If you’re perusing the housing market for the first time, you may be wondering what to expect after you decide on a home. You won’t move in for another month or so after deciding to buy. You’ll need to draft an agreement with the seller, investigate any problems with the property, whether structural or legal, and give your lender time to do their research. A real estate agent will be indispensable in guiding you through this process, but you should know what you’re getting into.

The Initial Offer

The negotiation process comes first. The buyer makes an offer and the seller either accepts or makes a counteroffer. Keep in mind that no third parties are involved yet — the value of the home is determined by you and your agent, without an inspection or appraisal. The initial offer gets the ball rolling, and the price can be renegotiated if issues arise later on. However, you should look the home over inside and out and consider what other properties in the neighborhood have sold for. When you and the seller agree on a price, you’ll draft a contract stating the closing date, a moving date, and what’s included with the home.

Inspection

You’ll want to order an inspection soon after signing the final offer. An inspector will make sure the house is up to code and determine if any repairs need to be done. If any major issues are found, you can bring them to the seller, who may be willing to make the repairs before you move in or give you a credit to pay for the repairs yourself. Once the inspection is complete, you and the seller will finalize a purchase agreement.

Mortgage Application and Appraisal

Next, you’ll meet with a loan provider to complete a mortgage application. They will typically request information about your income and assets to determine your ability to pay back the loan. The lender will also want to do their own estimation of the home’s value in the form of an appraisal. Where the inspector checked to make sure the foundation, plumbing, and electrical work were in good condition, the appraiser will look at features of the home, consider the home’s location, and research the local multiple listing service’s data to make a professional valuation. You may be able to renegotiate if the appraiser determines that the home’s value is less than the amount you agreed to pay, but keep in mind that the appraised value can differ from the market value. A home’s market value is whatever a buyer is willing to pay for it, while the appraised value is based on data and the appraiser’s opinion.

Insurance

Your lender will want you to apply for homeowners insurance to protect their investment, and they may have requirements on the amount of coverage you need. Before you close on the home, you’ll need proof of insurance, so get a quote as soon as possible. The insurance company will make yet another valuation on the home, but this time to determine the cost of rebuilding the home if it, say, burned down or was destroyed in a tornado. If you have a car, check if your auto insurance company also insures homes — sometimes you can get a discount if you bundle the two together. Most homeowners insurance won’t cover flooding, though, so you may also want to check the FEMA Flood Map Service Center to see if the property is at risk.   The lender may also require title insurance, in which case you’ll need to order a title search. Less understood and a bit more reviled than homeowners insurance, title insurance covers the cost and fees of defending your ownership of a property, even if a legal issue is known when the house is sold. The title search will attempt to reveal these issues, looking at the property’s past owners and checking for unpaid taxes or unrecorded easements into neighboring lots. After conducting a search, the title company will issue a commitment to insure, presenting any issues that they found and alerting the buyer of any issues that the company isn’t willing to cover. As odd as it seems to buy insurance after the fact, title insurance can come in handy should the ownership of your home ever come into question.

Final Review

Once you’ve gotten your lender all the documents they’ve requested, they will review the appraisal of the home and your income and assets documentation. Once the loan clears, you’ll meet with the buyer and an attorney to settle on a final agreement for costs and credits. Finally, the house is yours.