From Offer to Closing
By Shawna Sanders
If you’ve been following along in our series, Helpful Hints for First-Time Home Buyers, you’ve gotten your finances in order, chosen your real estate agent and lender before starting the hunt. You’ve found the house you want to make an offer on. So what happens now?
Make an Offer
Your real estate agent will help you come up with the initial offer including the closing terms on the house you’ve chosen. At this point, the seller can reject, counter or accept your offer. If it is rejected, your offer may be lower than what the seller thinks the home is worth and the difference may be more than you are willing to pay for the home. If it is countered, the difference may be within your reach. This is where your agent will be able to advise you on the best course of action concerning this particular property. Sometimes, you may have to walk away and continue the hunt until you have an offer that is accepted. When your offer is accepted, at this point you will have to provide earnest money and an option fee if the home is in Texas. (Check with your agent for exact requirements for your state.) It’s recommended that first-time home buyers pay this money with a check written from a personal account. Many younger buyers don’t have checks or have never used them. If that is the case for you, just make sure to purchase your own cashiers check from your bank. The earnest money must be your own funds and must be documented having come from your account. You can receive a gift of earnest money from a family member if they write the check, but there are strict guidelines to follow which include the donor provide a copy of their bank statement showing the gift funds available. The home is now under contract.
Your real estate agent is a good source for home inspector recommendations. Having the home inspected protects you from unexpected problems down the line. A home inspection is not required but highly recommended. An inspector will take a good look at things such as the condition of doors, windows, heating and cooling units, plumbing, wiring, roofing, and the foundation among other things. He or she will not tell you the value of the home, only the condition. Once you have this report in hand, you and your agent will decide if you want to ask the seller to fix some things. The seller may fix them or may choose not to. In Texas, you could walk away at this point as long as this negotiation is conducted within the “option period’ written into the contract without losing the earnest money if the seller chooses not to honor your requests. Your agent will help you navigate this process and determine the best course of action for the particular property.
Whenever you take out a loan to buy a home, you must have an appraisal of the property. This protects you and the lender by showing that the home is worth the money they are lending you since the home is the collateral on the mortgage. The appraisal will be conducted by a licensed appraiser who will determine the value of the home based on things like condition, location, floor plan and recent market values of similar homes in the neighborhood among other factors. If the report shows the home valued for less than the contract price, your loan may be delayed or canceled all together. You have the option of paying the difference between the contract price and the appraised value, walking away from the contract, or the seller may have to lower the asking price to more accurately reflect the home’s value. If the appraisal shows the home to be valued the same or higher than the contract price, the purchase can proceed as planned.
Final Walk Through
Once the underwriter has approved your mortgage and the loan officer has cleared you to close, it’s time to do a final walk through. The walk through should happen after the sellers have moved out and with just a few days to closing (or sometimes it will happen on closing day). You and your agent will spend some time going through the home to ensure that any repairs that the seller was requested to make were completed and that no new issues have come up since the contract was signed. If you do find that some agreed upon repair was not made, you have some options to accommodate for this before closing. Depending on the cost of the repair, you could request that the money due to the seller be held in escrow until the issue is resolved by the seller, or (if it’s a minor fix) you could agree to a concession where you will make the repair for a comparable reduction in price and you can proceed with closing as planned.
Your lender is required to provide you with a closing disclosure three business days before the actual closing. This will detail how much money you will need to bring with you to closing day in the form of either a cashier’s check or a wire transfer. Be sure to bring state issued identification with you as well. Be prepared as you will be signing a LOT of paperwork! Once you have signed and your down payment and closing costs have been received, you may have about an hour wait to ensure everything is in order. At this point, the lender will provide the funding for your mortgage and you are now officially a homeowner!
If you would like to purchase your next home, feel free to call us at (214) 945-1066 or use our purchase assistant to get started.
Your Local, Direct, 5 Star Rated Mortgage Lender, Specialty Lending Manager
Office: (214) 945-1066
Service First Mortgage NMLS 166487
6800 Weiskopf Ave #200, McKinney, TX 75070
Licensed by the Texas Department of Savings and Mortgage Lending (SML) Mortgage Banker Registration, AZ 0924237, CO, FL MLD1342, KY MC358087, OH SM.501988.000, OK ML01483. Service First Mortgage is an Equal Housing Lender. This is not an offer of credit or commitment to lend. Loans are subject to buyer and property qualification. Rates and fees are subject to change without notice.