10 Things Every Aspiring Homeowner Needs to Know: Making an Offer and Closing

We are covering the 10 Things Every Aspiring Homeowner Needs to Know. So far, we’ve discussed:

1. Whether you should really be buying, or if you should stick with renting
2. What your credit situation looks like to lenders
3. How much house you can afford
4. How to pick a realtor, or if you should do it yourself
5. How to pick a lender, and whether you need to get pre-qualified
6. How to pick the mortgage that is right for you

Next, we will cover everything about sealing the deal — how to make an offer, how to estimate closing costs, what you need to know about closing on a house, and if you should pay for movers.

What Goes Into an Offer?

The main things you need to decide when making an offer are^[1]:

• Purchase price
• Closing date
• Provisions for who will pay what closing costs
• Contingencies that would make the contract void, such as an unsatisfactory inspection or the financing falling through.
• Time limit for when the contract will expire

You will put down “earnest money,” which indicates that you are serious about the offer.

If you are working with a Realtor®, he or she should be able to draft a contract for you and submit it on your behalf to the seller or seller’s agent.

The seller will either accept the contract as-is, reject it completely, or — more likely — come back with a counter-offer. The counter-offer will also have a time limit, so if you are planning to put an offer on a house and leave to go on a European vacation, you might want to rethink those plans.

Once you and the seller have come to an agreement, you will want to get the home inspected and appraised.

If you find something unsettling about the house (like the foundation is crumbling or the roof needs to be replaced), you can go back to the seller and come to an agreement on how these new issues will be addressed.

If you’ve made it through the contract negotiations and the inspection and appraisal, and you have your financing all lined up, you can relax for a little while and start packing for your move.

How to Budget for Closing Costs

When you decided on a lender, you should have received a good faith estimate from the mortgage company, which includes a summary of the closing costs that you will incur. As a rule of thumb, closing costs for buyers usually run about  2 to 3% of the loan amount.

There are a few ways to handle closing costs:

• You have the money in the bank to pay them
• You negotiated that the seller is covering some of them
• You arranged beforehand that you are rolling the closing costs into the loan

For more information, check out First Time Homebuyer? Be Prepared for Closing Costs on Realtor.com.

What Happens at Closing

Closing is when you and the seller sign all of the paperwork needed to transfer the ownership of the house to you. Ask your Realtor® if he or she will be there. If not, will someone else from his or her office be available to answer any questions?

Here are a few things to bring to closing:

1. Your patience. The process of signing the paperwork can be somewhat tedious.
2. A copy of your contract to make sure everything is consistent.
3. A cashier’s check or instructions on how to transfer the down payment and closing costs that you agreed to pay out of pocket to the seller.

When the meeting is over, you should know when you’ll get the keys to your new house. You should have a stack of paperwork that includes your your final HUD-1 statement, your Truth-in-Lending statement (which outlines your mortgage terms), your mortgage note and your deed of trust.^[2] These are important documents, and you want to make sure you put them in a safe place.

Moving Day

You may be wondering whether you should tackle moving your stuff into your new house on your own or if you should pay for movers. There are a few questions you should ask yourself when making your decision:

1. Do you have friends or family willing to help you move the heavy stuff? Don’t just assume that they will; ask them beforehand.
2. Do you have nice furniture that you want handled by professionals?
3. Do you have money set aside to be able to pay professional movers?

If you decide to hire movers, ask around to see if anyone has a recommendation for a moving company that exceeded expectations. Make sure they are licensed and insured. For more information on selecting a mover, check out 12 Steps to Hiring a Mover from RealSimple.

Make sure to check out the other articles in 10 Things Every Aspiring Homeowner Needs to Know.