Process to Buying a Home
So you've found the house you want
to buy...now what?
I. MAKING AN OFFER
Your offer is about 10-20 pages of paperwork to tell the seller
what price you're offering, what type of loan you're getting,
what date you would like to close on the home, and how closing
costs will be divided. The seller may change any of those
items in a counteroffer back to you
A. Earnest money
You'll need to submit an earnest money deposit with your offer.
This may be $500 on up, depending on the sales price of the
home. If your offer is not accepted, you'll receive this check
back immediately. If your offer is accepted, your check will
be deposited with the title company that is handling your
closing. The deposit will be credited toward the sales price
when you close. If you cannot qualify for the loan, your deposit
will be returned to you. But if you change your mind about
buying the home for any other reason, you will forfeit your
B. Option period
An option period may be included in the offer. Its purpose
is to "buy" you a number of days, usually 5-10,
during which you can back out of the contract. At the time
of the offer, in addition to any earnest money you submit,
you'll also submit an option fee check, which usually ranges
from $50 on up. After your offer is accepted, if you change
your mind about buying the house, you can back out during
the option period. You will lose your option fee, but you
will get your earnest money back. The option fee is also credited
toward the sales price at closing.
II. AFTER YOUR OFFER IS ACCEPTED
A lot will be happening behind the scenes, but these are the
steps you will be involved in from the time your offer is
accepted until the day you close on the home.
A. Title company
The offer has been signed by both parties and is now considered
a contract. The contract and earnest money are sent to the
title company that will handle the closing.
B. Apply for a loan
Try talking with a couple different lenders to compare their
programs. Ask each one for a "Good Faith Estimate."
This is an estimate of how much your monthly payment will
be, what your interest rate will be, and how much closing
costs you will have to pay. Choose your lender and apply for
a loan. Your lender may ask for some money up front to cover
their costs. They will order an appraisal; an appraiser looks
at your house and determines the value. The lender bases their
loan approval on the home appraising at a high enough dollar
C. Home Inspection
Although not required, we highly recommend you have the home
inspected by a licensed inspector. An inspector will check
the electrical, plumbing, roof, attic, foundation, and more.
This costs from $200 on up, depending on the size of the house.
Please note that all of the "problems" that the
inspector finds may not be actual problems. Some are listed
merely because of the changes in building codes from the time
the home was built. Although recommended, nothing on the inspection
is required to be repaired before or after closing.
D. Termite Inspection
A termite inspection will be required by your lender. If termites
are found, the lender will require treatment before a loan
is made on the property.
E. Ask for repairs
After the inspection is completed you may be able to ask the
seller to repair some of the items on the list. The seller
may be willing to fix everything you ask for, or may not be
willing to fix anything at all; most are somewhere in the
You will need to have a homeowner's insurance policy in place
prior to closing. Shop around for rates. Be sure to ask about
their water damage coverage; there have been a lot of large
water/mold claims in Texas in the last several years, and
some companies will not cover water damage, or if they do,
they will add an additional premium. Your insurance company's
name and phone number will need to be given to the title company
and the lender before closing so they can add the insurance
amount into the closing costs.
III. READY FOR CLOSING
The day before closing, or the morning of closing, we will
do a final walk-thru of your home. If everything is satisfactory,
we will then go to closing at the title company.
The title company will handle the closing. We will meet at
their office and sign all the required paperwork. Prior to
closing, the title company will notify you as to the exact
amount of money you need to bring with you. You will need
to bring a picture ID and a cashier's check.
Funding is when the money transfers from your bank to the
title company. This is usually a few hours after closing.
You get the keys to your new house after funding.
D. Move in!
It's a good idea to change the locks on your new home, and
the post office will rekey your mailbox at no charge.