As your research or past experience has informed, buying a home is a long, complex yet very rewarding process.
If you’re new to homebuying, or it’s been a long time since you participated in the homebuying process, it’s good to know that the steps between the contract and closing on the home sale can get pretty involved.
Here are the steps new homebuyers can expect once they’re approved for a loan and have signed a purchase agreement for the home of their dreams.
Prepare documents
With the help of your real estate team and a title company, you’ll begin to review and sign a lot of paperwork to get the deal across the finish line.
The team’s job will be to make sure everything is accurate and no information is missing. At this point, the third-party escrow company will calculate closing costs that will be paid on both sides of the transaction.
Homebuyers will receive disclosure documents that give them the full rundown of how much closing costs will be due.
Home inspection
For your peace of mind, and negotiating position, a home inspection will be done to check out the home’s physical condition.
If any serious problem is revealed, such as a cracked foundation, leaking roof or anything of that sort, the buyer has the right to reconcile any future costs with the seller through renegotiation. The seller can reduce the asking price or offer closing credits to help the buyer save on the closing costs.
While unlikely, the findings of the home inspection give buyers a way out. They can walk away from the agreement without penalty if there’s a major issue found in the home inspection report.
Title search
Among the many tasks the title company will be responsible for is the title search.
This legal document is a matter of public record. As such, a title proves property ownership and notates any claims that can hinder the homebuying process.
The title search is designed to uncover liens, undisclosed easements, undiscovered encumbrances, boundary disputes or any other details that must be addressed before the home sale is complete.
Escrow account
Escrow simply refers to the steps you’ll take leading up to the closing of the home sale.
As a third party, the escrow company will open an escrow account to facilitate the finals steps of the home sale on the behalf of the buyer and seller. The escrow company will also hold onto all funds and related documents and move all the pieces in place as needed.
The escrow account begins at the point at which the buyer signs a purchase agreement or makes a deposit. From this point forward, the escrow company will lead the process, ensure all the terms and conditions of the contracts are met and transfer funds to complete the process.
Appraisal
At some point when in escrow, the lender will order a home appraisal to evaluate the home’s market value.
This is mostly done to make sure that the loan amount matches the home’s value. If there’s a discrepancy in how much the home is worth versus the asking price, then the homebuyer can be on the hook to make up the difference.
As the parties reach the end of the process, they can expect to have a lot of paperwork to review and sign. The entire escrow process lasts about 30 to 40 days, but is sometimes faster. Both parties will agree to the final closing date so they can coordinate their big move.