You hired an experienced real estate broker. You set a budget range. You looked at over a dozen homes. Now, you’ve found the home that is close to your idea of a dream house. What happens next? Here are the last few steps for buying a home:
When making an offer on a home, you want to hear those magic words, “The owner is motivated to sell.” This is when you put in your offer. Working with your real estate broker, you’ll put together an offer that takes in the current appraised value of the home and what other homes are selling in the same neighborhood.
If the home you found is actually under what you expected to spend, then perhaps you can go above the asking price to lock it down. Your broker will be handling the back and forth for the offer negotiations. Once the number has been accepted, a purchase contract will be drawn up and you can move onto the next steps.
The time between a signed purchase contract and the final closing will be the underwriting process. This can be a very delicate part of the home buying process. The housing crisis of 2008 caused every major lending institution to rethink how they do business. A lot of that is from new government regulations meant to prevent another crisis.
The underwriting process is as strict as ever, and many factors will come into play when they decide if you can pay for this home or not. Those include your credit score, the amount you have in savings, and your employment history. Even though you submitted all the documents, there might still be additional documents required to verify everything. A lot of money is put on the line and the banks want to know you’ll be good for paying it all back.
You will need to get the home inspected. A good inspection can take several hours and it can be “make or break” when it comes to deciding whether you want to buy the home. Yes, even though an offer has been made it won’t be finalized until the inspection is passed. Suppose it is discovered that there are leaks in the plumbing or the roof is damaged from termites. What would your options be then? That would be the next step.
After the inspection, you can renegotiate the offer. This should only happen under extreme circumstances like finding out you have to replace the plumbing or electrical wiring. The homeowner might offer to make those compliance repairs in order to keep the offer the same. They could also settle on a lower amount that would be based on how much you would have to pay to make the repairs. Any time there is a renegotiation of an offer, it will slow the whole process down.
The closing time can vary between 30 days to 90 days. The seller of the home might put in a condition that they are allowed to stay in the home for a certain period. If this is the case, you have time to find and price out moving companies. Many moving companies have promotions that you can take advantage of. While you figure out your move, you could end up charging the sellers rent that might pay for your first few mortgage payments. Being flexible with the owner is always a good way to lock down your deal.