If you are in the market to purchase a home and have prequalified or been preapproved, then you know just what you can afford to buy. If you are working with a realtor, now would be a great time to let him/her know that financing is in place and you are ready to shop for a home.
There are several steps/inspections to be completed during the purchase of a home. If you are using a realtor, he/she may schedule these inspections, etc. for you. If not, you may be required to handle this scheduling yourself:
- Making an offer on the home of your choice: Your realtor will help compose the offer.
- Scheduling a Home Inspection: Upon the sellers’ acceptance of your offer, you may want to have a home inspection performed by a licensed inspector. This very detailed report is optional, but will list any repairs needed or evident flaws. You as the buyer(s) will choose the inspection company and be responsible for payment of this inspection.
- Ordering an Appraisal: An independent report (appraisal) that will determine the value of the home that you are purchasing. In the event the home does not appraise for at least the price you are offering the seller, you have the option to renegotiate the purchase price with the seller(s) of the dwelling.
- Choosing an Insurance provider: You choose which company from whom you will obtain your homeowner’s insurance. Your Mortgage Loan Officer will advise you of the minimum amount of home coverage required by the lender. Should the property be located in a flood hazard area, you will be required to carry flood insurance.
- Scheduling a Termite Inspection: Your lender may require this inspection.
- Ordering a Survey: Your lender may require a determination to show the physical boundaries of the property as well as any encroachments present.
- Title Company/Attorney: Will be chosen to do a title search to ensure that there are no liens against the property and the correct owners are involved in the transaction. The Title Company or Attorney will prepare the final legal closing documents.
- Final Walk Through: Upon completion of the above steps (with the exception of signing the legal closing documents), you or your Realtor may arrange for one last inspection of your property to ensure that it is in the condition that you expected.
Congratulations! This is the day that as new Homeowner(s) you have been waiting for. Although it is very exciting to reach this day, there will be many legal closing papers with unfamiliar terminology that you will have presented to you. Ask your Title Company/Attorney to take the time to explain the closing documents that you will be signing.
Important Closing Documents
- HUD-1 Settlement Statement: a formal breakdown of all of the fees involved in the transaction. This document will show the final funds required to close the transaction. You should receive this document prior to the closing day so that you can review it. You must obtain a certified check equal to the amount you must provide (in addition to the amount you are borrowing) so that these amounts equal the total amount required for you to finalize this transaction.
- Mortgage Note: a legal document that will show the loan amount, interest rate, term of loan, date of the first payment, and the date of the final payment.
- Mortgage or Deed of Trust: legal document that will show not only the loan amount, interest rate, date of the first payment, date of the final payment, the late fee percentage, property address and the legal description of the property. This document also states that you are obligating yourself to pay the loan back.
- Truth-in-Lending: a formal document that includes the total finance charges which will show you the total (APR) Annual Percentage Rate.