subject: From Contract To Close: Tips For First Time Homebuyers [print this page] Are you thinking of purchasing an Austin home or Austin condo for the first time, but are unsure about how to proceed? Or are you a move-up buyer who hasn't purchased a home in many years? We've found that the majority of buyers, even if it isn't their first time purchasing a home, are often unsure about all the steps involved in the process of purchasing a home. The number of steps are the amount of paperwork, especially for buyers who are financing through a special program such as FHA, can be overwhelming.
This step-by-step guide from contract to close identifies all the steps of the process but keeps it simple: no lengthy write-ups filled with complicated jargon that's for real estate pros. We keep it simple and in down-to-earth language so it's easy to learn the process and approach the buying process with the confidence that comes with a working knowledge of what's in store.
Once you've found the right property (search Austin homes for sale here), the process of moving from contract to close consists of the 9 easy steps below:
Earnest Money - Once the buyer and seller have agreed on the offer ("acceptance"), the first step is to write a check made payable to the title company for the earnest money. At this time you'll also write a check directly to the seller for the option fee, usually $100. Only once this money has been received in addition to the accepted and signed purchase contract will the title company "receipt" the transaction, at which point the option period begins (the "clock starts ticking.")
Title Check - In the state of Texas, a title company serves as the escrow agent for the transaction, but more importantly handles all the details of the closing process, coordinating with your agent, lender, and other parties to the deal. Perhaps the most important function of the title company is to get a preliminary title report, which is used to confirm that the seller is the legal owner of record of the property and that there are no unpaid liens or other legal claims against the property. This could include unpaid debt to contractors, banks, or unpaid real estate taxes and special assessments.
Homeowner's Insurance - As the buyer, it's your responsibility to obtain sufficient homeowner's insurance coverage. In addition to being a smart financial decision to protect your investment, a certain amount of minimum coverage (usually the purchase price) is always required by your lender in order to secure financing. You'll have to provide proof of insurance in order to close - your insurance agent usually coordinates with the lender directly to ensure this is completed.
Disclosure and Inspection - The state of Texas requires that sellers provide a seller's disclosure that provides information about material facts, any property defects, lawsuits regarding claims to ownership of the property, etc. The buyer's responsibility it to obtain a professional inspection on the property that includes a general property report as to material defects, pest infestations, electrical or plumbing issues, or any other problems with the property. The inspection report serves two critical functions: it provides useful information that will help you to determine if you'd like to move forward and purchase the home, and it serves as a negotiation tool to work with the seller to agree upon solutions to problems before you're option period elapses. Your agent will assist you in negotiating with the seller to agree upon fixes or compensation for necessary repairs.
Appraisal of Property - An appraisal is required in order for your lender to provide your loan to purchase the property, and they will coordinate a professional appraisal of the property. The appraiser's report describes the physical characteristics of the property and the comparable property values that will be used to determine it's value. Once the inspector has performed a detailed inspection on the property they'll prepare a written report and determine the final dollar amount that the property is worth. As long as this amount is at least equal to least the loan amount, you're good to go.
Loan Approval - Once all of your lender's conditions have been satisfied and all of these steps have been completed, they will notify the title company that your loan request has been approved. The lender will then send your loan documents to the title company so that the documents can be signed at the closing appointment, which is often referred to as the "sign-off." The Third Party Financing Addendum is the document which protects you, the buyer, in cases where your loan isn't approved and you cannot obtain financing - talk to your agent about financing protection.
Closing Funds - Before your closing appointment (usually a day or so before), the title company will confirm with final amount of money due on the closing day. Your agent can assist you to insure you have the final number in advance of the closing date. The closing funds are in the form of a cashier's check payable directly to the title company. Certain transactions may also be funded using a wire transfer or electronic payment, direct payment from a financial institution by cashier's check, or another payment method - for more details specific to your financial scenario talk to your agent.
"Signoff" and Closing Appointment - It's finally time for closing! On the designated day you'll head over to the title company for your closing and signing appointment, which usually takes about an hour. This is when you'll sign all the necessary title and loan paperwork and provide your cashier's check for the amount due to close. Depending on the location of the seller and the type of transaction, they'll sign the paperwork at the title company on the same day, they will have already signed everything, or the documents will be mailed to them for signatures.
Final Steps - Once all the documents are signed and all monies are received, the transaction will be recorded by the county and you'll actually take possession of your new home. Your agent will help you to obtain the keys and any other required items from the seller, at which point the lockbox comes off, the signs come down, and you're ready to move in to your new home!
