Congratulations! If you’ve made it this far, that means you’ve found a home you love and made a successful offer. What does it mean now that you’re under contract on a home? What are your next steps when you go under contract?
This article will walk you through the steps you should follow once you’re under contract on a home. Read on for tips from your friendly Northern Colorado real estate agent on how to close the sale.
It’s Not Over Until it’s Over
Once you’re under contract to buy a home, stay focused to ensure the final stages of the mortgage process go smoothly.
The sale isn’t yet final, even when you’re under contract. Your future home’s appraisal and your ability to lock in a reasonable mortgage rate can affect the outcome of your purchase.
Here’s what you need to keep in mind when you reach this stage:
Final Home Appraisal
Why do you need an appraisal now? Your lender has already approved you and your finances, but now they need to approve the home you’re about to buy. Your lender needs assurance that the home you’re buying will sell for at least the amount they’ll lend you.
The bank wants to make sure the loan is a sound investment. If the final appraisal is lower than the sales price, the loan might be declined.
A licensed appraiser’s report will usually include:
- Details on the property/home
- Comparisons to other similar properties
- An evaluation of the current local real estate market
- Statements on any issues that may hurt the property’s value
Don’t confuse an appraisal with a home inspection. Appraisers are not home inspectors, so don’t rely on them to determine if your home is in good condition. They don’t look for leaky roofs, test appliances, or other items on an inspection checklist.
Locking In Your Mortgage Rate
What exactly is a lock-in? A lock-in is a lender’s promise to hold a specific interest rate and a set number of points for you while processing your loan application. The lock-in period is typically 30 or 60 days. The lock-in will protect you from any rate increases while finalizing the loan. Watch out for lock-in fees. The fee may be unavoidable but check with your lender, so you know what to expect.
Additionally, ask your lender if they offer a “float down.” This policy ensures you get a lower rate for no charge if your interest rate lowers before settlement. It’s up to you to hold your lender accountable. Be your own advocate, and don’t be afraid to ask many questions. Get clarity on the following topics:
- Your interest rate outlook. Are interest rates expected to rise or dip in the coming days or weeks?
- The length of the lock-in period. Determine the duration of your lock-in period and ask your lender to estimate how long it will take to process your loan. The lock-in period should be long enough to allow for settlement and any other contingencies imposed by the lender.
Keep Tangible Records
Throughout the entire home-buying process, it’s crucial to keep tangible records so you’re prepared in the event of a dispute with your lender or any other complication. When dealing with your lender, make sure any agreement you reach is in written form. Verbal agreements don’t hold much water.
If possible, get blank copies of all lender’s forms before you apply for or finalize the loan. Show these forms to your Northern Colorado real estate agent. The right agent will have the professional experience to help you understand exactly what you’re signing up for. Your agent can help you negotiate with your lender to save money on fees and avoid extra charges.
There you have it— now you know what needs to happen after you go under contract. For many buyers, this is a nerve-wracking time. You’re really doing it! You’re buying a home.
Don’t worry. You should have no problem finalizing the sale if you follow these steps. Remember to pay close attention to detail, and don’t hesitate to ask your trusted agent for advice. That’s what we’re here for! As a Northern Colorado real estate agent with many years of experience, it would be my pleasure to help you dot the final i’s and make sure you cross the finish line.
I'm Lauren Haug! I'm a teacher-turned-real estate agent, and I teach people how to build wealth through real estate in Northern Colorado.
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