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Did the seller accept your offer on a house? What happens next?

Congratulations on your impending purchase! Buying a home of your own -- especially for the first time -- comes with a great deal of excitement. However, you might find yourself scratching your head, trying to figure out all of the steps that must take place before the seller's hands over the keys to your new home. Understanding the process helps alleviate any anxiety or hesitation you might feel.

Steps prior to the closing

More than likely, you and the seller agreed on a closing date while you negotiated the selling price of the house. You need to know that this date remains tentative until the following steps occur:

  1. Even if your lender "pre-approved" you for a mortgage loan, now that you chose a house, you must obtain an approval for the loan from your lender. You will need to provide the mortgage lender with whatever information and paperwork they request. The more timely you respond to a request, the faster the lender can process the loan.
  2. Schedule and complete a home inspection as soon as possible. A home inspector examines the house for structural, electrical and plumbing issues. This differs from a home appraisal.
  3. The lender will request an appraisal of the home to ensure that you pay fair market value and to help determine the principal amount of the loan.
  4. An examination of the title for the property needs to be done to ensure that you receive a "clear" title. This means that no other party owns all or part of the property and that the seller may actually sell the property.

Any issues that come up during these steps could delay your closing. For example, if the home inspector finds anything wrong with the home, you will need to address it with the seller.

What kinds of fees will you pay?

In addition to your down payment, your lender might require you to have extra funds at your disposal. These "cash reserves" allow the lender to know that you can make your initial mortgage loan payments. You will also need funds for your closing costs. By law, your lender must provide you with a Good Faith Estimate of the closing costs within three days of receiving your loan application. Be prepared to pay more than the estimate says, however. These costs often exceed the initial estimate.

Prior to the closing date, you will receive a HUD-1 Settlement Statement from your lender. This form tells you the amount you must bring to closing. Bring a cashier's check for the closing costs, along with your checkbook for any last-minute costs.

What happens the day of the closing?

Finally, the day comes to close the deal. Most closings proceed in the following manner:

  1. Your lender provides a check for the amount you owe to the seller for the home.
  2. The seller executes a deed, transferring ownership of the home to you.
  3. The seller gives you the keys to your new home.
  4. The title agent handles the recording of the deed with the appropriate government authority.
  5. The seller's mortgage lender, if any, receives payment for the outstanding balance of the seller's mortgage loan and the remainder goes to the seller, if any.

Congratulations! You now own your first home. This process might seem intimidating and confusing. You might benefit from hiring a New York real estate attorney to assist you through the process. His or her advice and help could prove invaluable as you deal with completing all of the steps necessary to make the buying process as smooth as possible.

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