I placed an offer on a home. What’s next?
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Congratulations on finding a house you love enough to call your home! The next month or so is going to be filled with a lot of different events that are probably unfamiliar to you- so hopefully this cheat sheet will help clear the fog!
Submit a contract- Generally a seller will take a couple days to review your contract and will either accept it as it is written, or may submit a COUNTER OFFER altering the terms.
Counter Offer- If the seller submits a counter offer, we will review the altered terms with you to see if they are something you are comfortable with. If you agree, we will send an ACCEPTANCE notice to the seller. If you do not agree, we can cancel and continue to look for other homes, or submit a counter offer to their counter offer until a mutual agreement is met.
- Acceptance- Once you and the seller have agreed to the terms of the contract, you will sign the ACCEPTANCE AND ACKNOWLEDGEMENT portion of the purchase agreement. Receipt of the acceptance also initiates the beginning of your 10 (or agreed upon) inspection period. A signed acceptance will “lock” you and the seller into a legally binding contract to buy and sell a property and will require you to OPEN ESCROW with a EARNEST DEPOSIT
EARNEST DEPOSIT- Your earnest deposit will need to be deposited into a trust account managed by an escrow company within 2 calendar days of signed acceptance. This money will be held in escrow until closing and can be used as a credit to your closing fees. If it is not used, you will receive a refund at closing.
Inspection Period- Upon accepting the contract you are executing your 10-day (or agreed upon) inspection period. The day you accept the contract is day 1! This time is for you to preform due diligence, complete inspections and investigate any items that you feel important to you living in the home. If you are unhappy with your findings, you can either (a) ask the seller to correct the issue or (b) cancel the contract and receive complete refund of earnest deposit.
Mortgage Review and documentation- A copy of your executed contract will be provided to your lender letting them know you are under contract for a home. The lender will most likely contact you immediately with a list of items he/ she will need from you to obtain a home mortgage. Your promptness is key to a successful closing! Once these items are received, the loan officer will request the property be APPRAISED to make sure the value is fair in consideration of the purchase price.
Appraisal- A third-party is hired to go out to the home to assess its value and will submit its findings to the loan officer.
- Low Appraisal- We will request the seller to lower the contract price to meet the appraisal. The seller has the opportunity to deny the price change- however most sellers are reasonable and a mutual agreement is usually made. Another option is for the buyer to contribute in cash the difference between the appraised amount and the contract price. If a mutual agreement cannot be achieved, the buyer will cancel the contract and receive full refund of earnest deposits.
- At/ or Above Value Appraisal- This is what we are looking for! Your offer to purchase the home is a fair price and a mortgage company feels safe lending the appraised amount to you. You can now go into FINAL UNDERWRITING!
Final Underwriting- You are almost at the end of the road! Right after your lender receives your appraisal you file is transferred to a FINAL UNDERWRITER. This person will make one last attempt at verifying all assets and liabilities. This is also when you may be asked to provide last minute documents or updated financials. DO NOT PANIC!!! THIS IS ALL NORMAL!
CLEAR TO CLOSE- You have passed all the underwriters tests and you are now able to schedule a closing time. Normally, we like to schedule closings about 3 business days after the Clear to Close. This gives everyone plenty of time to review your loan documents, and make any last minute corrections.
CLOSING DAY! On the day of your closing (or hopefully the day before) you will receive a final closing statement that details all your closing costs and loan documents. This information will include the amount you must bring to closing as well. You can expect the closing to take at least an hour, but in some cases could take up to loner if documents need last minute changes. Once all the documents are signed, the mortgage company will need to FUND you mortgage.
Mortgage Funding– This is the final step! Once the entire doc’s are signed the lender will receive a faxed copy. Upon receipt, the lender will FUND your transaction. Once that funding is verified you walk away with your keys!