- Pay the Earnest Money Deposit
- Send Documents to Your Mortgage Lender for Processing
- Review and Clear the House's Title
- Get a Home Inspection
- Negotiate Repairs That Need to Be Made
- Have the House Appraised
- Purchase a Home Insurance Policy
- Transfer / Turn on Utilities
- Conduct a Final Walkthrough
- Carry Out the Closing
1. Pay the Earnest Money Deposit
The first step after your offer is accepted on a house is to put down an earnest money deposit to show the seller you're serious. When the seller accepts your offer, they agree to take the property off the market. So, they will want some proof that you are serious about going through with the purchase. The earnest money deposit is typically 1-3% of the final sale price. Once the sale closes, that money will go toward the down payment or related closing costs. But if, for whatever reason, you back out of the deal, the seller can keep the deposit to offset their losses.
2. Send Documents to Your Mortgage Lender for Processing
After your offer on the house is accepted and you've put down the earnest money deposit, you will send your financial documents to your lender to begin the underwriting process. Just because you've been pre-qualified doesn't mean that you've been officially approved for a loan. The lender will still have to do their due diligence to confirm that you can afford the home, and nothing has changed since you first applied. So, they will request income statements, tax returns, pay stubs, bank statements, and anything else they need to underwrite the loan.
3. Review and Clear the House's Title
Once you have been officially approved for a mortgage, the title must be reviewed and cleared. The title is the official document that proves the ownership of the house. But before the title can be transferred to you, it must be cleared of any outstanding issues such as tax or mechanics liens, ownership disputes, or zoning violations. You don't want to inherit any of the previous owner's financial problems. So, it's essential to have the title reviewed and cleared before you assume ownership.
4. Get a Home Inspection
The next thing you'll have to do after your offer is accepted is to have the home inspected. It's important to know that the property is in good condition before signing the contract. A home inspection will uncover any potential problems so they can be addressed. The home inspector will look at the foundation, roof, electrical system, plumbing, HVAC system, and any other important features and let you know if there are any issues that will impact the function or value of the home.
5. Negotiate Repairs That Need to Be Made
If the inspection reveals any problems that require repair, you should bring them to the seller's attention. You can then negotiate who should be responsible for making or paying for the improvements. If they can be made quickly, the seller may agree to take care of the repairs before the closing. If not, you can request a credit to pay for the renovation yourself. If you cannot reach an agreement, you have a right to back out of the deal.
6. Have the House Appraised
After the inspection, you will want to have the home appraised. If you're financing the purchase, your lender will require you to get an appraisal to ensure that you didn't overpay for the home. However, even if you are paying cash, it's still smart to have the home appraised to better understand what it's worth when you purchase it. The appraiser will look at the condition and features of the house and the broader market conditions and provide you with a valuation based on these factors.
7. Purchase a Home Insurance Policy
Next, you'll want to purchase a home insurance policy. Homeowner's insurance is not required by law, but most lenders require it. Buying a home is a significant investment, and you'll want to be sure to protect that investment from any potential hazards. A home insurance policy will protect you from financial loss due to damage caused by fire, theft, vandalism, or a weather event such as lightning or heavy snowfall.
8. Transfer / Turn on Utilities
You should contact your utility provider and ensure everything is transferred or turned on. If you're moving somewhere near your previous residence, you can likely have the same provider transfer service to your new property. But if you are coming from a totally different location, you will have to look up the local providers and create a new account. Either way, it's important to take care of it before the closing, so you have heat, running water, and electricity when you move in.
9. Conduct a Final Walkthrough
Right before the closing, you'll want to do a final walkthrough to verify the property's condition and make sure the previous owner has removed all their belongings. If any repairs need to be made before closing, this is the time to verify they've been taken care of. Once you sign the contract, it's assumed that you are content with the property as it is. So, the final walkthrough is the last chance you'll have to voice any concerns.
10. Carry Out the Closing
Once all the other issues have been addressed, all that's left is to carry out the closing. Your attorney will provide you with an itemized list of all the outstanding fees that need to be paid, which you will bring to the closing table. You will also go over the contracts with your broker (if you have one), and if everything checks out, you will sign on the dotted line. Once the closing process is complete, you will get the keys to your new home and be able to move in.