What Happens After Your Offer Is Accepted on a House?

Receiving an accepted offer on a house marks a significant milestone in the journey to homeownership. This moment transitions a prospective buyer into a committed one, initiating a structured process that culminates in the transfer of property. The period between offer acceptance and the final closing involves several important steps, each with its own deadlines and financial implications. This article will guide you through these stages, providing clarity on what comes next and how to navigate each phase.

Understanding the Purchase Agreement and Initial Deposits

An accepted offer transforms into a legally binding document known as the purchase agreement. This comprehensive document outlines the terms and conditions of the sale, including the agreed-upon purchase price, the specified closing date, and any contingencies. Reviewing this agreement with your real estate agent or legal counsel is important to understand all commitments and timelines.

A crucial financial step immediately following offer acceptance is the earnest money deposit. This deposit demonstrates your intent to purchase the property. Earnest money typically ranges from 1% to 3% of the home’s purchase price, but can be higher in competitive markets. The funds are held in an escrow account by a neutral third party, such as a title company or an attorney, and are later credited towards your down payment or closing costs.

Navigating Contingency Periods

After the purchase agreement is executed, the process enters a phase governed by specific contingencies designed to protect the buyer. One common protection is the home inspection contingency, which allows a professional inspector to evaluate the property’s condition. This inspection covers structural integrity, electrical systems, plumbing, and other components, with a report detailing any issues. Buyers have 7 to 14 days to conduct this inspection and review the findings.

If problems are identified, you can request the seller to make repairs, ask for a financial credit at closing, or, if the contract allows, withdraw your offer without forfeiting earnest money. Another important safeguard is the appraisal contingency, which protects you if the property’s appraised value is less than the agreed-upon purchase price. Your lender will order an appraisal to determine the home’s market value, ensuring sufficient collateral for the loan. If the appraisal is low, you might renegotiate the price, pay the difference out of pocket, or cancel the transaction.

Securing Financing and Property Insurance

Finalizing your mortgage is an important step after an offer is accepted. Your lender will transition your application to full underwriting, a detailed review of your financial profile. This process involves verifying your income, employment history, assets, and creditworthiness. You will be asked to provide documents like W-2 forms, pay stubs, bank statements, and tax returns. Promptly responding to lender requests is important to keep the process on schedule.

After underwriting, the lender issues a loan commitment letter. This document signifies formal approval to fund your home loan, outlining the terms, loan amount, and interest rate. This commitment may be conditional, requiring you to satisfy remaining stipulations before closing. Concurrently, you must secure homeowner’s insurance, which lenders require to protect their financial interest. Obtain quotes, select a policy, and ensure binding coverage is in place before the closing date, evidenced by an insurance binder provided to the lender.

Title Review and Final Preparations

Ensuring clear ownership of the property is an important step managed through a title review. A title company conducts a title search, examining public records to confirm the seller’s legal right to transfer the property and identify any existing liens or encumbrances. This search mitigates potential future claims against the property. Title insurance protects against unforeseen title defects.

There are two types of title insurance: a lender’s policy, which is mandatory and protects the mortgage lender’s investment, and an owner’s policy, which is optional but recommended to protect your equity. These policies safeguard against financial loss due to issues like undisclosed heirs or errors in public records.

As closing approaches, you will conduct a final walkthrough of the property, within 24 to 48 hours of the closing date. This walkthrough ensures the home is in the agreed-upon condition, any negotiated repairs are complete, and the property is clean and vacant. You will also receive and review the Closing Disclosure (CD) at least three business days before closing. This document details all final loan terms, closing costs, and credits; compare it against your initial Loan Estimate for discrepancies.

The Closing Appointment

The closing appointment is the culmination of the home-buying process, occurring about 30 to 60 days after the offer is accepted for financed purchases. Attendees include the buyer, seller, their real estate agents, and a closing agent or attorney. This meeting serves as the official transfer of ownership, where legal and financial documents are signed.

You will sign the promissory note, your promise to repay the loan, and the mortgage or deed of trust, which secures the loan against the property. The deed, transferring ownership from the seller to you, is also signed. Funds are transferred from your lender to the seller, and you will pay any remaining closing costs. After all paperwork and financial transactions are complete, and the deed is recorded with the local authority, ownership is legally transferred, and you receive the keys to your new home.