Offer on House Accepted, Now What?

An accepted offer on a home marks a significant step towards ownership. It signals the beginning of a detailed process involving legal agreements, financial preparations, and due diligence. Understanding these next steps helps secure your new home.

Understanding the Purchase Agreement and Earnest Money

An accepted offer transforms into a legally binding purchase agreement. This document outlines the terms of the property sale, detailing the purchase price, closing date, and any contingencies. Contingencies are conditions that must be met for the sale to proceed. The agreement also specifies inclusions and exclusions. Reviewing this document thoroughly is important before signing.

A buyer submits earnest money as a demonstration of commitment. This deposit is held in an escrow account. It is typically between 1% and 3% of the home’s purchase price and is generally due within a few days of signing the purchase agreement. This sum is applied towards the down payment or closing costs. If a buyer defaults on the contract without valid reasons outlined in contingencies, the earnest money may be forfeited to the seller.

Navigating Inspections and Appraisals

A home inspection identifies potential structural, mechanical, and safety issues. A licensed professional conducts this assessment, examining elements like the foundation, roof, plumbing, and electrical systems. The inspector provides a detailed report outlining deficiencies or recommended repairs. The report allows for negotiation with the seller regarding repairs or a price adjustment, or withdrawal from the contract if an inspection contingency exists.

An appraisal determines the property’s fair market value for the lender’s security. A certified appraiser conducts this evaluation. If the appraisal comes in lower than the agreed-upon purchase price, it creates an appraisal gap. The buyer may need to bring additional cash, renegotiate the price, or, if an appraisal contingency is in place, withdraw from the deal without losing earnest money.

Securing Your Financing

The formal loan application process begins after the offer is accepted. This requires submitting various financial documents to the lender, including income verification, pay stubs, tax returns, and bank statements. Lenders also require asset statements to verify funds for the down payment and closing costs. Credit reports are reviewed to assess financial stability.

Once documents are submitted, the loan enters the underwriting process. A mortgage underwriter evaluates the borrower’s creditworthiness and the property’s value. Underwriters review income, assets, debt, and credit history to confirm the borrower’s ability to repay the loan. The underwriter may request additional information. A loan commitment letter is issued once underwriting is complete and the loan is approved, signifying the lender’s formal agreement to provide financing. Buyers can also finalize their interest rate lock-in during this period.

Preparing for Closing

A title search verifies the property’s legal ownership and identifies any existing liens or encumbrances. This ensures the buyer receives a clean title. Title insurance is purchased to protect the buyer and lender from financial losses due to unforeseen title defects or claims.

Homeowners insurance is a mandatory requirement for most lenders. Buyers must obtain quotes and select a policy to ensure coverage is in place by the closing date. This insurance safeguards against damage to the home from events such as fire or natural disasters.

Buyers must prepare the final funds needed for the transaction, including the remaining down payment and closing costs. At least three business days before closing, the buyer receives a Closing Disclosure (CD). This document details all financial aspects of the transaction, including loan terms, projected monthly payments, and final costs. Reviewing the Closing Disclosure is important to ensure accuracy before signing.

The Closing Process

The final walkthrough typically occurs within 24 to 48 hours before closing. This allows the buyer to verify the property’s condition has not changed since the offer was accepted. It also confirms that any agreed-upon repairs have been completed and that the seller has removed all personal belongings. This is a final check to ensure the home is in the expected state.

The closing appointment is where ownership of the property is officially transferred. Key participants often include the buyer, seller, real estate agents, and the closing agent. Numerous documents are signed, formalizing the transaction.

Documents signed include the promissory note, which is the buyer’s promise to repay the mortgage loan. The mortgage or deed of trust, securing the loan with the property as collateral, is also signed. The deed, transferring ownership from the seller to the buyer, is signed.

After signing all necessary paperwork, funds are transferred from the buyer and lender to the seller. The keys to the home are handed over to the buyer, marking the transfer of ownership. The deed and mortgage documents are recorded with local authorities, finalizing the transaction.