Great news – the seller accepted your offer! You’re one step closer to becoming a homeowner. But don’t pop the champagne just yet.
So, what are the next steps? Typically, the mortgage process goes like this: find a lender, find an agent, find a house, put in an offer, negotiate, offer is accepted (you’re here), home inspection, negotiation, loan is finalized, closing, and move in.
It’s not quite that simple and straight forward, though. Let’s talk in more detail about what happens between when the seller accepts your offer and when you reach the closing table.
We know you love your soon-to-be new home, but you need to make sure it’s ready and safe for you to live in. That’s what the home inspection is for.
The home inspection is an examination of the condition of the house, usually conducted by a home inspector who’s been trained and is certified.
It’s not always required, but you may want to walk through the home inspection with your inspector. A good inspector will have their own list and paperwork to fill out as they perform the home inspection, but you can bring the list below with you, too. Once the inspection is complete, you enter a period of negotiation, where you may ask the seller to fix certain things in order to move forward. While we know it’s not what you want to hear, you have to be prepared to walk away from the property if something is discovered in the home inspection that can’t be fixed in a timely manner or poses a bigger problem.
A home inspection usually doesn’t check for things like asbestos, radon, methane, pests, mold, mildew, and lead. If you want any of these inspections done, you may to hire another professional, specific to what you’d like inspected. For example, if your home was built before 1978, you may want to have it checked for lead-based paint.
Termite and pest inspections are common, and may be required depending on your loan’s guidelines. A pest inspector will check under the house for signs of termite and pest damage and advise on how to treat any infestations. You may even be able to negotiate to have the seller cover costs of treatment.
Home Appraisal and Home Insurance
You’ll usually be required to get the home appraised, which is something your lender will be interested in. An appraisal gives you a report of what the home is worth.
If all goes well with the home inspection and appraisal, you’ll need home insurance, which you’ll have to prove you have when you go to closing. Additionally, if your property is in a flood zone, you’ll need to purchase flood insurance.
You’ll most likely have to pay homeowners insurance (and any other insurances you’re required to have) upfront, before or at closing.
Tip: Use your mortgage banker and REALTOR® as expert sources. After all, they do this for a living. They should be able to answer all your questions and walk you through the process.
Get your Funds Together
Make sure you have the money you need for your down payment, which you’ll have to pay at closing. You’ll also need funds for closing costs (although you can negotiate to have the seller cover some of those). If you’re receiving a gift for your down payment – which you ‘ll have to document with your lender – make sure it’s in your account before closing. Make sure you keep all documentation of money transfers so that you have proof of where the money in your account came from.
Tip: Don’t make any financial changes during the process. Don’t buy a car, open a new line of credit, make any big purchases, or quit your job. Changing your finances could jeopardize your credit and qualifications. There are hard pulls and soft pulls when it comes to credit, and you want to avoid hard credit pulls while your loan is processing.
The Final Walk-through
Forty-eight hours before you close, you’ll do a final walk-through. While this is not required, you should walk around the property one final time before you become the owner to ensure that nothing has been damaged or destroyed since you saw it last. Make sure that everything you negotiated after the home inspection has been addressed. Remember, if you don’t spot an issue during your final walk-through, it becomes your problem when you get the keys.
As we mentioned, your mortgage banker and real estate agent should be able to explain any part of the process that is unclear to you and answer questions as you have them. It may seem like a lot, but they’re there to help you so that you’re smiling at the closing table.