What Are the Steps in Buying a House After an Offer Is Accepted?

The acceptance of a home offer marks a significant milestone, transforming the aspiration of homeownership into a tangible process. This excitement transitions into a series of structured steps, each designed to ensure a smooth and legally sound transfer of property. Navigating these stages requires a clear understanding of the financial and procedural commitments involved. This article guides you through the journey from an accepted offer to holding the keys to your new home.

Formalizing the Agreement and Initial Deposit

After a verbal offer is accepted, the next step involves formalizing the agreement through a purchase contract. This document outlines the terms and conditions of the sale, including the purchase price and closing date. It also incorporates contingencies, which are conditions that must be met for the contract to proceed, such as successful home inspections, financing approval, and a satisfactory appraisal.

A crucial component of this agreement is the earnest money deposit, representing 1% to 5% of the purchase price. This deposit demonstrates the buyer’s serious commitment and is held in an escrow account by a neutral third party, like a title company or attorney. The earnest money can be applied towards the down payment or closing costs at settlement, but it may be forfeited if the buyer defaults on the contract without a valid reason related to a contingency. If a contingency is not met, such as a failed inspection, the earnest money is returned to the buyer.

Buyers also receive seller disclosures, documents detailing known issues with the property that could affect its value or desirability. These disclosures are mandated by law and can cover aspects like lead-based paint hazards, structural defects, or environmental concerns. Reviewing these disclosures carefully is part of due diligence, as they provide insights into the property’s condition beyond what is visible during a casual viewing.

Property Review and Financial Assessment

Once the purchase agreement is executed, the focus shifts to a review of the property and a financial assessment. This phase protects the buyer’s investment and ensures the property aligns with their expectations and the lender’s requirements.

Home inspections are a part of this process, providing a detailed evaluation of the property’s condition. Buyers schedule a general home inspection, which covers major systems and components like the roof, foundation, plumbing, electrical, and HVAC systems. Buyers may also opt for specialized inspections, such as radon, pest, mold, or sewer line inspections. The inspector’s report identifies deficiencies or necessary repairs, which can then be used to negotiate with the seller for repairs, credits, or a price reduction.

Concurrently, the lender initiates the appraisal process to determine the property’s fair market value. An appraiser evaluates the home to ensure its value supports the loan amount, protecting the lender’s investment. If the appraisal comes in lower than the agreed-upon purchase price, the buyer may need to renegotiate with the seller, cover the difference in cash, or terminate the contract.

The formal loan application and underwriting process also begins. Buyers submit financial documentation, including pay stubs, W-2 forms, tax returns, and bank statements, to verify income, assets, and employment. Underwriters review this information, along with the buyer’s credit history, to assess risk and determine loan eligibility. This review ensures the borrower has the capacity to repay the mortgage and that the property serves as sufficient collateral.

Finalizing Loan and Title Details

As the property review progresses, attention turns to solidifying the loan and ensuring a clear title for ownership transfer. This stage involves coordination between the buyer, lender, and title company.

A milestone in the financing journey is receiving the “loan commitment” or “clear to close” from the lender. This signifies the lender’s formal approval of the mortgage, confirming all conditions for financing have been met. This commitment means the lender is prepared to fund the loan, moving the transaction closer to its conclusion.

Simultaneously, a title search is conducted to examine public records related to the property. This search aims to verify legal ownership and uncover any potential issues such as liens, encumbrances, easements, or unresolved claims that could affect the buyer’s ownership rights. To protect against unforeseen title defects, both the lender and the buyer obtain title insurance. A lender’s policy is mandatory and protects the lender’s financial interest, while an owner’s policy, though optional, safeguards the buyer’s equity against future claims related to past title issues.

With the loan commitment and a clear title confirmed, the contingencies outlined in the purchase agreement are formally removed. This step indicates that their conditions have been satisfied or waived. Removing contingencies carries legal implications, binding both parties more firmly to the transaction and paving the way for the final closing.

Approaching the closing date, the buyer receives a document called the Closing Disclosure (CD) at least three business days prior to settlement. This five-page form provides a detailed breakdown of the final loan terms, projected monthly payments, and all closing costs associated with the mortgage. Reviewing the Closing Disclosure and comparing it to the initial Loan Estimate is important to identify any discrepancies and understand the exact financial obligations before signing.

Concluding the Purchase

The culmination of the home-buying process involves final checks and the official transfer of ownership. This phase brings together all preceding efforts into a definitive transaction.

A final walkthrough of the property is conducted within 24 hours of closing. This walkthrough ensures the home is in the agreed-upon condition, any negotiated repairs have been completed, and the seller has removed all personal belongings. Buyers should inspect all areas, test appliances, and verify that all fixtures included in the sale are present and in working order.

On closing day, all parties involved, including the buyer, seller, real estate agents, and a representative from the title company or closing attorney’s office, gather to finalize the transaction. During this meeting, legal documents are signed. Key documents include the promissory note, the buyer’s promise to repay the loan, and the deed of trust or mortgage, which secures the loan against the property. The deed, which legally transfers ownership from the seller to the buyer, is also signed.

Following the signing of documents, the funding process occurs, where loan proceeds are transferred from the lender and the buyer’s funds for the down payment and closing costs are disbursed. Subsequently, the deed and mortgage are recorded with the local county recorder’s office. This recording officially registers the change of ownership and the lien on the property in public records, providing legal notice of the transaction. Once these steps are complete, the buyer takes possession of the property and receives the keys, marking the successful conclusion of the home purchase.