Step-By-Step 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 deposit.

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 amount.

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 middle.

F. Insurance
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

A. Walk-thru
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.

B. Closing
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.

C. Funding
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.