Have you been pre-approved, made an offer on a home, and got it accepted? In this video, we’re going to talk about what happens after your offer is accepted on the home of your dreams. We’ll go through the process step-by-step so you know exactly what comes next.
When You’re Under Contract
First and foremost, being under contract can be a hectic process. You’ll want to make sure you’re working with a group of professionals that communicate well. Here’s a pro tip: make sure that your agent, lender, insurance agent, and all parties communicate weekly. That’s a huge key component in lowering stress for all parties. What we don’t want is playing the game of telephone, where one person talks to another person who talks to another person and by the end of the day, you’re all confused. So make sure your team is on the same page.
Second, there’s going to be earnest money involved. This is your good faith effort, your foot forward, letting the seller know how serious you are about the offer you made and the financing that you have. Be prepared to cut a check that the escrow agent will hold on to from day one to the last day of closing. The beauty of earnest money is that it’s used towards your down payment and closing costs.
After you’ve put down earnest money, your lender has a ton of work to do. I like to use the analogy that we’re like a duck with our feet frantically paddling underwater. On the surface, it seems calm, but there’s a lot that goes into that first week. I and my team or another lender are going to be working with the listing agent, the buyer’s agent, the title company, the escrow company, the appraiser, and the insurance agent to make sure that everybody’s on the same page and gathering documentation. Then we’re going to take everything that you did with your pre-approval, vetted income assets, credit, and loan application and refresh and update all of those items.
Documents, Appraisals, And Inspections
Something that typical consumers complain about is having to provide so many documents. The loan guidelines require the most up-to-date and most recent two months of income assets and credit documentation. So if you got pre-approved more than two months ago, we’re going to need those items again.
Once we gather all the updated and refreshed items, we’re going to package them and get them over to our processing team. Think of the processor as a second set of eyes. It’s like the paralegal to the attorney; they are there to make sure that every i is dotted and every t is crossed. They’re also going to assist with ordering all the third-party verifications, including employment, assets, and your tax return.
There’s so much that goes involved in that first week, and we’re also going to be ordering the appraisal. The appraiser isn’t going to go out the day we order the appraisal. What a lot of people will say is to hold off on the appraisal until we’re done with our inspection. We would suggest against that in a hot market because you’ll lose time as all of that’s going on.
You and your real estate agent are also working on the inspection. If you waive your inspection, you’re telling the seller that regardless of the condition of the home, we are moving forward and removing that contingency. If you haven’t talked with your agent about contingencies, such as which one to use and which one to remove, make sure you call your agent and have that conversation. If you do have an inspection, understand that the lender isn’t using your inspection report. That is a tool for you to understand what you may or may not need to do on your home after you close.
We use the appraisal to estimate the value that the lender can use and leverage for the mortgage. We go off of the appraised value, not the value that you made when you made your offer at the time of purchase in week two.
Underwriting And Final Approval
As all of the teams are frantically working on your documents, your loan is going to get sent to the underwriting team. The underwriter is a third party that works for the mortgage company. They ensure that what you say you have and who you say you are aligns with the guidelines and rules that the investor or agency put in place. The agency could be Fannie Mae or Freddie Mac for a conventional loan or the VA, FHA, or USDA. If you’re doing a non-conforming or a jumbo—which means that your loan is over the conforming limit for your county—your agent might be a specific investor.
The underwriter is going to compare the rules from the investor or the agency with your documentation and make sure that they align. If they don’t, the underwriter is going to reach out to our team, the processor, the loan partner, or myself to make sure that they can align and remove any complexities, concerns, or challenges. Once they’ve done that, you’re going to get your conditional loan approval.
In week three, we’re going to take the items from the conditional approval that may need to get updated or addressed. That’s why it’s a conditional approval; it’s conditional on certain items. We’re going to work to get your final approval, which means that everything is done, you’ve received all of your disclosures and signed them, and everything has been addressed. Your insurance and all your third-party items are vetted, verified, and included in the file. We have your appraisal back, and the value came in at what we needed or greater. And we’re going to get ready for scheduling and signing your loan documents.
Signing And Closing
Week four under contract is when you’re going to be signing your loan documents. At this point, our team has knocked it out of the park and the initial conditional approval is done. The final approvals are done, the appraisals in your interest rates are locked, and everything’s ready to go. Now we’re going to get ready for you to sign your loan documents.
The loan documents are going to be vetted by the escrow company. We take the documents and send them to the escrow company. They’ll verify that what they have on their end, including property taxes and fees, are what we show on our end. We’re going to consolidate and compare, making sure those numbers align. This will also ensure that any credits and any points you’re having included in your loan are noted. This includes any seller credits or any credits that you may have gotten from a third party, even a builder. Once all that’s done, escrow will schedule your signing.
Here’s another pro tip: they won’t schedule signing until that’s done. Once we get our final approval, we send our docs to escrow. You won’t get a call right away from your escrow company. Give them time to vet the documents; they know when you need to close. Believe me, the agents are hounding them to get to the finish line.
On the day of signing, you’ll go into our or the escrow agent’s office. Alternatively, a notary will come to you so you can sign your loan documents from the comfort of your home. Make sure you look at all the paperwork, keeping in mind that about 90% of it is generic boilerplate items that the government requires of all lenders. A lot of it is not specific to you but is specific to the loan program and the government requirements.
The day of signing is also the day where you want to have your cashier’s check, money order, or wire for the remaining downpayment and closing costs that you owe. This will complete the financing of your home. While you can certainly send that in after you sign, keep in mind that it has to be deposited and approved before you can fund your loan.
Getting The Home Of Your Dreams
I hope this helped you understand the step-by-step process of what happens after you make your offer and go under contract. If you have any questions, feel free to reach out to me and I’ll be happy to connect with you! You can also subscribe to my channel so you never miss an episode. Stay tuned to see what real estate tips and tricks we feature next!