Off Market Group, LLC
Home Purchase and Closing Checklist
Accepted Offer conversion to a Purchase & Sale Agreement
- Purchase & Sale Agreement:
- Purpose: Once an offer is tentatively approved by both parties, a Purchase and Sale Agreement or “P&SA” is needed to define the details of the transaction.
- Source: Most states have a Standard State Form of the P&SA that real estate agents prefer to use, many of which are free to download in PDF format online.
Key Ingredients for a Successful Closing
- Home Mortgage Financing:
- Purpose: It is common for potential buyers to list a financing contingency stating that they can only purchase the home if they are able to secure mortgage financing that they can afford on a monthly basis. Unless you are paying All-Cash for the home, a mortgage will be required and a sale cannot be completed without the available funds necessary to close.
- Source: A common source of Mortgage Financing is from a Mortgage Lender (either online or local to you) or Mortgage Broker who compares rates from multiple Mortgage Lenders such as a banks or credit union.
- Home Appraisal:
- Purpose: A home appraisal is required as a contingency to the sale by most mortgage lenders prior to making a loan on a home. The appraisal utilizes various methods of valuation (replacement cost, sale comparable, and others) to ensure a home’s value is worthy of the mortgage loan amount.
- Source: For potential buyers using a mortgage lender, the lender will often select an appraiser from a pre-approved list or panel for you.
- Home Inspection:
- Purpose: Another typical contingency in a P&SA is making the purchase contingent on outcome of a Home Inspection. During a Home Inspection, an inspector will review and make note of all major systems (structural, heating and air conditioning, plumbing, appliances, and others) and aesthetic condition of the residence. The potential buyer can then elect to ask the homeowner to repair any defects identified during the inspection process prior to purchasing the home. The inspector may also arrange other 3rd parties to perform more specialized inspections, such as Termite or Sewer/Septic Inspections. If items are uncovered during inspection that both parties agree to remedy, a simple addendum to the P&SA can capture the list of repairs prior to closing or possible closing credits or reductions in the purchase price.
- Source: Home inspectors can be found in every market across the country. Potential buyers may use online reviews, referrals, or their own research to find a home inspector that is right for them.
Additional Pre-Closing Items often required by Mortgage Lenders
- Deed and Title Review:
- Purpose: A title examination or review will determine if there are any issues with the land upon which the home is located, ensuring the chain of ownership is correct, complete, has no liens, judgments, or lawsuits pending against it.
- Source: For potential buyers using a mortgage lender, the lender will often select an appraiser from a pre-approved list or panel.
- Home Buyers Survey:
- Purpose: As part of the lending process, most Mortgage companies also require a property survey to make sure the property is worthy of the loan amount. Potential Buyers can also use the survey to understand the full dimensions of their property for future improvements and simply to verify that their improvements are situated properly given the boundaries of the lot.
- Source: For potential buyers using a mortgage lender, feel free to ask the lender for recommendations prior to choosing a surveyor.
- Taxes and Insurance:
- Purpose: Most mortgage lenders will automatically deduct Property Tax and Homeowners Insurance amounts monthly from your mortgage bill and hold the funds in Escrow accounts to help make sure homeowners can pay these bills.
- Source: To estimate your Annual Property Taxes, potential buyers can often find online Property Tax Calculators on the County website where the new home is located. For Homeowners Insurance, it is often a good idea to compare coverage and pricing from a few of the Online, National, or Local insurance agencies to determine the right insurance provider for you.
Your Personal Guide to a Successful Closing
- Real Estate Attorney:
- Purpose: Choosing the right real estate attorney is another critical step toward successfully navigating a home closing process where large sums of money changes hands based on lengthy, binding legal contract.
- Source: For potential buyers using a mortgage lender, feel free to ask the lender for recommendations before choosing a closing attorney. Friends, Relatives, or local Real Estate Agents may also have recommendations or preferences.
Final Walk-Through and Closing
- Final Walk-Through:
- Before closing, potential buyers will want to do a final walk-through of the home to ensure that its current condition and potential repairs from the Home Inspection list are satisfactory.
- Closing Day:
- If you have done all your homework, the actual closing process should be simple and predictable, hopefully with no unexpected surprises!
- Please take the time to review the CFPB Closing Checklist for helpful tips and tricks well in advance of the actual Closing Date:
Congratulations on your new home!
Reference Materials provided by the Consumer Financial Protection Bureau (CFPB):
CFPB Buying a House Guide:
Other CFPB Reference Materials – Tools and Resources for Homebuyers:
Homebuyers Milestone Map:
- Mortgage Closing Checklist:
- Closing Disclosure Explainer:
- Mortgage Closing Scams: How to protect yourself and your closing funds: