Once You Sign a Purchase Agreement: A Guide for Buyers

Congratulations! You have found the perfect property and have signed a purchase agreement. However, the process of buying a property is far from over. There are several steps that you need to take after signing a purchase agreement to ensure a smooth and successful closing.

Here’s what you need to do once you’ve signed a purchase agreement:

1. Deposit the Earnest Money

Most purchase agreements require buyers to deposit an earnest money deposit (EMD) within a certain period after signing the agreement. The EMD is usually a percentage of the purchase price and is meant to demonstrate the buyer’s commitment to the sale.

Once the EMD is deposited, it is held in an escrow account until closing. If the sale goes through, the EMD is applied towards the purchase price. If the sale falls through for any reason, the EMD is returned to the buyer.

2. Conduct a Home Inspection

A home inspection is a critical step in the buying process. It allows you to identify any potential issues with the property before closing. Once you sign a purchase agreement, you typically have a specified number of days to complete a home inspection.

If the inspection reveals any issues with the property, you can negotiate repairs or a reduction in the purchase price with the seller. If the inspection shows major issues, you may have the option to back out of the sale.

3. Secure Financing

Unless you are paying cash, you will need to secure financing for your purchase. After signing a purchase agreement, you will need to provide your lender with a copy of the agreement to begin the loan process.

Your lender will require an appraisal to ensure that the property’s value is in line with the purchase price. You will also need to provide documentation such as income statements and tax returns to show that you can afford the mortgage payments.

4. Obtain Title Insurance

Title insurance protects you and your lender against any issues with the title to the property. The title search ensures that the seller has the legal right to sell the property and that there are no outstanding liens or claims against it.

After signing a purchase agreement, you will need to obtain title insurance to protect your investment. Your lender will typically require you to obtain a lender’s title insurance policy, while you can purchase an owner’s title insurance policy to protect yourself.

5. Prepare for Closing

Once all the necessary steps are taken, it’s time to prepare for closing. You will need to review and sign several documents, including the settlement statement, loan documents, and title insurance.

You will also need to bring a cashier’s check for the remaining balance due on the purchase price, minus the EMD. The check will be made payable to the escrow account holder and covers closing costs such as attorney fees, title insurance fees, and taxes.

In conclusion, once you sign a purchase agreement, the process of buying a property is far from over. You will need to deposit the earnest money, conduct a home inspection, secure financing, obtain title insurance, and prepare for closing. By following these steps, you can ensure a smooth and successful closing and be on your way to enjoying your new home.