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Getting an offer accepted is one of the most exciting moments of the home-buying process, especially right now when demand is strong and inventory is low in many markets. But before moving into your new home, there are many important steps that need to take place.
Let’s take a look at typical elements of the post-offer approval process so that you can get an idea of things that happen before you close on a home.1. Apply for a loan. Unless you’re paying in cash, you’ll need to apply for a mortgage loan. Many people choose to apply for a loan when they are in the process of getting pre-approved (read our blog on the preapproval process). Upon your offer acceptance, you can convert the pre-approval to an application or, in the case that the pre-approval wasn’t done, initiate an application with your loan officer. Please ensure that you’re completely transparent about your finances to minimize lost time and maximize the likelihood of approval. Also, make sure to discuss closing costs with your loan officer to get a general idea of how much they may cost you. 2. Earnest money deposit. Earnest money is paid to confirm a contract, in the form of a deposit. Making this investment is an important part of the home-buying process because it tells the seller you’re a committed buyer and it also helps fund your down payment. On average, an earnest money deposit is typically 1-2% of the total price of the home. Be sure to factor this in when applying for your loan. 3. Home inspection and appraisal. Once you have an executed sales contract in hand, the clock starts on your inspection period. Your lender will also likely require your house be appraised by a professional; your lender usually handles setting up the appraisal appointment with your input.
A home inspection tells you if the home has any issues. Although inspections are not always required, most people get one. The inspection report will list any found problems, their severity, and the estimated cost to fix them.
The appraisal gives you a detailed report on the value of your home. If the home is appraised for less than the purchase price, you will either need to make a larger down payment or negotiate with the seller to lower the price.4. Review title. Make sure to review the title commitment once you receive it from the title company. It is a best practice to consult with an escrow officer or real estate attorney who can explain the title report to you. 5. Find homeowners insurance. Choose your homeowners insurance and provide the required information to your settlement agent and lender, after your loan is approved. Tip: Reach out to your insurance agent to see if you qualify for a multi-policy discount by bundling your home and car insurance together. 6. Conduct final walk-through. You will be allowed to do a final walk-through of your home 48 hours prior to closing. This gives you the opportunity to ensure that all items listed in your contract are fulfilled. It also lets you check the condition of the home. It is imperative to note every issue during the walk-through. Any issue you may encounter after closing will be your responsibility. 7. Closing! The day has finally arrived. You will sign the mortgage documents, receive your keys, and begin your contractual obligation to pay back your mortgage loan. Make sure to bring your ID and certified funds (if applicable).
As you can see, there are quite a few things that need to be done after your offer is accepted, so make sure to stay on top of it all to ensure things don’t fall through the cracks. I hope you found this information helpful. If you have any questions, reach out to your local mortgage banker. Congratulations on your new home!Read More ›