First time homebuyers often feel like the deal is done on their new homes once the offer has been accepted. But the purchase process is actually just getting started. Here are some homebuying tips to help prepare for the next steps.
Step One: Avoid These Things
First, it’s tempting, particularly for first time homebuyers, to fill their social stories with news of the accepted offer and plans for the new home. Be aware that things could still go wrong. If the deal falls through, it may become even more stressful if friends and followers have already been informed. It may be better to share the news with only the close group-chat friends and family instead.
Second, new homes need new furniture, and it’s also tempting to start placing orders. Some new home buyers even want to get a new car to put in the garage. Please wait until after closing! Underwriters will still need to run a credit check – possibly more than once through the process. New credit lowers a credit score, which may lead to higher rates or even a denied mortgage application.
Step Two: Meet the Requirements of Your New Home Contract
The first actions to take are those spelled out in the offer, often called the due diligence requirements or the contingencies. The first of these is typically providing earnest money, which shows the seller you’re serious about getting the deal done. The money needs to get to the real estate broker within 24 to 48 hours of the offer’s acceptance.
Another contingency – a factor a successful transaction requires – is financing. If you haven’t already, make a formal application for financing right away, then submit the requested documentation as soon as possible.
Within three days of mortgage application, the lender will provide a loan estimate. It will list some services the borrower can shop around for, such as a pest control inspection. If you wish to check out different providers for those services, then also begin that process right away.
One requirement for all new homes is proof of homeowners insurance. Homebuying tips recommend getting several quotes for this to get the best protection for the best price. Meet the lender’s deadline for providing proof of insurance well before closing.
Lenders also require a home appraisal to confirm the value of the home. While the lender selects a licensed appraiser, the borrower is typically required to pay the appraisal fee, so be prepared to forward those funds. If the value is determined to be less than the sales price, then prepare either to renegotiate the contract, cancel the purchase, or pay cash for the difference between the value and the purchase price.
Wise home buyers also include an inspection contingency in their offers, so the next step will be to hire a qualified home inspector (or inspectors) to evaluate the home’s structure and systems. If previously undisclosed problems are found – such as an HVAC system that’s on the brink, unsafe wiring or water leaks – buyers may choose to work with their agent to renegotiate the contract.
Step Three: Prepare for Closing and Move-In
After the closing date is finalized, make arrangements for utilities and mail forwarding. You’ll want lights and water for move-in day!
Three days before the closing, the lender will send a closing disclosure (CD). Among other information, the CD will provide the final amount of cash needed at closing, including the down payment and other fees. Gather those funds according to the lender’s instructions.
IMPORTANT: Wire fraud happens! If you receive last minute instructions regarding how to provide closing funds, particularly if wiring or electronic transfer is required, do NOT change the arrangements right away. Instead, initiate a spoken conversation with someone you know at the lending institution to confirm.
Finally, attend a final walkthrough of the property within a day or so before closing. This will assure you the sellers are leaving it in the same condition as expected and any agreed upon repairs or improvements have been made.
Step Four: Enjoy!
Now, the deal is done. After closing, share the news, start buying furniture, and fill the moving van. Switch from poring over all the new homebuying tips to home decorating tips instead. For first time homebuyers and those who have purchased many new homes, there’s no feeling quite like starting over in a new place, so take time to have fun!