This is part 5 in my mini-series on home buying. If you’d like to start from the beginning, click here.
I’m excited to be moving into a new home if for no other reason than that I will never have to move ever again. Before we can get to the fun part of nesting, though, we have to finish a slog through paperwork and setting fire to piles of money. That’s what it feels like, at least.
As I’ve learned, once you find a house you like, a few things happen:
- You make an offer. Your realtor should work up a comparative analysis of other properties in the neighborhood to guide your offer. Now is a good time to question your decision and maybe even look at some of the competing properties!
- Your offer is accepted! 🙂 The first 10 days after mutual acceptance is the option period during which you’re allowed to back out. Get out your checkbook, because it’s time to pay people a bunch of money.
- Earnest money – This is good faith money and is normally 1-3% of the home’s value. You won’t get this back if you renege on the contract.
- Inspections – This includes a general inspection, drainage inspection, plumbing inspection, pest inspections, and any number of other things you that are oddly expensive. Kiss about a thousand dollars goodbye.
- Once you get the results of those inspections, it’s time to negotiate more.
- Our house flat-out failed the plumbing inspection, but our realtor negotiated new plumbing into the contract. We didn’t get everything, though; our place still needs drainage work and insulation in the attic (where there is literally none).
- As negotiations wrap up, you’ll need to get your mortgage lender and title company involved.
- You’ll go through another credit check and provide information for another analysis of assets and debts.
- The lender will require the house be appraised, and your financing could be pulled if the appraisal value is noticeably different from what you’re offering.
- A title company will check to ensure the property’s current title is legitimate, that the house doesn’t have any outstanding liens or taxes, and isn’t caught up in any legal disputes.
- Write some more checks.
- Proof of home insurance is required by your lender. If you live in hurricane states, you’ll pay some of the highest rates in the country at an average of $1,600 per year.
- Also a home buyer warranty, which covers repairs in your first year of ownership. That’s another few hundred bucks.
- You’ll receive what’s called a title commitment that lays out buyer notifications, which detail any easements and requirements that must be taken care of prior to closing. Corresponding title insurance typically costs 0.5-1% of the loan value.
- Finally, close on the house!
- Give the house one final walk-through to make sure negotiated repairs are repaired.
- Sign the agreement in between you and your lender, and the agreement between you and the seller.
- Pay the big bucks, including the down payment (hopefully 20%+ of purchase price) and closing costs (about 2-5% of purchase price).
- Get your keys and go run around your new house!
I’ve heard it said that a house isn’t a home until you’ve peed in it, and I fully plan to test this hypothesis.
But until then,
I’ll be right here.