From Agreement to closing- What happens after the agreement of purchase and sale is signed?
Ever wondered what happens after you sign the papers to buy a house? Buying a home is a big deal, and there are many steps to take before you get the keys. Let’s look at the process and break it all down into simple steps transitioning from accepted offer to the closing and move in day.
Step 1: Sign the Papers and Pay a Deposit
First, you and the seller will sign a contract called an “Agreement of Purchase and Sale.” This document spells out in writing everything about the purchase of the house including, the legal description of the property, the agreed upon purchase price, the deposit amount, any conditions that are part of the agreement such as conditions on financing, home inspection, status review if it is a condo. Essentially, this paper says you agree to buy the house and how much you’ll pay for it. It will also detail the closing date- or day on which you plan to move into or out of the home if you are the seller. After signing, you’ll give some money as a deposit. This amount will also be detailed and agreed upon within the purchase agreement.
The deposit shows the seller you’re serious and that you have the financial means to purchase- it demonstrates your “good faith”. The deposit is kept in a special account, such as a trust account until you officially buy the house.
Step 2: Get a Mortgage
Unless you can pay for the whole house in cash, you’ll need a loan called a mortgage. Ideally you will have already spoken to your banking or lending institution about this. You will need to provide details about your job, how much money you make, and any other debts you have. The lender will also review your credit history to assess your risk and they will also require proof of your down payment. This information will helps them decide if they can give you the loan.
Step 3: Check the House
Before you say “yes” for sure, you’ll want to check that the house is in good shape. This is known as a home inspection. You will hire a skilled home inspector to look for any problems. They will look at the homes, structural and mechanical components such as the heating, cooling, plumbing and electrical systems. Once you are satisfied with the home inspection, you will notify the seller. Any conditions that you have included within the Agreement will have to be dealt with to satisfy the buyer and then the buyer will notify the seller in writing that they are continuing with the purchase. Typically you will have 5 business days to complete, most conditions.
Step 4: Make Sure the House is Legally Okay to Buy
You will also hire a lawyer to “close the sale”. The lawyer will check that the person selling the house really owns it and that there are no legal issues, like unpaid taxes or judgments against the property and that the seller is able to transfer title and ownership to you the buyer free and clear. This is known as a title search.
Step 5: Sort Out the Money
Before you can get the keys, all the financial aspects- all the money stuff needs to be sorted. This means the bank gives the loan money, and you might have to pay some other fees- such as land transfer taxes. All this money goes to the right places so you can buy the house. You will meet with your lawyer to sign off on all the final paperwork, usually 2-3 days before closing.
Step 6: Walk Through the House One Last Time
Before you finish buying the house, you’ll walk through it one more time, provided a clause providing re-entry was agreed to within the offer and agreement of purchase and sale. This is your last chance to walk through the property and to ensure that everything is as you agreed. Check that nothing is broken or missing.
Step 7: Get the Keys!
Finally on the day of closing, the buyer lawyer will transfer the funds to the sellers lawyer and money will be exchanged for keys. This last step is the best one—you get the keys to your new home! Now the house is officially yours.
Quick Summary
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Sign papers and pay a deposit to show you’re serious.
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Talk to a bank to get a loan called a mortgage.
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Hire someone to check the house for problems.
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Make sure the house is legally okay to buy.
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Sort out all the money and fees.
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Walk through the house one last time to check everything.
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Get the keys to your new home!
Conclusion
Buying a house might seem complicated, but it doesn’t have to be. Buying a home is easier when you know what to expect. So if you’re thinking about buying a home in Ontario, you now have a roadmap to guide you., knowing what each step involves, you can now feel confident in the process.
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