So you’ve made an offer on your dream home, and the seller has accepted…what are the next steps?
Several things still need to happen before the deal can close, and the house can officially become your home.
The closing process (also called the escrow process) generally takes 30-60 days to complete. Much of the work is done behind the scenes by the team of real estate professionals handling your transaction. But you’ll also be involved in several of the upcoming steps.
Here’s an outline of what buyers can expect during the closing process.
Appraisal and Inspections
The home appraisal is a formal valuation of the property. It is done more for the mortgage lender than anyone else. The lender needs to know that the house is worth the price the buyer is paying. The home is the collateral for the loan; if the buyer defaults, the lender can take possession of the property. So the lender wants to make sure the property is worth enough money for them to give the buyer the loan.
Then there are the inspections. Generally, all buyers should at least have a general home inspection conducted to bring any visible issues to their attention. Additional inspections (requiring specialized professionals for items like chimneys, drainage pipes, and roofs) may also be a good idea.
The goal of the inspections is simply to make sure buyers are aware of the actual condition of the property before closing the deal. If you find something unacceptable during the inspections, you have the option to 1) ask the seller to make repairs, 2) ask the seller for a price reduction or closing credit, or 3) walk away from the deal.
Securing Financing
Savvy buyers know to get pre-approved for a loan even before the home search begins. That way you can be reasonably sure you won’t have trouble securing financing when you find the right home.
Once you have an accepted offer, you’ll need to provide your most recent financials to your lender (bank statements, tax returns, pay stubs, etc).
From this point until the deal is closed, don’t do anything to change your financial situation. Don’t change jobs, don’t buy a car, don’t even pay down a large amount of debt or accept a raise. Anything that changes your finances would require the lender to start your approval all over from scratch. Save any financial changes for after the closing date.
Signing the Paperwork
There will be a lot of paperwork to be signed and notarized. Request a copy of all the documents before your signing appointment so you can read through it at your leisure, and be ready to just flip and sign when you’re sitting with the notary.
The Final Walk Through
Immediately before closing, you’ll have a chance to walk through the property one more time. This allows you to make sure the property is still in the condition it was in when you made your offer and that any repairs requested following the inspections were completed.
Paying Your Closing Costs and Getting Your Keys
With everything in order, you can wire your closing costs (the down payment, prorated taxes and insurance, and transaction fees) to your escrow company. This typically happens a day or two before the official closing date so funds can be received on time.
On closing day, you can get your keys, and let yourself into your new house.
Welcome home!