It has been a journey to get where you are…. getting a mortgage pre-approval to buy a home, opening houses every weekend, scouring the internet for a new home, possibly writing multiple offers and finally getting an accepted offer on a new home. But now what?
Getting your offer accepted is only half the battle. It is essential to keep up with the closing process during this time. An experienced agent will have your back and get you to closing on time and in a manner that is as smooth as possible. When going through the escrow process, time is of the essence.
After having an offer accepted on a home and going under agreement there are many steps along the way is an opportunity to delay your closing or in extreme cases kill the deal. Let’s look at the steps after an accepted offer that can be a stumbling block for some homebuyers.
What To Do After Getting An Offer Accepted On A Home
The first thing to remember is you have signed a legal and binding contract. Some dates must be adhered to and steps to be taken to get to the closing table.
If anything is missed, it could delay the closing or even cause the contract to be canceled and potentially risk your good faith deposit.
13 Steps To Get To Closing Day After An Accepted Offer
Keep Your Credit Status Quo
It is essential to keep your credit profile status quo. Do not pay anything off, do not open new lines of credit and do not do anything with your credit without talking to your loan officer.
Seemingly innocent actions like closing an unused credit card could impact your credit score significantly. Enough so that it might affect your credit score enough to deny your mortgage.
Wait until after you close to make any changes to your credit.
A Real-Life Scenario
Years ago, I had a buyer. The credit profile was strong. But the weekend before the client closed on their home, they opened a line of credit at a local furniture store with a high credit limit.
What most borrowers are not aware of is your credit is pulled again just prior to closing. The new line of credit threw off their credit profile.
It delayed the closing by a day. My client was confused. They had great credit and plenty of money. But the simple change threw the mortgage application back to the underwriter. All was good in the end, but it highlights the importance of not making any changes while in escrow to close on your new home.
Read Your Purchase Contract and UNDERSTAND It!
Take the time to read your contract and understand your obligations and important dates that you must meet. Many missteps are made by homebuyers that unfortunately delay their closing or cause them to lose their deposits, all because they didn’t take the time to understand their contract and in some cases even read it!
Everything you need to know about the sale of the home you are about to purchase is spelled out in your contract. Pay close attention to your real estate contract’s contingencies and associated dates.
But even past contingency dates, your contract will spell out how the home is to be delivered, how a sellers and buyer are to be notified, how the title needs to be recorded and much more.
The Massachusetts Purchase Contract
Massachusetts is a two-contract state. The first is your Contract to Purchase. It is your “offer” yet it is still legal and binding. In your Contract to Purchase, you agree to sign a more in-depth document called the Purchase and Sale. The purchase contract can run from 5 to 20+ pages, depending on the complexity.
The contracts spell out everything you need to know about purchasing your new home. It is critical to understand it.
Escrow Deposits
If you haven’t already, one of the first things you need to do is ensure your earnest money deposit gets where it needs to go. Most contracts have a provision where the buyer puts an earnest deposit in escrow. The contract is not binding until the escrow agent receives the deposit.
In some states, the escrow money is tendered with the offer. However, in many states, the selling agent delivers the check after the home seller accepts the offer.
Make sure your deposit gets to where it needs to be; don’t let your deposit money be a reason your deal is canceled.
Notify Your Lender
Immediately notify your lender that you have an accepted offer on a home. Your loan officer will get the application for your loan squared away and let you know what documents will be needed for the underwriting of your home loan.
The lending process is going to be constant from the time the offer is accepted until you close on your new house.
Be proactive and fill every request from the lender quickly. If your lender is not in constant contact with you, take the lead and contact your lender every few days.
Obtaining your mortgage is going to be the most significant step once you have an accepted offer.
Advice From A Professional
With 21 years of experience, Luke Skar of Madison Mortgage Guys says:
Staying proactive with your mortgage during the escrow period is crucial for ensuring a smooth transaction. One prime reason is to prevent any unexpected hurdles that may arise, potentially jeopardizing the deal.For instance, I recall a recent scenario where a buyer became complacent after their offer was accepted. They assumed their mortgage approval was a done deal and didn't actively engage with their lender during escrow. However, due to changes in their financial situation, the lender required additional documentation, causing delays and almost derailing the entire transaction. By staying proactive and regularly communicating with their lender, the buyer could have addressed these issues early on, saving time, stress, and possibly the deal itself. This underscores the importance of staying ahead of the game when it comes to your mortgage during the escrow process.
Home Inspection
You have a short period to conduct any home inspections. Schedule a home inspection as soon as you get an accepted offer on a home.
Typically, you will have a 5-10 day period for a home inspection. Do it as soon as possible, giving you time to do any due diligence after the home inspection.
One your inspection is done, take the time to carefully read your home inspection report, ask any questions of the inspector and the home seller and call any professionals if there are areas of concern.
If you have any issues with the home inspection, you may be able to negotiate a resolve with the seller or if it is a massive cause for concern totally back out of your contract. But do so promptly, as spelled out in the home inspection contingency in your purchase contract.
The Appraisal
Once you have completed all home inspections, let your lender know that the appraisal can be ordered.
The appraisal is an important step in the lending process and it takes time. It confirms the home is worth at least what the bank is lending for the home. Many lenders will require you to pay upfront for the appraisal. Pay the appraisal fee immediately.
You want to get the appraisal cleared and confirm the house appraises for the purchase price before the mortgage commitment is due. Do not release mortgage commitment if the appraisal process is not complete by the mortgage commitment date.
Insurance
Your lender is going to require you to have insurance on your home before they lend you the money. In your lender’s eyes, worse than you not paying your mortgage, is the house being destroyed by a fire or other catastrophic event with no insurance coverage.
Don’t wait until the last minute to get insurance coverage. Get several quotes and compare prices and policies to get the best deal you can.
Make sure your insurance coverage coincides with the day you take possession of the property
Title Search
The closing attorney will perform a title search to make sure the seller can deliver a clean title. But it should be done early in the process to discover any title issues, have them cleared up before closing.
While this piece of a closing is done behind the scenes, you should stay on top of it to avoid any last minute issues. Most title issues are minor, but they do take time to fix.
The most common issue is a previous mortgage has not been properly discharged. While not a big deal, it needs to be taken care of before you can close on your mortgage. And, that usually does not happen overnight.
Switch Utilities And Notify
About two weeks before moving, call the utility providers to make sure you have accounts opened and the utilities will be on for your arrival. It costs you nothing to switch account names, but if you forget and the utilities get shut off, it will cost you money to turn the utilities on.
This is also a good time to do an address change with the Post Office to make sure your important mail gets where it needs to go. Take the time to notify anyone who sends you important mail…. service providers, doctors, credit card statements, banking and investment statements, etc…
Switching utilities and taking the time to notify people of an address change won’t delay your closing, but it is an important step in the closing process.
Mortgage Commitment
Most purchase contracts has a mortgage contingency allowing for a buyer to receive mortgage commitment by a certain date. If mortgage commitment is not obtained by that date, then the buyer can void the contract with no recourse to them.
Your mortgage commitment is a formal letter from the bank committing to lend you money under certain conditions, for some time.
Often the conditions are boilerplate like re-pulling your credit report and verifying employment on or one day before you close on your loan. Other conditions may be more serious, like the bank still trying to source down payment money, and should be discussed with your attorney before releasing mortgage commitment.
Once you say you are all set on your mortgage, you are fully committed to close and if you should default all your deposit money is at risk.
Closing Disclosure
The closing disclosure or CD is one of the most time-sensitive documents during the process. Your final CD must be signed 3 days before closing. The Federal three-day rule allows plenty of time to review the closing disclosure and discuss any discrepancies from the initial CD.
The closing disclosure spells out the terms of the loan as well as all the accounting of your escrow money deposit and your closing costs. Make sure you review and sign the same day you receive it.
Final Walkthrough
Don’t skip your final walkthrough. It may have been several weeks to a few months since you last saw the home. You want to take the time to make sure that everything is in working order and the house is being delivered in the manner you last expected and as your contract spells out (in case you agreed to the seller doing repairs or leaving something behind).
Once you close on your home, most contracts state that the home is being delivered as-is. You will not have any recourse after you close.
Schedule your walkthrough, preferably after the home has been vacated but also give enough time to rectify any issues if possible. Unfortunately, some buyers are still moving up to minutes before you close. If that is the case, delay the closing if possible to give time for you to properly view the home.
Closing Day
At this point, everything should be all set. You should know how much money you need to bring as well as have time to do a final walkthrough and review your final closing disclosure.
Make sure you have identification with you as well as a bank check with any money you have to bring for the transaction. The lender’s attorney will not accept a bank check for any monies that need to be brought to the closing.
Schedule your closing early in the day to give time for any last-minute hiccups. In many states, you do not own the house until the deed is recorded at the registry of deeds. Electronic filing with the registry of deeds has certainly sped up the recording process, but there is a filing deadline in the late afternoon.
FAQs About An Accepted Offer
What's the first step after my offer on a home is accepted?
What is a home appraisal, and why do I need one?
What happens if the home appraises for less than the offer?
How important is the home inspection, and when should it be done?
What happens during the closing process?
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Wrapping Up What You Need to Know About An Accepted Offer In Real Estate
Pay attention to the closing steps to avoid any closing delays along the way. The escrow period between the time you have an offer accepted on a home and closing can be hectic. Usually, you have 30 to 45 days to close and the pace can be fast.
While these steps may leave your head spinning, working with a competent Massachusetts Realtor or one in any state, will leave you in good hands. A REALTOR, acting in your best interest, will know the steps you need to take and will outline what you need to do.
Be proactive and work with your local REALTOR to get to closing on time.
Author Bio
Kevin Vitali is a Massachusetts REALTOR out of Haverhill MA that serves Essex County and Northern Middlesex County in Massachusetts. If you want to buy or sell a home, let me use my years of experience to get you the best possible outcome.
Feel free to contact me to discuss any upcoming moves. I am always happy to answer your questions
Call 978-360-0422 Email kevin@kevinvitali.com
