This is the 4th entry in our Home Buying series. There are links to the other entries at the end of this article.
Buying a home can be a long, drawn out process. But once you finally find the right home you’re ready to make an offer on it. Making an offer is essentially you saying to the seller (usually through your real estate agent) “I’d like to buy your home for this price.” There can be back and forth negotiations, but if your offer is accepted then you’ve bought a home! Except you haven’t yet, not quite. The home becomes yours at closing and the time between your offer being accepted and closing can be weeks, or even months. Here’s what happens during that time.
– Have a home inspection completed, to identify potential issues with the home. This inspection protects you, the buyer. You can ask the seller to correct any issues found or for a reduction in price, but there is no guarantee they’ll agree.
– Have an appraisal completed. It may seem similar to the home inspection, but this is actually to protect the mortgage lender. A 3rd party estimates a value for the home and ensures that the mortgage company doesn’t lend you more than the home is worth.
– Complete a title search. This ensures that the seller has the right to sell the home to you. A “clean” title means no one else has a potential claim on the property, which would be a big problem if you found that out AFTER you’d paid for it.
– Shop for and buy homeowner’s insurance for the home. This is usually required to protect you and the lender from unforeseen circumstances (fire, storms, etc) that could decrease the value of your home and their investment (collateral).
– Establish an escrow account for various items such as pre-paying property taxes, the first few months of homeowner’s insurance premiums, and more.
The good news is that the closing agent (may be called an escrow agent, and may be required to be an attorney depending on the state), your lender, and your real estate agent can help you with many of these. They may have recommendations for experts to use and have done this many times before, so don’t be afraid to ask questions.
Finally, at least 3 days before closing you should receive a Closing Disclosure which you can compare to your Loan Estimate to make sure all of the financial details are correct. 24 hours before closing you will often do a final walk through of the home to make sure it has been vacated, is in good condition, and any agreed upon repairs have been made.
And then, finally, closing. All you have to do is read and sign many, many documents. You’ll need to bring a check (cashier’s or certified, not personal) for the down payment and all closing costs (all those things we listed above come with fees, the total is often 3-4% of the value of the home!). It’s a good idea to bring a photo ID as well.
And then once everything is signed, you are finally a home owner. Congratulations!
Keep learning about the home buying process!
Home Buying #1
You need to know the basics.
Home Buying #2
How to prepare your finances before it’s time to buy.
Home Buying #3
Understanding the different stages of the mortgage process.