Key Takeaways
- A purchase agreement is legally binding — every contingency clause matters before you sign.
- The inspection period is your clearest opportunity to negotiate repairs or walk away with your deposit.
- Underwriting can reopen even after pre-approval, so avoid major financial changes during this window.
- Closing costs typically range from 2% to 5% of the loan amount and are due at the closing table.
- A final walk-through lets you confirm the home's condition before funds transfer.
Making Your Offer
Once you've found a home that fits your needs and budget, the next step is submitting a formal purchase offer. Before you reach this stage, you should already have a mortgage pre-approval letter in hand — sellers routinely require it. If you haven't verified your financial readiness yet, see our financial readiness checklist before proceeding.
Your offer is submitted on a standard purchase agreement form and typically includes:
- Offer price — what you're willing to pay
- Earnest money deposit — a good-faith sum (usually 1–3% of the purchase price) held in escrow
- Contingencies — conditions that must be met for the deal to proceed (inspection, financing, appraisal)
- Proposed closing date — typically 30–60 days from acceptance
- Inclusions and exclusions — appliances, fixtures, or other items explicitly part of the deal
The seller may accept, reject, or counter your offer. Negotiations are common and can involve price, closing date, or concessions. In a competitive market, responding quickly and clearly matters — see our guide on buying strategically in a competitive market for context.
Under Contract: What Happens Next
When both parties sign the purchase agreement, the home is officially "under contract" — sometimes called "pending." This triggers a series of parallel processes that must all complete before closing.
Key actions during this phase:
- Earnest money is deposited into an escrow account, typically held by a title company or escrow agent
- Your lender opens the loan file and will issue a Loan Estimate within three business days — a standardized document showing projected interest rate, monthly payment, and closing costs
- Title search begins — a title company examines public records to confirm the seller has clear ownership and no outstanding liens
Unfamiliar with terms like escrow, contingency, or title insurance? Our plain-language glossary of real estate terms defines each one in context.
Contingencies Protect Your Deposit
Contingency clauses in a purchase agreement set specific conditions under which you can exit the deal and recover your earnest money. Common contingencies include financing, inspection, and appraisal. If you waive a contingency to make your offer more competitive, understand that you may forfeit your deposit if that issue arises. Never waive a contingency without fully understanding the financial risk you're accepting.
The Home Inspection
A professional home inspection is one of the most consequential steps in the process. A licensed inspector evaluates the property's structural components, electrical systems, plumbing, HVAC, roof, and more — typically over two to three hours.
After the inspection, you generally have three options:
- Accept the home as-is
- Request that the seller make repairs or provide a credit toward closing costs
- Walk away and recover your earnest money deposit (if your contract includes an inspection contingency)
Attend the home inspection in person whenever possible — walking through with the inspector in real time gives you context that a written report alone rarely captures.
Inspectors explain severity, urgency, and maintenance implications on-site; buyers who attend often negotiate more effectively and enter ownership with fewer surprises.
Request the seller's disclosure statement before waiving any contingencies — it documents known defects and can be referenced legally if undisclosed issues surface later.
Seller disclosure laws vary by state, but the document creates a written record that can be critical if disputes arise after closing.
Specialized inspections — for pests, radon, mold, sewer lines, or foundation — may be warranted depending on the home's age, location, and condition. These are separate from a general inspection and carry additional fees.
Appraisal and Mortgage Underwriting
Your lender will order an independent appraisal to confirm the home's market value supports the loan amount. If the appraisal comes in below the agreed purchase price, you may need to renegotiate with the seller, make up the difference in cash, or — if your contract includes an appraisal contingency — exit the deal.
Simultaneously, your loan file moves into underwriting, where the lender verifies every piece of your financial documentation: income, assets, employment, credit, and debt-to-income ratio. Even buyers who were pre-approved can encounter issues at this stage if their financial picture changes. Avoid opening new credit accounts, making large purchases, changing jobs, or moving money between accounts during this period. Our article on mistakes that derail home purchases after pre-approval covers the specific moves that sink deals.
When underwriting is complete, you'll receive a Clear to Close — the lender's formal confirmation that your loan is approved and the transaction can proceed.
Closing Day: What to Expect
Closing is the final step — the moment ownership legally transfers from seller to buyer. In most states, both parties (or their representatives) sign documents at a title company or attorney's office, though some states allow remote online notarization.
Before the closing appointment, conduct a final walk-through of the property — typically within 24 hours of closing — to confirm the home's condition matches what you agreed to buy, agreed-upon repairs were completed, and seller belongings have been removed.
At the closing table, you'll sign a significant volume of documents, including the promissory note, deed of trust or mortgage, and closing disclosure. You'll also bring funds to close — your down payment and closing costs — via certified check or wire transfer. Closing costs commonly run 2–5% of the loan amount. Our detailed reference on what closing costs cover and who pays them breaks down typical line items.
Once all documents are signed and funds have been disbursed, the deed is recorded with the county — and the home is yours. For what comes next, explore our hub on ongoing homeownership responsibilities and strategies.
This article is for general informational and educational purposes only and does not constitute legal, financial, or real estate advice. Consult a licensed real estate professional, attorney, or financial adviser for guidance specific to your situation.