Next Steps After Going Under Contract on Your Home Purchase
Escrow is a small deposit on the home during the contract process which is usually about $1,000 to 3% of the total purchase price of the home. This is to ensure you have “skin in the game” and are acting in good faith. The escrow money is usually held by a third-party and dispersed as a downpayment once the house is purchased. In some instances, the escrow money may be disbursed back to the buyer or given to the seller. This is when a contract falls through.
As a buyer, you should immediately apply for a home loan. In most cases, you would have already been pre-approved for a loan before house shopping. In that case, provide your executed contract to your lender. The lender will have 5 days to fill the application.
Do NOT apply for any other credit lines during this process. If you are looking to purchase a home, it is not recommended to make any other large purchases like a vehicle.
Reviewing Seller Disclosure & HOA
The seller of the home is required to disclose information about the home that they are knowledgeable about. Once you receive the seller disclosure, you should review all documents in detail and take notes for further questioning if needed.
Reviewing the HOA
If the home you are purchasing has a home owner’s association, you need to review the HOA documents. Imagine moving into the property not knowing you cannot keep your RV or motorcycle at your home!
Ordering a Home Inspection
During this time, you typically have 10-15 days for an inspection period. You should begin calling/researching home inspection companies immediately in order to have the company inspect as soon as possible. In most cases, your Realtor can recommend an inspection company.
Ordering your home inspection as soon as possible is important in case the inspector finds items of concern. The extra few days can be used for re-inspections or negotiations.
In order to schedule an appraisal, you will need to secure your financing. Moreover, you can wait after the home inspection to order to the appraisal to ensure you know you will move forward on the home, but it is not required. The appraiser is chosen by the lender through a third-party management company so the process is non-biased.
You can begin shopping for insurance immediately once the contract is signed. The insurer will not be able to complete your policy, until you have all inspections and other items in place (Florida Insurers need a wind mitigation, and possibly a four-point). However, most agents are brokers too which they can look at different underwriting policies to find the best rate for you.
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Special thank you to Crystal Brady for this blog idea and help. You are the best! 🎉