Purchasing a home is a thrilling adventure, and when your offer gets accepted, it’s an exciting milestone. But what happens after this crucial stage? In this guide, we detail the key steps to smoothly transition from an accepted offer to owning your dream home.
- Timeliness is Essential: The home buying process requires meeting several important deadlines. Keep pace to ensure smooth sailing.
- Communication is Crucial: Maintain strong communication between you, your lender, and your real estate agent to avoid potential pitfalls.
- Inspections and Appraisals Protect You: These steps safeguard you from investing in a property with issues and ensure the home’s value aligns with the loan amount.
- Insurance is Mandatory: Don’t overlook homeowners and flood insurance. Secure them before the closing.
Secure the Binder (Earnest Money)
Securing the binder, also known as the earnest money, is your first step after your offer is accepted. This deposit, typically ranging from $500 to $5000, is your commitment to the seller. It signifies your serious intention to purchase their property and safeguards the seller as they take their home off the market. This deposit, which is due within three days of the offer acceptance, will later contribute towards your closing cost and down payment.
Get Moving on Your Mortgage Application
The next step involves filing your mortgage application and submitting all necessary documents to your lender, which should be done within five days of your contract’s execution. Remember, the clock starts ticking as soon as your offer is accepted, and getting your mortgage process started is crucial. Submitting your application promptly will help avoid any delays and ensure that your loan process aligns with the contract timelines.
Arrange the Property Inspection
Your new home must be structurally sound, free of pests, and in good working condition. To verify this, you’ll need to arrange for a property inspection within ten days of your contract execution. A standard home inspector will conduct a comprehensive check of your property. Depending on your location and the home’s specifics, you might also need specialized inspections for radon, pest, septic, structural, HVAC, or mold.
Organize an Appraisal
An appraisal, which is ordered by your lender, is a professional assessment of your home’s value. This step is critical in ensuring that the loan amount you’re requesting aligns with the property’s actual value. The appraisal is typically organized after you’ve cleared the inspection process to avoid any unnecessary expenses should significant issues be identified during the inspection.
Verify the Title Commitment
Verifying the title commitment is an essential step that guarantees the property you’re about to purchase is free of legal issues. A title company handles this process, checking if there are any liens on the property due to unpaid work or unsettled legal disputes. They review the property’s title history and issue a title commitment, a legal document that confirms the title’s validity.
Obtain Homeowners Insurance & Warranties
Before closing, you must secure homeowners and flood insurance. These policies protect your investment against potential damages and are often a lender’s requirement for a mortgage. It’s worth shopping around for policies that best suit your needs. Also, consider purchasing a home warranty. This policy covers the repair or replacement of major home systems and appliances, offering you further protection.
FAQs about Home Buying Process
- What is earnest money?
Earnest money is a deposit made by the buyer to show the seller their commitment to purchasing the property. It is typically due within three days of the offer acceptance and will later be used towards closing costs and down payment.
- Why do I need a property inspection?
Property inspections are crucial for identifying any potential issues with the home, such as structural damage, pest infestations, or faulty HVAC systems. Identifying these issues early can save you from costly repairs down the line.
- What is an appraisal and why is it necessary?
An appraisal is a professional assessment of the home’s value, ensuring that the property is worth the loan amount you’re requesting. Your lender requires this to ensure the mortgage is a secure investment.
- What is a title commitment?
A title commitment is a legal document that verifies the property’s title, ensuring it’s free of liens and that the seller has the legal right to sell the property.
- Why do I need homeowners insurance and a home warranty?
Homeowners insurance covers potential damages to your property, while a home warranty covers the repair or replacement of major home systems and appliances. These provide protection for your investment and peace of mind.
- Can I get my binder or earnest money back if the house doesn’t close?
Yes, you can often retrieve your binder or earnest money if the house doesn’t close, but the specifics depend on the terms outlined in your contract. Generally, most real estate contracts include contingencies that protect the buyer, allowing them to pull out of the deal and reclaim their earnest money under certain circumstances.For instance, if your contract includes a financing contingency and you’re unable to secure a mortgage, you would typically get your earnest money back. Similarly, an inspection contingency would allow you to withdraw from the deal and get a refund of your earnest money if a home inspection uncovers significant issues.However, if you decide to back out of the deal without a valid contingency, you may forfeit your earnest money. It’s crucial to understand the terms of your contract and, if necessary, seek advice from a real estate professional or attorney to fully comprehend your rights and obligations regarding earnest money.
By understanding these steps and remaining proactive, you can make your journey from offer acceptance to home ownership much smoother and more rewarding.
This guide was provided by Clay & Duval County Relator Paige Stephenson.