Woo-hoo! After months of searching for your first home, you found one you love, made an offer — and it got accepted.
But, before you break out the bubbly and start thinking about paint colors, you have TONS of work to do. So brace yourself: you’re about to run a marathon.
5 steps to take after your home offer is accepted
From getting your financing in place to buying homeowners insurance, the list of things to take care of is a mile long. And while every step is important, these 5 things shouldn’t be overlooked.
Negotiate your loan
If you haven’t gotten a preapproval from a lender, start shopping for a mortgage stat. If you’re preapproved, great! Some of your work is already done.
In either case, be prepared to furnish all of your financial records — like bank statements, proof of income, and gift letters — and whatever else they may ask from you.
While you’re getting your financing in place, negotiate your loan and lock in the best interest rate you can.
After your offer for a home is accepted, you can still search for a better rate from other lenders even if you’ve been preapproved. (Tweet this.)
If you do get a better rate, ask your lender to match or switch. In my case, I had a preapproval from a national lender and was given a 4.25 percent interest rate. But my realtor recommended a local lender, who ultimately offered me a much better deal.
The lesson? Shop around and negotiate before you lock in your loan. It’s about as fun as going to the dentist, but it could save you tons of money in the long run.
Get a home inspection
Just as you wouldn’t judge a book by its cover, you shouldn’t judge a home by its staging.
A professional inspection can peel away the veneer of carefully placed furniture and floral arrangements to reveal the home’s true condition.
You’ll find out the condition of major appliances (oven, furnace, washer/dryer, and water heater), the electrical system, plumbing, roof, ventilation, foundation, and much more. If there are major problems, this is your chance to negotiate with the seller on price and repairs or back out of the deal.
Open an escrow account
A written offer is one thing. But, to show the seller you’re serious, you’ll need to deposit a sizable amount (aka earnest money deposit) in an escrow account.
The escrow account will hold the funds until your loan closes. At that time, your earnest money deposit can be applied to the down payment. Once the home is yours, you can use the escrow account to pay for property taxes and homeowners insurance.
Buy homeowners insurance
You may not have the keys to your new home yet, but your lender will require proof of homeowners coverage before closing your loan.
It’s smart to shop around and get a few quotes. (Hey, Esurance can help.)
As a general rule of thumb, you want to get enough insurance to cover the cost of rebuilding your home (this includes labor, debris removal, and the cost of materials), protect your liability, and cover your stuff.
If you’re buying a condo, you’ll still need insurance. Though your HOA will cover the exterior, you’ll be responsible for everything within your 4 walls.
Read everything carefully
Once your offer is accepted and your loan is in process, you’ll get enough documents to fill a small library. Before you sign on the dotted line, make sure you read and understand everything. Pay particular attention to:
- The seller’s disclosures — This details the characteristics of the home along with any problem the seller is aware of (if someone died on the property within the last 3 years, for example).
- The HOA disclosures (if you’re buying a condo) — Review the meeting minutes, the financial report, and the rules and regulations to get an idea of the community you’re moving into and the association that manages it.
- The good faith estimate — Here’s where you’ll get a solid sense of how much money you’ll need to close, the associated costs (like lender fees, appraisal report, title insurance, etc.), and your interest rate.
Don’t be afraid to ask questions as they come up. When I reviewed my good faith estimate, for instance, I noticed some charges that should have been waived. I asked about it and ended up saving a few thousand dollars. In short, reading the fine print can pay off.
Closing the loan
A lot happens between the time your offer is accepted and when you actually get the keys to your first home. But if you stay on the ball and work with an experienced team, your loan should close without a hitch. And once you sign on the dotted line for the final time, you’ll be a homeowner. Congrats!
Esurance homeowners insurance is available in AZ, CO, MO, OR, and WI. In other states, we provide insurance through our partner.
First-time homebuyer’s guide: shopping for mortgage rates
First-time homebuyer’s guide: coming up with a down payment
5 surprising things covered by homeowners insurance
How much homeowners insurance you really need