So, your offer was just accepted by the seller and you have a home under contract. Now what?
First off, congratulations! You are one massive step closer to becoming a homeowner. In this article, we will help you understand exactly what needs to be done between going under contract and closing on your new property. To sum up: here is a shortlist of everything you'll need to get done.
- Providing your earnest money
- Setting a closing date
- Coordinating with your lender
- Scheduling a home inspection
- Getting a home insurance quote
- Scheduling a survey
- Getting an appraisal
- Reviewing the title commitment and closing statement
1. Providing Your Earnest Money
Earnest money is a deposit you will make in good faith to show that you are serious about purchasing the property. It will go towards the purchase price at closing, but you’ll usually need to provide it soon after you get the property under contract.
The amount of earnest money you are required to provide is likely specified in the contract and can vary depending on what you were able to negotiate. The contract should also specify who the earnest money should be given to, which is typically the title company you’ve selected to handle the closing process. In most cases, you can also provide the earnest money to your real estate agent or attorney and have them coordinate with the title company.
While it can be scary to provide money right after you get the property under contract, don’t worry. If the seller backs out of the deal or you utilize one of the contingencies provided to you in the contract, there’s a good chance you’ll get your earnest money back.
2. Setting A Closing Date
Setting a closing date gives every party involved in the transaction a deadline to have all of their tasks completed. If a date wasn’t already specified in the contract, you’ll want to coordinate with the seller to find a day that works best.
Be careful not to set a closing date too soon. Your lender will need time to process the loan documents, the title company needs time to inspect the property’s title and write their title commitment and you need time to perform your due diligence. The safest bet is to select a closing date at least a few months out from when the contract is accepted.
It’s easier to close sooner than the contract specifies than it is to close later, so err on the side of caution and give yourself more time than you think you need.
3. Coordinating With Your Lender
If you are using financing to make your home purchase, you’ll want to notify your lender as soon as you go under contract. This will let the lender know that they need to begin the final steps of your mortgage application, collect any last pieces of information they need, and coordinate with the title company to provide the funds at closing. All of this takes time, so notifying your lender as soon as possible is key.
If you were pre-approved for a mortgage before getting the property under contract this step will be easier, but there may still be a few outstanding pieces of information that you’ll need to provide. The lender will likely also have you review and sign documents over the coming weeks as they complete your application.
The last thing you want is to get to the closing table and find out your lender isn’t ready to provide the funds, so communicating early and often will help ensure that everything runs smoothly.
4. Scheduling A Home inspection
A home inspection will give you an opportunity to see if there are any issues with the property that you should be made aware of. There are several things you can expect from a home inspection, including the inspector checking for problems like termites, water damage, and electrical issues that you probably didn’t take notice of during your initial tour of the property. This is your opportunity to take a thorough look at the property before you purchase it to make sure there aren’t any unexpected issues.
The problem is, finding a qualified home inspector can be a huge hassle. Not all inspectors are created equal and, even if you do find one, scheduling an inspection can mean a frustrating series of phone calls and reschedules.
Inspectify solves those problems by making it easier than ever to find and schedule a home inspection. Our nationwide network of home inspectors is thoroughly vetted and qualified to ensure they are able to provide the best possible service. our instant, hassle-free booking means scheduling an inspection is just a few clicks away.
Book a home inspection with Inspectify today to see for yourself just how easy it can be.
Did we mention that every inspection comes with a free repair cost estimate for the entire report? (Other guys charge $100+ for this). With the repair estimate in hand, you can negotiate with the seller to adjust the sale price with ease.
There are several reasons you should never buy a house without a home inspection, so don’t skip this step. The small expense now can save you from major expenses in the long run.
5. Getting A Home Insurance Quote
Getting a home insurance quote might not be the most exciting thing in the world, but it’s well worth your time to look into while you have the property under contract. You need to make sure the property is not only insurable but at a price that won’t break the bank.
Most home insurance companies offer free, online quotes, so fill out a few forms to start getting an idea of what it’s going to cost to insure the home once you own it. It may also be worth checking in with local insurance agents to see if they offer better prices or insurance options.
There’s a good chance you’ll find that the quotes you receive are in the ballpark of what you expected, but doing the work now will save you from any surprises later. You don’t want to purchase the home and then find out that the insurance premiums are through the roof because the property is in a flood plain.
6. Scheduling A Survey
Before you complete your purchase, you need to know exactly what you are buying. That’s where a survey comes in.
A survey will show you the property’s boundary lines, building lines, and easements for things like power lines and alleys. While it may seem obvious where a property’s boundaries are, especially if you are purchasing a home in an area where every home has a fence around it, plenty of buyers have been shocked to find out that their nice fence or garage is actually on their neighbor’s property. A survey will help you avoid this headache.
Aside from your own peace of mind, a survey may also be necessary for other reasons. The title company may require a recent survey if it is to be covered in the title commitment, and your lender might require one before they’ll issue the mortgage.
Depending on your market it could take several weeks before a licensed surveyor is able to make it to your property, so getting a survey scheduled soon after going under contract is a good idea.
7. Getting An Appraisal
A home appraisal is a valuable piece of information for you to have in your back pocket. Between your own research and the help of your real estate agent you might already have a good idea of what the home you have under contract is worth, but an appraisal will give you an official estimate by a qualified expert.
Appraisers are licensed professionals who estimate the values of properties for a living, so their opinions are valuable when evaluating your home purchase decision. The appraiser will typically compare your property to other properties in the area that have recently sold to get an idea of how much it should be worth.
Even if you don’t feel you need an appraisal, your lender might require one. If this is the case, coordinate with your lender to see if you are responsible for scheduling the appraisal or if they will handle it. Either way, make sure you receive a copy of the appraisal results prior to closing.
8. Reviewing The Title Commitment And Closing Statement
Before closing the title company should provide you with the title commitment that they are offering for the transaction. You’ll want to review this commitment to make sure it includes everything you want it to protect you against, and that they didn’t uncover any title issues with the property.
You’ll also want to review the closing statement, also known as the HUD1 form, to see what money is going in, what money is going out, and what fees you and the seller will be paying for the transaction. This is usually your last chance to negotiate on any of the financials of the deal or raise any concerns. It will also tell you exactly how much money you are going to be responsible for once you get to the closing table, so make sure that number makes sense to you and that you will be able to provide it once the closing date arrives.
We hope this article gives you a thorough understanding of everything you need to know after going under contract. With a little bit of work between now and closing, you’ll be well on your way to making a successful purchase of your new home!