The Search
Once you have decided to purchase a home, your next step will be to identify neighborhoods where you would like to live. In some cases, this will involve a decision of whether you
wish to live in a single family home, a two family house – or a condominium building. Your real estate agent will be able to help by showing you different areas. And once you have
narrowed down the areas, your agent will be able to identify homes that are for sale in those areas. This is one of the most valuable services that your real estate agent will
provide because he or she will have access to the local multiple listing service, which is the most accurate, up-to-date source of information on listings. Your agent will also be able to draw on extensive experience to provide insight into specific listings.
Do I need a pre-approval?
While you are starting your search, you will also want to speak with a lender to obtain a lender pre-approval. This is important because it will tell you the price range of properties
you can afford – and it will be necessary when you are ready to make an offer. In most cases, sellers will not consider offers that are not accompanied by a pre-approval. The
exception would be if you plan to make the purchase without a mortgage. In that case, the seller would request “proof of funds,” such as a bank statement or letter from your bank
stating the amount of funds available in your account. Finding the right lender We suggest that you consult at least three lenders. Different lenders offer different types of mortgages. We recommend consulting one of the big national banks, a local or regional bank, and a mortgage broker. The biggest difference will be between those that resell their mortgages and those that
don’t, which therefore are known as “portfolio lenders” because they keep their mortgages in their own portfolios. We can offer suggestions on banks with which our clients have had good experiences.
Making the Offer
Once you have identified the home you wish to buy, an experienced real estate agent will help you determine a fair amount to offer. This will be based on similar homes that have sold recently, as well as information about the current listing, about the dynamics of the market – and possibly even about the current seller’s motivation. An experienced agent will be able to help negotiate and, in a competitive situation, he or she will be able to suggest ways to
strengthen your offer.
Once your offer is accepted
Once you have an accepted offer, you will want to hire a local lawyer who specializes in real estate. Your real estate agent should be able to recommend lawyers. Hiring an experienced lawyer is very important! Your lawyer will perform critical functions such as preparing an addendum that will supersede the terms of your contract. This is often known as an attorney review letter, or a rider. Until the review letter is signed, your contract is not binding – and the
seller will be free to entertain other offers. You therefore will want to get the review letter signed as quickly as possible. But you will also want to be sure that the review letter meets
with your approval because this is a document that will govern the remaining steps of your purchase.
The role of the inspector
Your contract and review letter will explain your rights to an inspection—and your rights in the event that the inspection reveals defects that were not apparent when you first visited
the home you are buying. In rare cases, the inspection will become grounds for cancellation of the contract. But in most cases, the inspection report will give you an opportunity to
request repairs. You will do this through your attorney. The seller may offer to make the requested repairs, or may offer a credit so that you can make the repairs. But the seller is
also free to refuse a request for repairs, in which case your recourse would be to either proceed without any credit or simply cancel the contract.
Making a deposit
Your review letter will explain how many days you have to make your deposit, which normally will be either five or 10 percent of the purchase price. In most cases, you will be expected to make the deposit within 10 days after attorney review is concluded. The deposit will be held as escrow in a trust account, usually administered by the seller’s attorney. The deposit money cannot be removed from that account unless both your attorney and the seller’s attorney agree that it is time for that to happen. At closing, your deposit will become part of your down payment.
Qualifying for a mortgage
By now, you will have hopefully selected a lender. One of the first things your lender will do is to order an appraisal. Your realtor will make arrangements for an appraiser to visit the property and assess its value. Your lender is likely to require that the home be worth the purchase price – or you may have to come up with a larger down payment, depending on the size of your planned down payment. Your contract and review letter will specify a date by which you must obtain a mortgage commitment in order to meet the terms of your agreement. This will typically be 30 to 35 days after the conclusion of attorney review. You will be expected to provide your lender with all necessary documents in order to get this commitment. Still, the
commitment is likely to come with several conditions. Once all of the conditions have been met, your lender will give you a “clear to close.” Now you can breathe a sigh of relief!
Title search and title insurance
While you are busy working with your real estate agent on
the inspection and other details, your attorney will be initiating the title search and ordering title insurance. If you are purchasing a condominium, your attorney will also
request copies of the building’s financial statements, bylaws, and other relevant information.
Final walk-through and closing
Now that your lender has issued a “clear to close,” your attorney will arrange for the closing. Your attorney or your title company will provide you with a settlement statement, showing your final costs and you will need to bring a certified bank check for the specific amount to the closing. But there is one final step: You and your real estate agent should visit the home shortly before the closing, just to be sure its condition has not changed. For example, you will want to be sure that there has been no water damage from a leaking roof or, in the case of a condominium, from a neighbor’s apartment. If all looks fine, as most likely it will, you will sit down with your attorney and title company representative to sign your closing documents. Once you have signed all the necessary documents, you will receive the keys to your new home.
You are now a proud homeowner, having found a wonderful new place to live – and having made what will likely prove to be one of your best ever investments!
I am Diana Tian. I am here to assist you with every step of the process. Contact me for any questions.
