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What Home Buyers Should Know
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What Home Buyers Should Know
Once you have decided that you would like to purchase a home, you will set in motion a series of activities, events, and procedures that will lead to putting the keys to your new home in the palm of your hand. Experienced professionals are available to assist and guide you along the way.
Step 1: Getting Started.
A great way to start is by locating a REALTOR®, a trained and experienced professional whose knowledge of the market, the process of locating the right property, the structuring of a fair and workable contract, the requirements of state and local laws, and the process of obtaining a mortgage loan can be of great value to you, the consumer. Family, friends, your banker, or your attorney may be able to direct you to a REALTOR® whose skills and abilities are familiar to them.
Step 2: Initial Interview.
Try not to rush into looking at properties right away. The first appointment with the REALTOR® should be spent discussing your options with regard to agency (see Agency Choices in Vermont and Customer or Client?), determining what you would like and need in a new home, and summarizing your financial status to determine what you can comfortably qualify to purchase. This step is often referred to as qualifying the buyer or a buyer consultation. The REALTOR® may also use this time to review the buying process with the purchaser and to familiarize the purchaser with the forms that are generally encountered during the purchasing process.
Step 3: Looking at Properties That Fit Your Needs.
The REALTOR® will assist you in finding, selecting, and then visiting properties that may be just right for you. It's a good idea to visit just a few at any one time, if possible. You may want to jot down a few notes about the advantages and disadvantages of each property you visit.
Step 4: Preparing an Offer and Negotiating a Workable Contract for Purchase and Sale.
Once you've found a property that you would like to purchase, the REALTOR® will assist you in constructing an offer to purchase and in presenting it to the sellers. Usually, through the process of offer and counteroffer, an agreement for purchase and sale will be reached within a couple of days. Be sure that you can live with the offer that you have made and that it includes all of the items or areas that you want to address. You will probably include clauses or contingencies relating to inspections of the property, the obtaining of financing, and other specific conditions of sale. Remember that the terms of an agreement can be just as important as the price that is offered. Remember too, that you are signing or executing a legally binding agreement. If you feel uncomfortable with or don't completely understand the terms of your offer, your attorney can be enlisted to review it and explain your legal obligations and liabilities before you sign. Once the agreement has been signed by the purchaser and by the seller, it can only be changed by mutually acceptable written agreement. Both parties begin to make plans based on the agreement. Those plans may be difficult to change as time goes on and changing the agreement then may be difficult.
Step 5: Inspections.
If you elected to have a property inspection performed as part of your agreement (and you usually will), it will likely be done within a few days of execution of the agreement. Be sure to comply with the time limits set forth in the agreement.
Step 6: Application for Mortgage Financing.
If you need mortgage financing, you will also be expected to submit a complete application to a lender within a few days of reaching agreement. The lender will request a credit report and verifications of your employment, income, debts, and assets. The lender will also assign an appraiser to appraise the value of the property. The purchaser will be charged a fee at the time of application to cover processing costs and the appraisal.
Most purchasers will obtain a letter of 'pre-qualification' from a lender or even a mortgage loan approval before beginning their search for a home. This can be a great advantage to a purchaser in negotiating an agreement with a seller because it tells the seller that the purchaser has a high probability of completing the purchase.
Step 7: Underwriting.
Once the application package is complete, it will be sent to the mortgage insurance underwriter(s) and to the mortgage loan underwriter(s). Both must approve the package before the lender can issue a commitment letter in which the lender pledges to make the loan if the purchaser can close the transaction within a specified number of days. It is not unusual for underwriters to send the package back to the lender with a request for more information. Once the package has received the necessary approvals, the process is close to complete.
Step 8: Title Search and Certification.
Traditionally, attorneys for purchasers have waited until after the mortgage application has been approved before beginning a search through the land records to be sure there are no claims to the property other than the sellers. Today, with courts raising the standards for title searches, it is often advisable for the purchaser to have the attorney begin the title search earlier in the process. In that way, should problems with title arise, they can be solved without undue delay. Once the attorney is satisfied that title is clear, she or he will issue a certificate to that effect, and a title insurance policy will be issued to protect the lender against possible loss or claims against title. The purchaser may obtain title insurance coverage, as well, and should discuss that with the attorney.
Step 9: Closing.
Once title has been certified, the parties can proceed quickly to closing. All that is necessary is to allow the lender a few days to prepare the settlement documents and to schedule a time when everyone can meet, usually at the offices of the lender, to sign and exchange the necessary documents and to transfer funds, thereby conveying ownership (title and possession) from seller to purchaser. The purchasers attorney will see that the deed is recorded in the land records so that all persons will be legally 'notified' of the change of ownership. |
