For your protection, we recommend you have a professional help you through this difficult phase of the purchase. You may also wish to have an attorney review the contract before you sign it. Some states require that both the buyer(s) and the seller(s) have attorneys for a real estate transaction and some do not. Please discuss this with the Realtor.
STEP SIX - After you have selected the property you wish to purchase, we highly recommend that you have a home inspection done on the property. The contract should indicate how much time will be allowed to complete the inspection. Sometimes you are allowed to have the inspection completed before you sign a purchase contract while some will allow it as part of the contract. Again, your Realtor will guide you through the process. To find a Home Inspector in your area, please click here.
The home inspection will cost you, but a professional home inspector will point out any defects in the property and the applicable costs to remedy the problems found. The home inspector should put his findings in a written report. If your state requires an attorney to handle your contract you may wish to forward a copy of the report to the attorney. Your attorney may use the report as a basis for negotiating the purchase price with the seller’s attorney. If, on the other hand, you are not using an attorney then you will have to make your own decision regarding the purchase of the property, bearing in mind the contents of the home inspector’s report.
STEP SEVEN - Next, you will need mortgage financing (unless you are purchasing the property for cash). It is very important to shop around for financing because you will be making your mortgage payments for a very long time. There are several factors involved besides the interest rate. To give you an idea of how many mortgage types there are, take a look at the list here.
The Mortgage Broker or lender will require information and documentation to start the loan process. See the Mortgage Process for explanations on Application, Disclosures, Interest rate types (Fixed, Arm, Neg Am), Mortgage Insurance, Prepayment Penalties and even documents needed.
Then, the Mortgage Broker will order the Appraisal, Insurance, Title and numerous other documents. When all the appropriate documents are in place, they will submit it to the underwriter for approval. You will be informed periodically on the status of your application.
You will receive some initial documents from your lending institution, which you might be required to sign and return. (If you are using the services of an attorney, please refer all documents to him/her before signing).
When your lender approves your loan, your Mortgage Professional will contact you. Before the closing date is determined, and at least twenty four hours before closing, your mortgage broker or lender will discuss with you the settlement charges, the amount you need to bring in at closing, verify your interest rate, amount, terms, all indicated on the HUD-1 settlement form. Funds required for closing must be in the form of a bank draft or money order because personal checks will not be accepted. You will also be told where the closing will take place, the date, at what time and who should be present.
Be prepared to sign a number of documents. This will be another stressful day in the home buying process. You will look at the stack sitting there and wonder what you are getting yourself into. Most of the forms are standard and often you will see duplicate forms. The Closing Agent, the Realtor and the Mortgage Broker will walk you through the process and answer any questions you may have.
After closing, the keys will be handed to you and you are now a proud homeowner. You will also receive a copy of all that paperwork you just signed. Please keep these documents in a safe place because you may need them at a later date. Your original title policy will arrive a few weeks later. This should also be added to the closing documents.
We hope this information was helpful in understanding what happens when you purchase a home. Please continue to browse our site for other helpful hints.