securing Your Financing and Title

With due diligence complete, the focus shifts to formalizing the mortgage loan and verifying legal ownership. The loan application proceeds into underwriting, where the lender reviews the buyer’s financial stability and risk profile. This involves submitting documentation like W-2 forms, pay stubs, bank statements, and tax returns. Underwriters assess income, employment history, assets, and debts to confirm repayment capacity. Maintaining financial stability by avoiding new debt or large purchases is advisable to prevent loan approval disruptions.

Simultaneously, a title company performs a title search to examine public records. This search uncovers any existing liens, encumbrances, or ownership disputes that could affect the buyer’s clear title. Examples include unpaid taxes, outstanding mortgages, or judgments. Following a successful search, title insurance is typically purchased to protect against future claims from title defects not discovered initially.

There are two main types of title insurance: a lender’s policy, which protects the mortgage lender’s investment, and an owner’s policy, which safeguards the homeowner’s equity. The lender’s policy is almost always required, while the owner’s policy is optional but recommended. The cost for title insurance is a one-time premium paid at closing. Once underwriting is largely complete, the buyer often receives conditional loan approval, contingent upon satisfying remaining requirements.

Pre-Closing Logistics and Closing Day

As closing day approaches, final logistics and negotiations are addressed. If issues were identified during inspections or if the appraisal came in low, the buyer can negotiate for repairs, a seller credit, or a price reduction. If an agreement cannot be reached and the contract allows, the buyer may terminate the purchase. Real estate agents typically facilitate these discussions, aiming for a mutually agreeable resolution.

Final loan approval is confirmed, and the buyer receives the Closing Disclosure (CD), a five-page document detailing all final loan terms and closing costs. Federal regulations mandate this document be provided at least three business days before closing. This allows the buyer ample time to review it and compare it against the initial Loan Estimate, identifying any discrepancies before signing.

Arrangements for utilities and homeowner’s insurance must be finalized. Buyers should contact utility providers at least two to three weeks before closing to ensure seamless service transfer. Securing a homeowner’s insurance policy is a mandatory lender requirement and must be in place before closing. A final step, typically performed within days or hours before closing, is the property walkthrough. This confirms the home is in the agreed-upon condition, negotiated repairs are complete, and seller belongings are removed.

Closing day involves signing numerous legal documents, including the promissory note, mortgage, and deed transferring ownership. Attendees typically include the buyer, seller, their real estate agents, and a closing agent or attorney. Funds, including the down payment and closing costs, are transferred. Upon completion of all paperwork and financial exchanges, the keys are officially handed over to the buyer.