You’ve finally found the perfect home for you, made an offer on it and now it has been accepted! While you probably feel excited (and perhaps a bit relieved), the process isn’t quite finished.
Buying a home is a somewhat complicated process, and includes many steps. Use this step-by-step list to make sure you don’t overlook any of the tasks needed to complete the home buying process.
Provide your deposit
If you haven’t already done so, you will need to provide a deposit to accompany your offer to purchase. A deposit is a portion of your down payment that will go towards purchasing the home. The deposit is used to demonstrate to the seller that you’re committed to making the purchase. You can speak with your Realtor about how much of a deposit to provide. While deposit amounts vary, you can plan on making the deposit with a bank draft, cheque or wire transfer.
Fulfill purchase conditions
If your offer on a house included conditions, you’ll need to fulfill them. Common conditions include:
Once your offer on a house has been accepted, it’s important to let your Mortgage Broker know right away. Your Realtor can send the MLS listing along with the offer to the Mortgage Broker to get started your financing. This process of submitting to a lender, mortgage underwriting, and document review typically takes about two weeks. The financing condition protects the buyer, which essentially tells the seller that the purchase is conditional on you obtaining financing.
Selling your current property
If you are an existing homeowner and need the funds from the sale of that home to buy the new property, you should make your purchase offer contingent upon the sale of your current home. This typically includes a reasonable time frame to sell your home, such as 30 or 60 days.
Getting a home inspection
While home inspections aren’t mandatory, keep in mind that an inspection could help uncover construction and/or repair/replacement issues that could prove much more costly. Expect to pay in the range of $350-$500 for a home inspection by a qualified inspector.
Get the home appraised (if required)
An accredited home appraiser evaluates properties to calculate the current market value. Lenders require an appraisal before finalizing the mortgage to protect their loan and ensure a property is worth what a buyer is paying for it. On insured mortgages, the insurer pays for the appraisal and on uninsured mortgages, it is paid by the client.
Confirm your closing costs
There are many costs involved with buying a home. Once your offer is accepted, you don’t want to get caught short of funds, as this could result in difficulties closing the deal. That’s why it’s important to save 1.5% to 4% of the purchase price as part of your plan to buy a home.
Closing costs are the legal and administrative costs you will need to pay when your house closes. Closing costs include fees and charges such as legal costs, appraisal costs, home inspection costs, home and title insurance, property tax and interest adjustments and so on.
Tell your real estate lawyer
If you don’t already have a real estate lawyer, I’d be happy to recommend someone I trust. The lawyer will take care of various legal tasks associated with the purchase. Some of their responsibilities might include:
- Helping home buyers understand common mortgage terms and meanings
- Arranging title insurance and/or completing a title search
- Preparing and finalizing mortgage documents based on instructions from your lender
- Registering the title and mortgage documents with the appropriate government office
- Handling the transfer of funds for the purchase and sale
- Getting an estoppel certificate for condominium purchases
Give notice to your landlord if you’re renting
If you’re making the leap from a renter to a homeowner, remember to give notice to your landlord. You might even get the opportunity to receive some or all of your security deposit, and that can help cover the closing costs of your new home.
Plan your final walkthrough
You can negotiate how many additional visits you’re allowed to make before closing, but you should always plan for 2-3 visits, including a final walkthrough.
The visits give you a chance to bring a contractor in case you want to do any renovations before you move in to understand permits, cost, and timing requirements, and to plan how you’ll lay out the rooms in case you need to buy any furniture. The final walkthrough should be as close to the closing date as possible, as it’s a chance to make sure the house is in the same condition as when you submitted your offer, and to confirm the sellers have completed any work uncovered by the inspection.
Prepare for the closing date
Your offer will include your closing date, but be prepared for the date to shift. If your inspection uncovers any work that the sellers needs to take care of, or if your approval takes longer than expected to finalize, your closing date could get delayed. Pay close attention to the dates that any conditions must be met once your offer to purchase has been accepted so that you complete each task as required.
After you’ve completed these steps, there’s only one thing left to do: move in and make yourself at home. Congrats!
Tatum Neufeld, BComm
Mortgage Broker • Mortgage Tailors