If you’re a first-time homebuyer, there’s nothing quite as exciting as hearing that your offer has been accepted. Many people get so excited they start composing their moving checklist immediately and start thinking about how they’ll furnish their new home.
However, buying a house is a lot more complex than buying other items, and just because your offer was accepted doesn’t mean you immediately get to buy the house. There are a few steps that you, the seller and even the lender will have to take before you can close the sale and get the deed to your new house.
Transfer the Initial Deposit Into Escrow
After the seller has accepted your initial offer, you’ll need to make an initial deposit, also called earnest money, into an escrow account. Putting your deposit into an escrow account will show the seller that you’re serious about your offer, but it won’t let the seller touch that money until you’ve completed the sale.
You should know that once you’ve put your initial deposit into escrow, you might have to pay it to the seller even if the deal falls through. However, if you’ve made a contingent offer and the terms of that offer aren’t met, you’ll get to keep your deposit.
Get Your Mortgage Loan Approved
After you’ve made the initial deposit, you’ll need to get your mortgage lender documents submitted and processed. In other words, you’ll need to officially get a mortgage loan from a financial institution. This will involve a lot of paperwork and documentation proving that your financial situation is not only secure, but that you’re not buying more house than you can afford.
If you’ve gotten preapproved for a mortgage, this process will be a lot easier, since you’ve done most of the work beforehand. Also, having a preapproval for a mortgage shows sellers that you’re serious about buying a home and makes them more inclined to work with you.
Get pre-approved for a mortgage today
Review and Clear the Title
As you’re getting your mortgage loan approved, the title to the home will have to reviewed and cleared to make sure no one else has a claim on the property, such as a lien. While either the buyer or seller may pay for the title check, having the seller pay to ensure that the title is clean is one of the common conditions of a contingent offer.
Inspect and Appraise the House
When the buyer’s financial fitness and the seller’s title have both been deemed satisfactory, the next step is making sure the house itself is in good shape. A licensed home inspector will go through the house and examine it to see if it has any issues, like structural defects or major repairs.
This is an important step in the house-buying process, as it gives the buyer a chance to see the true condition of their new home. While almost every home will need some small repairs, no one wants to spend hundreds of thousands of dollars on a new home, only to discover it will cost thousands of dollars more to be livable. It’s worth pointing out that many contingent offers will have a clause that states the seller has to make any repairs the home inspector deems necessary.
In addition to being inspected, the home must also be appraised to make sure that its selling price matches its actual worth. If the appraisal turns out to be less than the house’s selling price, the lender will only let you borrow the amount for which the house was appraised, and the buyer may have to make up the difference themselves or renegotiate a lower price with the seller.
Get a Home Insurance Policy
While this isn’t a legal requirement, almost all lenders will require the buyer to purchase home insurance as a condition of getting the loan.
Perform a Final Walkthrough
Once everything has been agreed on and any repairs have been made, a home inspector will complete a final walkthrough to make sure that the house’s condition hasn’t changed since the first inspection and that all agreed-on repairs have been made.
Sign and Transfer Funds
This is the part of the home-buying process that may leave first-time homebuyers with writer’s cramp. You’ll go through the loan and sign all the loan documents, all the closing documents and make sure the rest of the downpayment goes into the escrow account.
Close and Record Title
During this step, a county clerk will record that the property deed has legally changed hands. At this time, the seller will get the money in the escrow account and you will officially own your new home.
Own Your Own Home With First Alliance Credit Union
It’s okay to celebrate when your offer on a home gets accepted, but there’s still a lot to do. You’ll have to work with the seller and lender to make sure the property changes hands smoothly, and there are several steps in the process.
If you’re thinking about buying a house, contact First Alliance Credit Union and talk with one of our mortgage lending advisors. We’ll work with you to make sure you get a mortgage that works for you.