You've found the house of your dreams and your offer has been accepted. Now what? For a first-time buyer, purchasing a home may seem a bit intimidating. Don't get too stressed! Whether you're buying your home through a realtor, directly from the owner or via a discount brokerage, the basic process is the same. Keep in mind that many of these steps overlap and should be initiated early on in the process.
Negotiating Your Contract
Once your offer has been accepted, a purchase contract needs to be prepared and signed. Don't do this without your lawyer! The purchase contract essentially says that you will buy the home for the agreed upon price contingent upon various factors such as:
- The home passing inspections
- The sale of your existing home
- Obtaining your mortgage
The contract usually states that the buyer will deposit 10% (minus the initial good faith deposit) into the escrow account of the seller's attorney and establishes a deadline for the arrangement of financing. It also describes the furniture, appliances and fixtures that are included or excluded from the sale. The purchase contract is quite extensive and can take several days to negotiate.
Applying for Your Mortgage
Unless you're in the fortunate position of buying a home without a loan, your next step is applying for a mortgage. If your intended closing date is not too far off, you should start this step during your contract negotiations.
Once you've shopped around and found a good rate and reputable firm, your mortgage broker will guide you through this paperwork-intensive application. You'll have the option of locking-in the current interest rate and you may be asked to pay several fees related to the application and appraisal. Some of these fees are negotiable.
Make sure that the lender is aware of your intended closing date and feels certain that they can meet the deadline. Check in with them occassionally to be sure that your application process is on track.
Inspections, Inspections, Inspections
Arrange for the inspections as quickly as possible. This will allot time for related negotiations and repairs. You may be able to use one inspector for all of the inspections or you may need different inspectors for the home, septic system, well, termites, radon, etc...
You should be present for each inspection to learn about any problems that are found. The inspector will also offer valuable advice about maintaining your new home.
Homeowner's Insurance
Research insurance companies and policies carefully. Choose an insurance provider early on and start the application process. During the peak relocation season (spring and summer), the process can take a few weeks. Homeowner's insurance is required at closing.
Title Search & Insurance
Your lawyer should initiate a title search on your new home through a title company. The title search examines municipal records to determine if the home's title is clear for the ownership transfer. Title insurance ensures the home owner against mistakes in the title search.
The Survey
Depending upon your title company, an existing survey may be accepted. If changes have been made that affect the survey or the survey is too old, a new survey will need to be prepared. Changes that require a new survey typically include an addition, a different septic field or a new well. Your title company will let you know if you need a new survey.
Mortgage Approval
Your mortgage should be approved well before closing. Typically, a deadline for arranging financing is established in the purshase contract.
The Final Walk Through
Before closing, you will take a final walk through of your new home. This allows you to see the house after all of the furniture has been moved out and make sure that there are no underlying damages that could not be seen previously.
Closing
The closing requires many signatures and involves putting the title in your name, verifying homeowner's insurance, committing to the mortgage and receiving the keys to your new home.
At closing, you'll need several things including:
- Homeowner's Insurance Policy
- Settlement Statement
- Certified Funds
- Closing Cost Estimate
Ask your lawyer what to bring to closing well before the closing date.
First Published: Jun 06, 2006
