You paid close attention to my first time homebuyer mistakes post and followed the steps to make sure you were ready to make the purchase. You searched with your agent, and the offer you put in on a property was accepted. Congratulations. But now what? Below is what takes place after you have come to terms on a deal. If you have a good Realtor, they will help you along the way with these items.
First, you need to let your lender know that you have a contract on a house so that they can get to work getting the financing in place before it is time to close. It takes time for everything to come together, so your lender will need all the advanced notice they can get to make it work. They will need to know the purchase price, as well as any seller paid items agreed upon.
Next is the inspection period. This is a 10 day (depending on the contract) window that is opened up as soon as you have a deal in place. This is a chance for you to get the house checked out to make sure there are no hidden problems that could become costly for you once you move in. The inspector will look at the entire house and write up a report detailing everything they that could be an issue. You can then use this information to open up negotiations to have these things fixed, or change the price of the house accordingly so that you can do the repairs. Or you can walk away from the deal altogether . This is a crucial step in making sure that you know what you are getting before you get to the closing table.
You also want to get your funds ready. Whether you are paying all cash for a house, or whether you are financing part or all, you will more than likely have to put in some money into the deal unless your financing is through VA, or any of the First Time Homebuyer programs which will cover all of the costs. Outside of those two financing products, things like the down payment and closing costs are expenses you will need to be ready for. Closing costs are what you pay to take out the loan. In it you have the fees the lender charges for you to get the loan. Also, things like the appraisal, title fees, up front taxes and insurance, etc. are all bundled together to make the closing costs. You must have this money available in certified funds to bring to closing.
A side note, yet a VERY important note. Unless you are paying cash for a house, once you have signed the contract on the house. DO NOT go out and buy big ticket items. I know you may need furniture and other things to fill this new house. But you must wait until after closing. Otherwise you risk that the decrease in funds or additional credit usage will cause the lender to not loan you the money for the house. This happens more than you think. This doesn’t mean to stop paying your bills, no, keep doing that. But if something comes up that is outside of the normal monthly spending, it is best to check with your lender first.
Once you have had the inspection, and everything is settled and closing is eminent, you need to find homeowners insurance. Shop around and find the best rates with the best coverage. Make sure you have enough insurance to replace the home and its furnishing if something were to happen. Too many times people go under-insured and when something happens, they don’t get enough money to start over. So choose your policy carefully.
A final walk through of the house is something that not everyone does, but probably should. This is a chance for you to see the house in the condition that the previous owners intend to leave it to you in. It allows you to make sure that they have left behind (or taken) everything they were supposed to per the contract. As well as make sure everything is in the condition you were expecting when you made the offer to buy. If there needs to be fixes, now is the time to get that done before closing.
And now we have come to the fun part. If fun to you means sitting in a room initialing and signing your name on a hundred pages of documents. This is where everything comes together and the transfer of ownership takes place. Otherwise known as closing. You as the buyer bring the money, the seller gets the money and everyone is happy. Make sure that as you go through the documents to check that everything looks right. If something looks off, ask about it. Don’t be afraid to speak up and even slow things down a bit so that you are comfortable with the process. It is better to address any potential errors now, than to try to figure it out later. I know this is hard when you are excited about getting the house. But you must stay calm here and do things right.
Now all that is left is to gain possession and move in. Truthfully, this is one thing that gets confusing to buyers. They come to closing, hand over the certified funds and sign endless documents to buy the house. But then in most cases, do not get the keys to house at that time. In fact, it usually is not until a day (or even two) later. Why? Well unless you are paying all cash for the house, you are using a lender to finance the deal. And apparently it takes more than just a push of a button to transfer the money from one place to another. I don’t get it either. In today’s world you would think this process would catch up to the times. But I have no control over that. So it just is what it is. So you have to wait for the lender to transfer funds through the title or escrow company to the seller. Once that is complete and the transaction has been recorded, you own the house. Well…you and the lender own the house. But that’s another blog topic.
Now you just get to have the fun of packing, moving and then unpacking all of your stuff. It’s exhausting, but at the same time fun because you are off to a new adventure in a new place. And hopefully you entrusted a good Realtor to get you through all of the above transaction deals, so that you were not already exhausted from that process. If not, hopefully you remember that for the next time you move!