Just imagine a scenario where you have found the right house for you and your family. Maybe you applied for, and are now qualified for, a loan or will be working with CHAC or CHFA on down payment assistance. You have put in an offer for your fabulous new home, which the seller has accepted. A huge weight has been lifted off your shoulders, this is a time to celebrate, especially if you were one of many interested in this particular house. Your offer was accepted out of the multitude of offers from other hungry, eager buyers.
A question you may be asking yourself after the joy of becoming a homeowner has begun to wear off, “Well, what now? What are my next steps?” In this article you will find 6 important steps to make immediately after your offer has been accepted.
1) Make Your Earnest Money Deposit
Although an Earnest Money Deposit isn’t a necessity by any means, it will be measured as an act of good faith to the seller as it demonstrates your seriousness in buying the home. This deposit, usually in the ballpark of 1-3% of the sale price, will be held by your real estate agent or broker in an escrow account and can later be applied to your down payment or closing costs.
If making an Earnest Deposit is something you have discussed with your agent or broker, be sure that your contract specifies if and when you can get your cash back if the deal falls through or the sale isn’t finalized. A consideration you should take into account would be to ask your agent to include a clause that makes the deposit refundable if, for example, the home is appraised for less than what you offered, or if your financing falls through.
2) Get An Appraisal
Next step is crucial. Schedule your appraisal as quickly as possible! This is extremely important as the information gathered is beneficial not only for your knowledge of the property, but for your lender as well. It is your duty to cover the costs of an appraisal, typically ranging from $300-$400. Once your appraisal has been scheduled, your lender will send a trusted advisor to the property to determine the value of said property to ensure the home is worth what you are looking to borrow.
“But wait. What if the appraisal reflects a value less than my initial offer?” This can happen, and there are ways to combat this potential news. One is to work with your lender to see if a second appraisal would help prove that the appraiser made an error or omitted key information when drafting their final report. Another option is to ask the seller to lower their asking price for the property, making up the difference in cash, or compromise by asking the seller to lower their properties price slightly and offer more cash. This can be an extremely tricky negotiation, and needs to be approached carefully, especially if the seller isn’t super motivated or if there are more eager buyers on the docket. In the absolute worst case scenario, the final option is to call the purchase off. Remember, however, that the wording in your contract is extremely important if this were the case, as you may not be able to get your Earnest Money back.
3) Schedule Your Inspections
Scheduling your home inspection is another crucial step, and should be done around the time of the initial appraisal, as you may have a very limited window to cancel the home-buying contract if there are serious structural or pest-related issues. You can schedule these inspections yourself, however, similar to the appraisal, you will need to cover the costs of the inspection which typically range from $200-$400 with an average pest inspection costing about $75. If the property in question has an independent septic tank, make sure that this is included in the inspection as well.
The true purpose of these inspections is to make sure your new home is structurally sound, the foundation is strong, and that there are no major issues that might affect the appraisal. A typical check-list to use would include: ensuring the home doesn’t have structural stress, faulty wiring, issues with plumbing, problems with the HVAC (Heating, Ventilation, Air Conditioning) system, and broken windows or doors. Using this basic check-list is a good place to start, but you should brainstorm and think of other things you want to take a closer look at during the inspection.
4) Buy Homeowners Insurance
Now that Inspections and the Appraisal have been completed and everything is looking good, you should definitely be applying for homeowners insurance. Your lender will likely ask you for this information as your closing date approaches, so continue showing your seriousness in continuing with the purchase by having this in for ready for them. As soon as you get become qualified for a policy, the insurance company will prepare the documentation needed by your lender to verify your coverage.
The biggest question when looking at homeowners insurance policies will be figuring out how much insurance you really need. Remember, homeowners insurance is designed to cover things like theft, fire, wind and lightening damage. If you purchase property closer to the many rivers and lower elevation areas around Grand Valley, you may also want to look into additional coverage for potential flooding. Really the best idea is to speak with your insurance agent about coming up with the right coverage policies.
5) Schedule The Walk-Through
The walk-through will be the last major hurdle to clear before you skip to the closing table. Ask your agent to attend the walk-through with you to ensure you have covered everything on your home walk-through checklist, that should include:
-Making sure all the light switches work.
-Running the water out of all faucets to check for leaks.
-Testing out the appliances (stove, microwave, dishwasher, refrigerator etc).
-Check windows and doors to make sure they open and close smoothly, and locks work.
-Flush all the toilets, and run the garbage disposal.
-Check walls, floors and the ceiling for any signs of damage.
-Run AC and heating.
If you do stumble across any issues, the walk-through is your opportunity to point them out and your agent will work quickly to get issues resolved to keep your closing date from being delayed.
6) Get Ready To Close
You have made it! The finish line is in sight! Closing will prove to be the very last piece of the puzzle in the home-buying process, where you will be signing all of the paperwork your lender requires, paying your closing costs and collecting your keys. Closing costs will be dependent on your loan, but as the buyer you can expect to pay somewhere between 2-5% of the purchase price to cover fees required for finalizing your loan. This will include credit-check fees, legal fees, and mailing fees. This amount does fluctuate based on your loan, the property, and the terms. Your lender should inform you beforehand as to exactly how much you will need, and you will need to pay for these fess using either a wire transfer, cashier’s check, or a certified check. Be sure to check with your banking institution who will be able to assist you.
After all is said and done, you are officially a homeowner! You will receive additional documents from your lender explaining your options for paying your mortgage, and you can expect these in the mail within a few weeks after closing. Generally, it is just best to assume that your first payment will be due one full month after the last day of the month in which you closed, which gives you time to prepare.
Best practice? Don’t procrastinate. Once your initial offer has been accepted, there is still plenty to complete before signing off on your mortgage paperwork and start packing for you move-in day. More often than not, mortgage underwriting will be completed in less than a week, but can potentially take a month or more, depending on the situation. Don’t drag your feet! The sooner you sit down and get to work following the acceptance of your offer, the sooner you will be able to move into your new home!
Do you have any further questions? Reach out to our experienced team at Vertex Realty Partners and we will be happy to help!
Or stop into our centrally located office at:
601 Main St. Suite B
Grand Junction, CO 81501