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Detailed Timeline of the Homebuying Process
Dated: July 12 2023
Buying a home is an exciting and significant milestone in anyone’s life. However, the process can be complex and overwhelming, especially when it comes to purchasing a home. Closing is the final step in the homebuying journey, where all the necessary legal and financial transactions take place to transfer ownership from the seller to the buyer. In this blog post, we'll walk you through the typical timeline of closing on a home, helping you get a better idea of what you can expect along the way.
Pre- Approval (1 week)
In a nutshell, a mortgage pre-approval is written assurance from a lender or broker that you’re able to borrow money to purchase a home up to a certain amount. It’s based on the income, employment, and asset documentation you supply at the time of application, in conjunction with your credit history. Most agents (the good ones) will ask you to get pre-approval before they start working with you. It helps you know what you can afford and can increase your negotiating power.
Finding an Agent (1-2weeks)
Selling or purchasing a home is a big deal. Too many people don’t realize just how much can go wrong if they make the wrong hire. There are some very serious problems that can arise if you accidentally work with the wrong person to buy or sell a home. Here’s an article by our broker/owner about signs you need to find a new agent.
Setting up your search (3-5 days)
Working with your agent to decide where you want to look, the kind of home you’re looking for, your price range, must-haves, etc.
Touring Homes (1 week-4 months)
This really depends on what you’re looking for and the market. If you’re working with the right agent that can usually help you find the right place faster if it’s necessary for your current living situation. But again, there are a lot of factors that affect the duration of this step.
Offer & Negotiations (1-3 days)
While it might only be a few days this part can feel like an eternity. Once you find your dream home and make an offer, the seller can accept, reject, or negotiate the terms. If the seller accepts your offer, you both enter into a legally binding contract, which outlines the purchase price, contingencies, and closing date.
There might be times when you’re offer is not accepted if the market is tough. But, the right house for you is the house you will get.
Below is the timeline once your offer has been accepted. (30-45 days)
Initial Deposit and Escrow (Typically 3 days after the offer is accepted.)
After the offer is accepted, you'll typically be required to submit an earnest money deposit as a sign of good faith. This deposit is held in an escrow account until the closing, where it will be applied towards the down payment or closing costs.
Home Inspection and Appraisal (7 days)
Before proceeding, it's crucial to conduct a home inspection to identify any potential issues or repairs needed. Simultaneously, your lender will order an appraisal to ensure the property's value aligns with the loan amount. These steps help protect your interests and provide assurance regarding the property's condition and worth.
Loan Application and Underwriting
*Getting pre-approved helps move this process along faster and usually will clear to close within 30 Days
To secure financing, you'll need to complete a mortgage loan application and provide relevant documents to your lender, including income statements, bank statements, and employment history. The lender will evaluate your application, verify the information, and assess your creditworthiness. This process is known as underwriting.
Loan Approval and Clearing Contingencies:
Once the lender reviews your application and documentation, they will determine whether to approve your loan. If approved, they may issue a loan commitment letter, detailing any conditions or contingencies that must be met before closing. Common contingencies may include obtaining homeowner's insurance, finalizing the appraisal, or resolving any outstanding issues found during the inspection.
Closing Disclosure and Review:
Before closing, the lender will provide you with a Closing Disclosure, which outlines the final loan terms, estimated closing costs, and other financial details. It's essential to carefully review this document and ensure accuracy. You should compare it with the Loan Estimate you received earlier to identify any discrepancies.
Just before closing, it's customary to conduct a final walk-through of the property. This ensures that the home's condition remains unchanged, all agreed-upon repairs have been made, and any fixtures or appliances included in the sale are present.
On the agreed-upon closing date, you'll meet with the seller, their agent, and potentially a representative from the title company or attorney's office to finalize the transaction. During this meeting, you'll sign the necessary paperwork, including the mortgage note, deed, and other closing documents. You'll also pay the remaining closing costs, such as attorney fees, title insurance, and prepaid taxes or insurance premiums.
Recording and Funding:
After the closing documents are signed and notarized, they are typically sent to the county recorder's office to be officially recorded. Once recorded, the funds needed to complete the transaction are disbursed. This includes the loan amount from the lender, your down payment, and any other amounts owed.
Congratulations you are officially become a homeowner! The keys to your new home are handed over, and you can begin moving in and making the space your own.
Closing on a home can be very stressful, but here at NextHome we really strive to make it as fun and exciting as it should be. Understanding the timeline is crucial for a successful and smooth experience. Remember, every home purchase is unique, so it's essential to communicate closely with your real estate agent, lender, and other professionals involved to ensure a seamless closing process