You found the home and won the contract. Now what do you do?

1. Earnest Money Deposit- Most contracts require Earnest money or "due diligence" funds to be deposited fairly quickly within the contract acceptance < 1 week. This is essentially "putting your money where your mouth is." You are serious about purchasing the home you are willing to put money down to guarantee that you hold your end of the contract or you will lose money. The contract is binding booth ways, and the earnest money is usually binding to the seller as well. Meaning if they cancel the contract they would have to not only allow you to get your earnest money back, but also would typically pay you the amount you put down in earnest money in liquidated damages. This is general information and varies from state to state and depends on how you, your realtor, or attorney writes the contract. Regardless, this is a pretty standard part of a contract. Find out what it is called in your area and ask your representative to explain in detail how, why, and when you would lose this deposit on the contract in the case of default.

2. Submit Loan to underwriting- You were prequalified, now you will go through the full qualification process called underwriting. Usually within 48 hours of getting under contract you want your loan officer to start this process. They will send you a "Loan Estimate" that breaks down your costs. They must stick to these numbers within certain thresholds by federal law, so it is important you look over and review these numbers. If the loan officer has not already asked you for these documents, they will request the following, or more recent versions. The loan underwriter will take a look at these documents and most likely ask for additional documents and clarifying questions. This is 100% normal and should not cause any panic.

   • 2 months bank statements.​

   • 2 months paystubs (or a future employment contract if you have not started)

   • 2 years tax returns

   • Driver's License

   • Gift letters (if needed)

   • 2 months retirement account statements (can be used for reserves).

   • School transcripts, diplomas.

   • Who you want to use for your home insurance policy.

3. Lock in a rate- An interest rate does not have to be locked at the start of your loan, but usually it is done upon submitting your loan to underwriting. "locking in" an interest rate is guaranteeing you that rate even if the market rate goes up, or down. It is like paying a gas station owner to give you the gas price from a certain day all month long even as they change. You can lock in a rate up to 1 year, the longer your lock, the more expensive it is. This cost is usually not an up front cost, typically you only have to pay it if you close the loan and it is calculated into your closing costs. Traditionally most banks do a 30,60, or 90 day lock. Longer if doing a new build. If you lock expires, you have to pay extension and relock fees, if even available, or you have to relock at what the current market rate is. Most banks offer a 1 time "float down" rate option where if rates decrease after you lock, you can "float the rate down" will little to no cost.

4. Due diligence Deadline- Usually a buyer has about 2 weeks from contract acceptance to back out of a home and get their earnest deposits back AS LONG AS you or your realtor includes the "due diligence clause" in a contract. A home inspection needs to be completed BEFORE this date and you need to let them know if there is anything you want them to fix/renegotiate the purchase price down for. If you want to back out because of structural issues/zoning/”vibe” problems, you also need to do it before your due diligence clause is up.

5. Appraisal Ordered- Lender orders a third-party appraiser to evaluate the property. Typical turn times on receiving an appraisal is 10-14 calendar days from the date of order. Can usually pay a "rush" fee to get it back faster. Rush fees vary from $100-$1000 depending on lender and speed in which you need it back.

6. Conditional Approval- Lender takes a look at the initial underwriting package and sends out a letter stating if certain conditions are met- the loan will be approved. Usually need to provide letters of explanation or more documents to clarify some questions the underwriter has. Usually asks for clarifications on large deposits in bank accounts that are not typical, discrepancy in paystubs vs, salary, and tax return clarifications etc. Can take anywhere from 48 hours-10 days to get this back depending on the lender.

7. Financing and Appraisal deadlines - Usually 3 weeks from contract acceptance if your contract includes these clauses. If the appraisal comes in low, you will need to renegotiate. If the seller will not drop the price, and you do not wish to cover the gap out of your pocket, you will want to back out and get your earnest Money (if refundable) as long this is done before the appraisal deadline clause. If it comes in at or above appraised value, we move forward no questions asked, no negotiations needed. The seller does not have access to your appraisal unless you authorize your team to disclose that. So in the case the appraisal comes in above value and you get in with instant equity, the seller will not know that.

8. The financing part of this deadline is for your loan. If you "decide" you don't like the loan for whatever reason- any reason at all. Even if you 100% qualify for the loan but just don't feel right about it you can back out before the financing deadline and get your earnest money back (the part that is refundable if you have some non-refundable portions). This gives you the freedom to back out for any financing reason all the way until the financing deadline and get the refundable portion of your earnest money back.  It typically takes 30 days to get final loan approval. Most contracts only allow you about 3 weeks to back out because of the loan. Most of the time you don't have 100% "final approval" by the time you hit this deadline. We recommend you talk to your loan officer and see how far along your loan is in the process and how confident they feel in that it will close. If the answer is satisfactory- then you move forward depending on what the Loan officer says. Usually, 2-3 weeks into the loan you know with a 90% confidence if the loan will close or not because you have seen all the loan conditions and the appraisal at that point.

9. Closing Disclosure- This is a government required document tied to the loan estimate that gives you a final breakdown of all your loan costs and numbers. This has to be sent out 3 days prior to closing. NO EXCEPTIONS. So you need to make sure you sign this at least 3 days prior to closing or else you will not close on time.

10. Clear to close or Final loan approval- The underwriter has reviewed and approved all documents and has given the green light for you to qualify for the financing. It usually takes 48 hours to get all the final paperwork you will need to sign to the title company and closing arranged.

11. Final Home inspections- You can walk through the property one more time before closing to make sure everything is in order and no new damages have happened. Usually within 48 hours of closing

12. Closing- Typically a buyer goes to a title company and signs all their loan documents. If documents are signed before noon and all the monies are already at the title company, a home usually records the same. If papers are signed in the afternoon it usually does not happen until the next day. If signing to purchase a home while living in another state they will arrange a mobile notary to meet with you, sign the documents, and then overnight the paper to the title company to fund and record the next day. The home is not officially yours until the deed is recorded at the county. After recording is when you can pick up your keys unless your contract stipulates otherwise.

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If for some reason you need extensions on parts of your contract for more time. Your realtor will try to negotiate those for you as well.

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