What Happens After You Accept an Offer? A Clear Guide to the Forward Mortgage Closing Process

After you accept an offer on a home and choose a forward mortgage, several key steps follow before you officially own your new home. These include submitting your earnest money deposit, completing inspections and appraisals, navigating escrow, reviewing closing disclosures, and signing the final documents. Knowing what to expect helps you prepare and avoid surprises on your path to homeownership.

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1. Earnest Money Deposit and Contract Finalization

Once your offer is accepted, you’ll submit an earnest money deposit—this is a good-faith payment showing the seller you’re serious. In Los Angeles, this deposit typically ranges from 1% to 3% of the purchase price and is applied toward your closing costs. Note that after the seller accepts your offer, this deposit is generally non-refundable.

Alongside this, you finalize the purchase contract, which details the terms of the sale. This contract is legally binding and sets the timeline for the next steps.

Learn more about this step and earnest money details.

2. Home Inspection and Appraisal

Next, schedule a home inspection to identify any issues with the property. In Los Angeles, inspections often include checking for seismic retrofitting needs or termite damage, which are common local concerns. If problems arise, you can negotiate repairs or credits with the seller.

Simultaneously, your lender orders an appraisal to confirm the home’s market value matches the loan amount. If the appraisal comes in lower than expected, you may need to increase your down payment or renegotiate the price. Your loan officer will guide you through these options.

More on inspections and appraisals.

3. Escrow Process and Closing Disclosure Review

Escrow is a neutral third-party service that holds your funds, documents, and instructions while the sale completes. In California, escrow companies are commonly used to ensure all conditions are met before closing.

At least three business days before closing, you’ll receive a Closing Disclosure. This document outlines your final loan terms, closing costs, and the exact cash you need at closing. Review it carefully to confirm all fees and terms are accurate. Planning ahead for these costs helps avoid last-minute surprises.

For example, in Los Angeles, closing costs can range from 2% to 5% of the purchase price, including title insurance, escrow fees, and prepaid property taxes.

Step-by-step escrow guide and escrow basics.

4. Final Loan Approval and Closing Appointment

After all lender conditions are met—such as appraisal, inspections, and documentation—your loan receives final approval. You’ll then schedule your closing appointment.

At closing, also called settlement, you and all parties sign the necessary documents to finalize the mortgage and transfer ownership. In Los Angeles, closings are typically in-person at the escrow office, but some lenders may offer remote options.

This step officially completes your home purchase.

Closing explained and mortgage process overview.

5. Understanding Closing Costs and Builder Incentives

Closing costs cover fees like title insurance, lender fees, taxes, and prepaid items such as homeowners insurance. Your earnest money deposit will be credited toward these costs.

If buying a new home from a builder in the Los Angeles area, you might access builder incentives such as closing cost assistance, mortgage rate buydowns, or design center credits. For example, some builders offer $5,000–$15,000 in closing cost credits if you use their preferred lender. These incentives can reduce upfront expenses but may require specific conditions.

Evaluate builder incentives carefully to ensure they align with your financial goals.

Explore builder incentives.

6. Private Mortgage Insurance (PMI) Cancellation Rights

If your forward mortgage requires private mortgage insurance (PMI), you have rights under the Homeowners Protection Act (HPA) to cancel it once you reach certain equity levels. Typically, you can request PMI cancellation when your mortgage balance reaches 80% of the home’s original value.

In Los Angeles, where home values can fluctuate, it’s important to track your loan balance and home value to know when you qualify. Your lender or servicer will verify eligibility and process the cancellation, which can lower your monthly payments.

Learn about PMI cancellation under the HPA.