You’re Under Contract

Congratulations, the seller accepted your offer. Being under contract does not mean you own the home just yet, and several important things still need to happen before closing.

Depending on your transaction, that may include:

• Delivering earnest money and the option fee
• Completing inspections
• Reviewing property documents
• Continuing the mortgage process
• Ordering an appraisal
• Completing underwriting
• Reviewing title documents
• Obtaining homeowners insurance
• Completing your final walkthrough
• Reviewing final closing documents

Home Inspection

A professional home inspection gives you more information about the condition of the property. An inspector may evaluate areas and systems such as the roof, foundation, plumbing, electrical, HVAC, appliances, windows and doors, attic and exterior.

An inspection report can look intimidating, because inspectors document many observations including relatively minor ones. A home does not simply pass or fail a general inspection. The report gives you information so you can make an informed decision.

Depending on your contract and circumstances, you may decide to accept the property as-is, negotiate certain items, or consider other options available to you.

Appraisal

If you are financing your purchase, your lender will typically order an appraisal. An appraisal is an independent professional opinion of the property’s value, based on the home itself, its characteristics, location and comparable properties. It helps the lender decide whether the value supports the amount being financed.

Financing & Underwriting

While you are under contract, your lender keeps reviewing your loan. That process is called underwriting. Do not be alarmed if you are asked for additional or updated documents, that is normal. Your lender may verify your income, employment, credit, bank accounts and assets, debts and source of funds.

Title & Title Insurance

Before closing, the title company researches the property’s ownership history, looking for issues that may affect ownership such as liens, unpaid taxes, ownership claims, easements and restrictions.

You may receive a document called a title commitment before closing. Title insurance protects against certain covered title problems, and there are generally two types:

• Lender’s title policy: protects the lender’s financial interest.
• Owner’s title policy: protects you against certain covered ownership and title problems.

Your title company can explain the specific coverage, exclusions and requirements for your transaction.