What Happens When Your Offer Is Accepted on a House?

Once your offer on a house is accepted, a significant milestone has been reached. The focus shifts from property searching to the detailed process of formalizing the transaction. This involves a series of structured financial and legal steps, including evaluations, financial preparations, and legal reviews, all designed to ensure a smooth transfer of ownership.

Formalizing the Purchase Agreement

The first step after an offer is accepted is to formalize the agreement through a written purchase contract. This legally binding document outlines the sale’s terms and conditions, including the purchase price, closing date, and any specific contingencies. Contingencies are conditions that must be satisfied for the sale to proceed, such as a satisfactory home inspection or the buyer securing financing. Both the buyer and seller must sign this agreement, signifying their commitment.

Following the signing of the purchase agreement, the buyer typically provides an earnest money deposit. This deposit shows the buyer’s serious intent to purchase and is held in an escrow account by a neutral third party, such as a title company or real estate attorney. The amount varies but commonly ranges from 1% to 3% of the purchase price. This money is applied towards the buyer’s down payment and closing costs at settlement, or it may be returned if certain contingencies are not met.

Property Evaluation and Legal Review

After the purchase agreement is executed, a thorough home inspection is typically scheduled. A qualified professional examines the property’s structural integrity and major systems, including the roof, foundation, plumbing, electrical, and HVAC. The inspector’s report details any existing defects or potential issues, providing the buyer with comprehensive information. Home inspection costs can range from approximately $300 to $600, depending on property size and location.

Simultaneously, the lender arranges for a property appraisal to determine its fair market value. An independent, licensed appraiser conducts this assessment to ensure the property’s value supports the loan amount. The appraisal protects the lender by confirming they are not lending more than the property is worth. An appraisal typically costs between $300 and $450, and this fee is usually paid by the buyer.

A title search is initiated by a title company to investigate the property’s ownership history. This process uncovers any potential issues that could affect the transfer of clear title, such as unpaid taxes, liens, easements, or ownership disputes. The title company then issues title insurance, which protects both the buyer and the lender from financial losses due to title defects. Owner’s title insurance protects the buyer’s equity, while lender’s title insurance protects the lender’s investment.

Securing Your Financing

The transition from pre-approval to a full loan application marks an important phase in securing home financing. Lenders require comprehensive documents to assess your financial health and capacity to repay the mortgage. These documents generally include recent pay stubs, W-2 forms for the past two years, federal income tax returns, and bank statements. Providing these details allows the lender to verify income, employment history, and asset availability.

Once submitted, the loan enters the underwriting process. Underwriters review all financial information, including your credit history, debt-to-income ratio, and the property’s appraisal report. They evaluate lending risk and ensure loan terms align with lender guidelines and regulatory requirements. This review determines the final approval or denial.

Following a successful underwriting review, the lender issues a conditional loan approval. This means the loan is approved pending fulfillment of any remaining conditions. These conditions might include providing additional documentation, clarifying financial details, or satisfying specific property requirements. Once all conditions are met, the lender issues a final loan commitment, a formal promise to provide mortgage funds.

Final Preparations for Ownership Transfer

As the closing date approaches, buyers typically begin formally removing contingencies from the purchase agreement. This signifies that conditions like a satisfactory home inspection, a property appraisal meeting the purchase price, and the final loan commitment have been fulfilled. Removing these contingencies solidifies the buyer’s commitment to proceed, often with specific deadlines outlined in the contract.

Buyers receive a Closing Disclosure (CD) at least three business days before the scheduled closing date. This document provides a comprehensive summary of the final loan terms, projected monthly payments, and all closing costs. The Closing Disclosure allows buyers time to review financial details, compare them against the initial Loan Estimate, and ask questions before signing final loan documents.

A final walk-through of the property is conducted just before closing, usually within 24 to 48 hours. This visit ensures the property is in the agreed-upon condition, any negotiated repairs are completed, and no new damage has occurred. It is a chance to verify the property is vacant, clean, and ready for occupancy.

Completing the Transaction

The home-buying process culminates at the closing table, where all parties gather to finalize the transaction. Typically present are the buyer, seller, their real estate agents, and a closing agent or attorney who facilitates the proceedings. The closing agent ensures all documents are properly executed and funds are correctly disbursed.

At closing, the buyer signs legal documents, including the promissory note (the buyer’s promise to repay the loan) and the deed of trust or mortgage (granting the lender a security interest in the property). The seller signs the deed, which officially transfers legal ownership to the buyer. These documents establish the buyer’s ownership and the lender’s lien on the property.

Following the signing of all paperwork, funds are transferred. The buyer provides the down payment and remaining closing costs, often through a wire transfer or certified check. The lender disburses loan funds, which, along with the buyer’s funds, are distributed to the seller and other parties for closing costs, such as title insurance premiums and recording fees. Once financial obligations are met and the deed is recorded, the buyer receives the keys, marking the official transfer of ownership.