1 – Go into escrow/under contract and open an escrow account

Once you and the seller have signed a mutually acceptable purchase agreement, your agent will collect your earnest money check and deposit it in an escrow account at the escrow company specified in the purchase agreement.

The escrow company acts as a neutral third party to collect the required funds and documents involved in the closing process, from the initial earnest money deposit to the loan documents to the signed deed. In some areas, attorneys may handle this process instead of an escrow company and it may be called "settlement" rather than "escrow".

2 – Await the bank's appraisal

The bank providing the mortgage will do its own appraisal of the property (which the buyer usually pays for) to protect its financial interests in case it needs to foreclose on the property.  If the appraisal comes in lower than the offered price, the lender will not give you financing unless:

1. You are willing to come up with cash for the difference.
2. The seller agrees to lower the price to the appraised value amount.

Other option would be: 

The real estate agent(s) involved in the transaction may be able to provide additional comparable properties information (for properties that may not have been used in the appraisal report) to the appraisal management company (AMC) for the appraiser to review and see if the price could possibly be adjusted based on the new information. 

If none of these options are possible, you will be able to cancel the purchase contract.

3 – Secure financing 

You should have already been preapproved for a mortgage at the time your purchase agreement was accepted. Once you give your lender the property address, it will prepare a Loan Estimate , or a statement detailing your loan amount, interest rate, closing costs and other costs associated with the purchase.

4 – Approve the seller's disclosures

During this step, the seller and agent will provide you with various disclosures for your review and approval.  Some disclosures will have items that describe issues with the property that have already been identified by the seller or the seller's agent. (Sellers are required to disclose all material fact known to them about the home).

Some of the most important disclosures are:

• Real Estate Transfer Disclosure Statement [TDS]
• Seller Property Questionnaire [SPQ]
• Solar Advisory and Questionnaire [SOLAR]

5 – Obtain the necessary inspections

Home Inspection: You aren't required to obtain a home inspection when you purchase a home, but it's in your best interest to do so. For a few hundred dollars, a professional home inspector will tell you if there are any dangerous or costly defects in the home. If there are, you'll want to know about them so you can back out of the purchase, ask the seller to fix them, or ask the seller to lower the price so you can handle the repairs yourself.

NOTE: You cannot negotiate any seller concessions here if the contract says you will purchase the property "as is".

If the inspection process concludes satisfactorily, you will then need to remove the inspection contingency in writing. (You'll repeat this step after any other inspections.)

Pest Inspection: If the lender does not require a pest inspection, you may still want to get one to ensure that the house does not have termites, carpenter ants, or other pests such as roaches or rats. These problems may not be apparent during the daytime hours when you've most likely viewed the house, and would be a terribly unwelcome discovery after you move in. If there are any pest problems, they will need to be rectified before the sale can proceed (assuming that you want to continue with the purchase). This is another area where you may want to renegotiate with the seller to pay for the work.

Environmental Inspection: It is sometimes recommended to get an environmental inspection to check for toxins in the home such as mold and asbestos. There can also be problems on the home site, like contamination from a location near a landfill, former oil field, dry cleaner, gas station or other environmentally hazardous business. Any problems uncovered in this area can mean serious health hazards and may be prohibitively expensive to fix.

Other Inspections: Areas subject to earthquakes may require a soils report and/or a geologic report to assess the risk of serious damage to the property in the event of such a disaster. Many areas require flood reports. If the home is too likely to flood, you won't be able to get homeowners insurance, which means you can't get a mortgage. In some cases, purchasing flood insurance in addition to your homeowner's insurance will solve this problem. In rural areas, a land survey should be done to verify the boundaries of the property (in urban areas, the boundaries tend to already be very clear).

6 – Obtain hazard insurance 

This includes Homeowners Insurance and any extra coverage required in your geographic area (such as flood insurance). You will be required to have Homeowners Insurance until your mortgage is paid off. Choose your own insurance company, which may be different than the one the lender selects, and shop around to get the best rate.

7 – Acquire the title report and title insurance

These are also required by your lender. 

The title report ensures that the title to the property is clear – that is, that there are no liens on the property and that no one else but the seller has a claim to any part of it.

Title insurance protects you (and the lender) from any legal challenges that could arise later if something didn't show up during the title search. If there is anything wrong with the title (known as a cloud or defect), the seller will need to fix it so the sale can proceed or let you walk away. Depending on where you live, the escrow company and the title company may be one and the same.

8 – Do a final walk-through

It is advisable to re-inspect the property just before closing to ensure that no new damage has occurred and that the seller has left you items specified in the purchase agreement, such as appliances or fixtures, and that the property is generally in the same condition as when you first viewed it.

At this point in the process, you probably will not be able to back out unless the home has sustained serious damage. 

9 – Review the Closing Disclosure

At least one day before closing, you will receive a Closing Disclosure, or the final statement of loan terms and closing costs. Compare it to the Loan Estimate that you had received and signed at the beginning of your loan process. The two documents should be very similar. Look for unnecessary, unexpected or excessive fees as well as outright mistakes.

10 – Close escrow

The closing process varies somewhat by state, but you will need to sign many documents, which you should take your time with and read carefully. The seller will have documents to sign as well. After all the documents are signed, the escrow officer will prepare a new deed naming you as the property's owner and send it to the County Recorder’s Office for recording. You will submit a "bank certified check" or arrange a wire transfer to pay for your down payment and closing costs, and your lender will wire your loan funds to escrow so the seller and, if applicable, the seller's lender, can be paid.

If you make it this far, you will finally get to take possession of the home!