Congratulations! Your offer was accepted! But what happens now? When your offer is accepted, it’s time for more paperwork and signatures! There are also numerous deadlines you’ll need to be aware of. Your Realtor should help you stay on top of your deadlines and keep your real estate transaction on track. Here are the 10 Steps to Get You into Your New Home:
1) Earnest Money DepositYou’ll need to submit your earnest money deposit, which is usually in the form of a personal check, cashier’s check or money order and will go towards your down payment and/or closing costs. Be aware though that the funds must be readily available as your earnest money will be deposited into an account and held by the title, closing or escrow company and then applied at closing. You will not have access to this money prior to closing.
2) Loan ApplicationNotify your mortgage lender that you are under contract, and complete your loan application if you haven’t already done so. The lender will need certain documentation from you, such as your identification, bank statements, paycheck stubs, W-2’s, and possibly more depending on your situation (i.e. tax returns if self-employed). Be sure to provide the requested documents as soon as possible so as not to hold up the process. During the transaction, make sure you do not do anything that will affect your credit or debt-to-income ratio and ultimately your loan qualification, such as changing jobs, applying for a credit card, or making any large purchases on credit (i.e. buying a car, appliances, furniture, etc.). You might think it’s a good idea to plan ahead by buying new furniture before you close on your new house. However, if you do that, you may no longer qualify for a loan, and therefore may not be able to buy the house you just bought all the furniture for.
3) Home Inspection
Home Inspection. The purpose of a home inspection is to determine whether or not there are any health, safety or structural issues with the property. You should have a professional home inspection done to know what you’re getting yourself into. And since you’re paying for the inspection, you should be there to see the results first hand. This is also a good opportunity for you to ask questions and learn more about the property along with its systems. Based on the age and location of the property, you may want to have other inspections done as well, such as a sewer scope and/or a radon test. Keep in mind though that there is no guarantee the transaction will close. You could pay for inspections and then end up not becoming the homeowner, in which case you’d be out the money for those inspections with nothing to show for it. Consider it the cost of doing business to try to reduce your risk with buying the home. Would you rather pay $400 to find out there’s structural damage that could cost $40,000 to repair and back out losing that $400 or later find out you have to pay $40,000 to repair the structural issues when you already own the home? To give you an idea of inspection costs, here are the average costs of some of them:
- Home Inspection = $300-$400 (depending on the type, age, and size of the property)
- Sewer Scope = $100-$150
- Radon Test = $100-$150
4) Title Commitment
The title company will provide a preliminary title commitment for you to review, which will list anything that has been recorded with the county for the property, such as liens, encumbrances or encroachments on the property. It is your responsibility to read through the commitment and understand what you’re reading. Title is not a Realtor’s area of expertise, so you should contact the title company directly for any questions or clarification.
5) Homeowner’s Insurance
You’ll need to research homeowner’s insurance policies for the property and get quotes to find out the cost along with any special requirements (i.e. flood insurance, etc.). You’ll work with your lender on the homeowner’s insurance policy to make sure you have enough coverage. When you contact insurance companies for a quote, they’ll need to know the property address along with the purchase price and your loan amount, so be sure to have that information handy. Usually bundling your homeowner’s with your car insurance will get you the best deal. Once you decide which insurance company, agent and policy you want to go with, you’ll need to give your lender the information for your insurance agent. Your lender should contact your agent to obtain your Evidence of Insurance (i.e. Insurance Declaration Page). The lender will need this for your loan file to submit it to underwriting.
6) AppraisalSince the property is the collateral for your home loan, the lender will require an appraisal to be done to determine the value of the property and make sure it’s not less than the amount they’re lending on. The appraisal will be ordered by the lender through an Appraisal Management Company (AMC). The AMC will then find the next available appraiser and schedule the appraisal with the seller’s agent.
Prior to moving in, you’ll need to transfer and/or set up utilities for the property, such as power, gas, trash removal, recycling, cable/internet, etc. You can usually find information for the utility providers on the city’s website, or ask your Realtor. The title company will transfer the water and sewer for you. You’ll also want to transfer your mail with the Post Office.
Prior to closing (usually within a day or 2), you’ll want to do a walk-through of the property to ensure that the property is still in the same condition as when you went under contract, any items that were included in the sale are still there, any items that were excluded from the sale have been removed, and any agreed upon repairs have been completed.
9) ClosingThe closing is when you sign all the final paperwork and officially take ownership of the property. Typically, all parties will be present at the closing to sign documents. Whoever is going to be on the loan and/or title will need to be at the closing to sign and will need to have identification. You’ll also need to bring a cashier’s check or send a wire transfer to the title company for your “cash to closing” (i.e. your remaining down payment, additional closing costs, etc.). You’ll receive the final numbers from your mortgage lender in your Closing Disclosure (CD) at least 3 days prior to your closing. Talk to your mortgage lender about the costs involved with the closing so you know what to expect. Your closing costs will likely include (but are not limited to) your remaining down payment, title fees, taxes, insurance, interest, etc. Once the funds from the lender have cleared and the deed has been delivered (“Upon Delivery of Deed and Funding”), the property is yours! Unless your contract specifies otherwise, you should get the keys to the property at your closing.
10) Move In!
You did it! You made it to the end of the transaction and through your closing. You’re officially a homeowner! Get the locks changed, and start moving into your new home. Use a Moving Checklist to help keep your move on track.
Congratulations! You survived the home buying process and are now a homeowner! Enjoy your new home!
* Please keep in mind that this blog post was written for Colorado (specifically the Denver Metro area) in January 2017. This information may vary in time as well as in other states and/or real estate markets.
© Briana Nickas and www.briananickas.com, 2017. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Briana Nickas and www.briananickas.com with appropriate and specific direction to the original content.