20 Steps to Closed
1. Choose Your Realtor! This is not a process you do alone. It is, after all, one of the major milestones in your life. You deserve a knowledgeable and skilled partner in this transaction process. According to National Association of Realtors, 88% of buyers purchased their home with the wise guidance of a Realtor. Purchasing a new home in a competitive and ever changing market may seem like a daunting task, but if you keep in mind what is important to you, what you are looking for in a home, and interview two or three Realtors you will discover the best compatibility of this trusted agent who will take you seamlessly to the closing table.
2. Choose A Lender. A critical next step. In this market, buyers must have a pre-approval letter to effectively search for homes within a 30-90 day time frame putting them in an agile position of making an offer (s). That does require establishing your financials baseline and just how much home you can afford. Prior to that important pre-approval, a lender will provide you with information on the different types of mortgage loans and those programs that support first-time home buyers.
3. Selecting Your Home! This is the exciting part and a great realtor will make this an enjoyable and educational process for you. I know I do. With your realtor you will have discussed price range, style, amenities criteria, location and other features so you are touring homes that match your "this is home" expectations.
4. The Offer. With your chosen realtor, you will determine what you price you wish to offer and the terms and conditions of that offer. Initially, this breaks down to price, method of financing, earnest money, option period and financial offering towards the option. Now, you may have some questions as to all of these details in the process. Let The Possibility Realtor walk you through and provide some answers. Give me a call- 512-271-2022.
5. The Escrow Process. You have reached an agreement on the offer! Yay!! Now, the initial good faith deposit (that is the Earnest funds and the Option funds) is given to an escrow representative and your home buying process is in a serious move forward.
6. The Mortgage Loan. Based on the accepted offer, the offer is submitted to your chosen lender with all the appropriate documentation and requested for mortgage processing where it will move to underwriting for full approval. This can take 30 - 60 days and that anticipated closing date will have been accounted when you, your realtor, and the seller negotiated towards the accepted offer.
7. Preliminary Title. A title company is named by the seller, but is at the discretion of the buyer who to choose as a title or escrow company. Your realtor will guide you here, but it is your decision. It is important since this is where your earnest money, option funds will be held (in escrow), and where you will go to close on your new home. Your offer is presented to the title company you select and a title report on the property is pulled, reviewed, and accepted.
8. Inspections and Disclosures. Property inspections are done in the period we call Option. There is a date limitation to this option period usually of 3 - 7 days. You as the buyer paid the seller a non-refundable fee (small portion which typically is between $250 - $1000 depending on the list price of the home and offer made) allowing you access to time and have 3 party vendor services like an inspector, foundation experts, plumbers, mechanical experts, roofers out to evaluate the home to ensure you know of any issues there might be with the home you are purchasing. Your realtor even before the offer was made would have requested you review thoroughly the seller's disclosure before making an offer. Even if the seller's disclosure looks good and they present you with an inspection report they had done this should never stop you, the buyer, from paying for the necessary inspections that might uncover some unknowns the seller did not list on the seller's disclosure or found in the prior inspection. This is your opportunity for an independent 3rd party review. Your realtor will provide you with some references of trusted inspectors. It will be your decision who to chose. These fees for any 3rd parties are paid separately by the buyer.
9. Assessment or Appraisal. Unless your offer is a full cash offer, a lender will require a property value assessment. They assign an appraiser to analyze and assess the value of the property for financing of the loan. As a buyer, you want the assessed value and the offer price accepted to match or the assessed value to exceed the offer price. In some cases, if the appraisal was to fall short of the accepted offer price, the buyer can make up the difference bringing more cash to the closing table or re-negotiate the property contract. The lender will not take the risk of financing under the appraisal value, so along with your realtor and seller if you re-negotiate price terms, this will be your decision.
10. Loan Approval. You have made it through underwriting CONGRATS and all systems are go for you to meet the closing date and be the owner of this new property.
11. Home Insurance. Within your mortgage escrow will be funds for your homeowners insurance, if you are not paying over 20% of the accepted offer price as a down payment. Your realtor can discuss referral sources with you for coverage and scenarios of paying insurance outside of your monthly mortgage. Once you as the buyer as named a homeowner's insurance company, your realtor will provide this to the title company.
12. Hidden Defect Insurance. The title company will provide the buyer with insurance against unknown title claims. A rare, but best to be ensured occurrence.
13. Conditions. The title company reviews all documents: the property contract, the title documents, the lender's documents and ensures all conditions are met and accepted.
14. Schedule the Final Visit. You are nearly at the finish line!! There may have been some repair requests to check on, but for the buyer this is the final visit before the home becomes free and clear- yours. And well maybe, the banks. You want to make sure that everything at the home is as you saw it in the beginning. Nothing noted on the contract missing, still there, or damaged. You will schedule this FV with your realtor.
15. Closing Day!!! You will meet your realtor at the title company to sign off on all the loan documents and process the funding on your new home. CONGRATULATIONS!
16. Escrow to the Lender. All documents are turned over by the escrow agent to the lender for a final review and scheduling of funds for closing.
17. Funding. The lender's funds are electronically transferred to the title company. Depending on the time of day, in general, the actual exchange and registering of funds may not happen until the following day.
18. Deed. The deed is registered with the County office transferring the property title to the buyer.
19. Transaction Closed. The accounting is finalized and account statement remitted.
20. New Ownership Official. With keys in hand, welcome to your new home!
