What to expect when purchasing
You have done your research, picked your realtor and even your lender. You’ve found “the one,” that special house to call home. Well the good news is that most of the hard work is finished. The even better news is that you get to mostly sit back and let the people in your corner (realtor, lender, broker, etc.) do the work for you. Here’s a behind-the-scenes look into the buying process that will make that house your dream home.
Once an offer has been made and accepted, a legal contract is drafted. The purchase agreement is a document that describes specific terms and conditions of the purchasing transaction. Both parties acknowledge and agree to the terms by signing the document.
Inspection & Appraisal
After the buyer and seller finalize their agreement, an inspection and appraisal are needed. A home inspector is hired to inspect the condition of the home and point out any areas that need repairing. Inspected areas commonly include the roof, basement, heating and cooling systems, the structure, plumbing, electrical, water heaters and sometimes more.
Next, an appraisal of the home is needed. Most lenders order an appraisal to ensure an objective way to assess the home’s fair market value. Appraisals are completed by an unbiased third party in an effort to determine the home’s worth. For more information regarding appraisals check out this article from U.S. News & World Report.
Both inspections and appraisals play a major role in getting the best deal. Almost everything is up for negotiation. You can “haggle” over the value, closing costs and even the sales price.
Once negotiations are finished, the leg work turns to the lender. Chances are you were already pre-approved by your lender and this portion of the process finalizes the details of the loan. A complete application and all supporting documents including credit checks, pay stubs, inspection and appraisal forms are sent to the financial underwriter for final approval. More on underwriting and approval here.
Title Insurance & Escrow
Title insurance provides protection to the buyer’s and lender’s financial interest in real property. Title insurance safeguards against title defects, liens and/or other matters.
Escrow is another protection aspect in the purchasing process. Your earnest money, deposit, purchase agreement and other documents are sent to an impartial third party. The escrow agent holds on to the documents until specific conditions are met including everybody getting paid and the deed being recorded with county. When all of these are completed, the escrow will close.
At this meeting, all of the paperwork and documents will be reviewed and signed by both parties. After everything is completed and finalized, the house is finally yours.
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