Step 7: Close on your home.
The closing is the last step in the process of buying your home. “Closing” refers to the transaction during which you close your deal with the seller to buy a home at the same time that you close your deal with your lender to borrow a loan.
Conduct a final walk-through of the home before the closing.
Usually, the final walk through is conducted with your Realtor, the evening or morning of your schedule closing. This final walk though is like a last inspection to ensure that the home is in acceptable, move-in condition. This is important because, once you close on the property, you will lose any legal recourse against the seller for a condition that you did not previously discover. Come to the closing prepared.
Your attorney will provide you with detailed information about what you must bring to the closing. In general, you will be required to bring two forms of identification as well as a certified cashier’s check to cover the exact amount of the closing costs you have agreed to pay. (Who pays closing costs can be a subject of negotiation with the seller. Talk to your agent about this.)
This is the step in the home buying process when your attorney’s expertise is particularly relevant. Make sure you ask your attorney any questions that occur to you before the closing. Come to the closing prepared to carefully read and sign closing documents and do not hesitate to ask more questions during the closing. It is vital that you understand all documents before you sign them.
Familiarizing yourself ahead of time with some of the mortgage and real estate documents that are likely to be included in your closing will minimize the potential for surprises and confusion.
Some or all of the following documents related to your home loan will be presented to you at your closing:
•Truth in lending statement lists the interest rate, annual percentage rate, amount financed and the total cost of the home loan over its life.
•Itemization of amount financed summarizes the finance costs of the loan.
•Monthly payment letter breaks down your monthly payment into principal, interest, taxes and insurance.
•Mortgage puts a lien on the house as security for the loan, which allows the bank to foreclose if you default.
Some or all of the following real estate documents connected with the sale of the home will be presented to you at your closing:
•Settlement Statement contains all settlement costs and amounts.
•Warranty deed guarantees that the seller has the right to sell the property and is signed by the seller and the buyer to transfer title of the property.
•Proration agreements describe how you and the seller will divide the costs associated with the home for the current month. These costs could include property taxes or condo association fees.
•Name affidavit certifies that you are who you say you are.
•Acknowledgment of reports signifies that you have seen all of the reports regarding the property, including surveys and inspections.
•Search or Abstract of Title lists the documentary history of the property including all titles and all liens. This document ensures you that the seller has clear title to the property and that there are no claims against the property by other parties.
Take the keys and move into your new home.
At the loan closing, the title of the home will be transferred from the seller to you. Also, the mortgage agreement between you and your lender will be finalized, which will enable you to pay the seller with the proceeds of the loan at the same time you receive title to your new home. Your attorney will ensure that payment is made on your behalf at the closing.
The closing often takes place in the office of the buyer’s attorney but can take place at any mutually agreed upon location. You can expect multiple participants at the closing. Besides yourself, among those present will be the seller and his attorney, the real estate agents and/or brokers, your attorney and the lender’s attorney.
At the closing, your lender will give you a mortgage payment schedule which will include payment instructions. At the end of closing, you will leave with a folder full of paperwork and a set of house keys (or two!).
Congratulations; you are now officially a homeowner!
Showing posts with label First Time Homebuyer Series. Show all posts
Showing posts with label First Time Homebuyer Series. Show all posts
First Time Home Buyer Step 5... Apply for the Mortgage
Step 5: Apply for a mortgage.
Once you have a signed contract on a home, it’s time to apply for a mortgage. Remember that you still must formally apply for a mortgage even if you have already been pre-approved. Also remember that you are not obligated to apply for a loan with the same lender who originally provided you with the pre-approval .
Meet with a Lender. Your lender will then guide you step by step through the entire application process.
Your lender will discuss mortgage terms and rates.
Your lender will explain "PITI." Your lender will explain the components of a monthly mortgage payment known as “PITI.” PITI stands for “principal, interest, taxes and insurance” and represents the monthly loan service of principal and interest, as well as the monthly property tax payment, homeowners insurance premium, and mortgage insurance premium, if required, (as well as any other insurance premiums) that combine to form your monthly mortgage payment.
Your lender will provide a “good faith estimate” of closing costs. Federal law requires your lender to provide you with a “good faith estimate” of closing costs within three days of applying for a loan. Closing costs can range from between 3% to 5% of the sale price of the home. Closing costs include fees associated with the services provided during the processing of your mortgage application. Some of these fees cover the costs of the credit report, the title search, the title insurance, the lender's attorney, the buyer’s attorney, the home appraisal, the property survey, the document recording and the transfer taxes. Closing costs also include escrow accounts. Knowing what your closing costs will be in advance helps you to plan your budget for the loan closing, which is when you will be required to pay them.
Once you have a signed contract on a home, it’s time to apply for a mortgage. Remember that you still must formally apply for a mortgage even if you have already been pre-approved. Also remember that you are not obligated to apply for a loan with the same lender who originally provided you with the pre-approval .
Meet with a Lender. Your lender will then guide you step by step through the entire application process.
Your lender will discuss mortgage terms and rates.
Your lender will explain "PITI." Your lender will explain the components of a monthly mortgage payment known as “PITI.” PITI stands for “principal, interest, taxes and insurance” and represents the monthly loan service of principal and interest, as well as the monthly property tax payment, homeowners insurance premium, and mortgage insurance premium, if required, (as well as any other insurance premiums) that combine to form your monthly mortgage payment.
Your lender will provide a “good faith estimate” of closing costs. Federal law requires your lender to provide you with a “good faith estimate” of closing costs within three days of applying for a loan. Closing costs can range from between 3% to 5% of the sale price of the home. Closing costs include fees associated with the services provided during the processing of your mortgage application. Some of these fees cover the costs of the credit report, the title search, the title insurance, the lender's attorney, the buyer’s attorney, the home appraisal, the property survey, the document recording and the transfer taxes. Closing costs also include escrow accounts. Knowing what your closing costs will be in advance helps you to plan your budget for the loan closing, which is when you will be required to pay them.
First Time Home Buyer Step 4... Making a Offer on a Home
Step 4: Make an offer on a home.
Once you have found a home that you hope to buy and are ready to make an offer, your real estate agent will represent you in drafting a reasonable offer and presenting the offer to the seller’s agent. It is important to remember that while you alone determine the price you are prepared to offer, your agent can provide expert advice to adequately protect your investment and interests in the terms, conditions, contingencies and deadlines included in your offer.
The offer is legally binding. Remember that your offer becomes a legally binding contract once signed by Seller(s) and you the Buyer(s.)
The seller can accept, reject or counteroffer.
The seller has the option to accept your offer, reject your offer or make a counteroffer which modifies some or all of the conditions or terms of your offer. This negotiation can alternate back and forth several times before an agreement is reached and a contract is signed by both parties that finalizes the terms and conditions of the transaction. At this point, the legal ability of the seller to entertain other offers ends.
Meeting contingency dates.
Timing and deadlines are very important in real estate transactions. Once your offer is accepted and there is a preliminary contract on the home purchase, you should make sure to allow sufficient time to apply for and obtain mortgage financing, to schedule the closing and the home inspection of the property, and to negotiate the details of the final contract known as the Purchase and Sale Agreement between you and the seller.
Once you have found a home that you hope to buy and are ready to make an offer, your real estate agent will represent you in drafting a reasonable offer and presenting the offer to the seller’s agent. It is important to remember that while you alone determine the price you are prepared to offer, your agent can provide expert advice to adequately protect your investment and interests in the terms, conditions, contingencies and deadlines included in your offer.
The offer is legally binding. Remember that your offer becomes a legally binding contract once signed by Seller(s) and you the Buyer(s.)
The seller can accept, reject or counteroffer.
The seller has the option to accept your offer, reject your offer or make a counteroffer which modifies some or all of the conditions or terms of your offer. This negotiation can alternate back and forth several times before an agreement is reached and a contract is signed by both parties that finalizes the terms and conditions of the transaction. At this point, the legal ability of the seller to entertain other offers ends.
Meeting contingency dates.
Timing and deadlines are very important in real estate transactions. Once your offer is accepted and there is a preliminary contract on the home purchase, you should make sure to allow sufficient time to apply for and obtain mortgage financing, to schedule the closing and the home inspection of the property, and to negotiate the details of the final contract known as the Purchase and Sale Agreement between you and the seller.
First Time Homebuyer Series Step 3... Find Your Home
Step 3: Find the right home for you.
Once a lender has pre-qualified you by calculating the maximum mortgage you can afford, the next step is to look for and find the right home for you and your family that is within your price range.
Describe your ideal home.
What does your dream house look like?
How big is it?
Does it have a porch, a basement?
How many bathrooms?
How much closet and storage space?
How many bedrooms, windows?
Does it have laundry facilities?
Does it come with appliances?
Does it have a garage?
A backyard?
Your agent will ask questions to better help you precisely describe the kind of home you hope to buy.
Your Realtor will help you to focus on what you really need, first.
Once a lender has pre-qualified you by calculating the maximum mortgage you can afford, the next step is to look for and find the right home for you and your family that is within your price range.
Describe your ideal home.
What does your dream house look like?
How big is it?
Does it have a porch, a basement?
How many bathrooms?
How much closet and storage space?
How many bedrooms, windows?
Does it have laundry facilities?
Does it come with appliances?
Does it have a garage?
A backyard?
Your agent will ask questions to better help you precisely describe the kind of home you hope to buy.
Your Realtor will help you to focus on what you really need, first.
First Time Homebuyer Series Step 2... Find a Realtor
Step 2:
Find the right Realtor to help you.
In-depth and up-to-date knowledge of the communities and real estate markets that you are considering.
Can search for a home that meets your specifications.
Can schedule property visits for you to view and tour homes.
7 main roles of your real estate agent when buying a home :
Find the right Realtor to help you.
In-depth and up-to-date knowledge of the communities and real estate markets that you are considering.
Can search for a home that meets your specifications.
Can schedule property visits for you to view and tour homes.
7 main roles of your real estate agent when buying a home :
- Educates you about your market.
- Analyzes your wants and needs.
- Guides you to homes that fit your criteria.
- Coordinates the work of other needed professionals.
- Negotiates on your behalf.
- Checks and double-checks paperwork and deadlines.
- Advise & solves problems that may arise.
First Time HomeBuyer Series- Step 1 ...Get Preapproved
Step 1: Get Pre Approved for a Mortgage.
A lender will assess your credit-worthiness and eligibility for a home loan before you formally apply in a process called pre-approval.
By evaluating your household income, your savings and your existing debt, a lender can tell you “how much house” you can afford. (For a quick, do-it-yourself estimate of your mortgage limit, use the Mortgage Payment Calculator)
During the preapproval process, you might want to also ask your lender to provide you with a list of potential closing costs. A lender is not required to provide you with a formal quote of these costs until you actually apply for a mortgage, but it may be prudent for you to have this information early so you can budget for the overall costs of the home purchase.
Though a preapproval is not a guarantee of obtaining a mortgage on the home you hope to buy, obtaining a preapproval before you make an offer on a home can strengthen your negotiating position. A seller who is confident in your ability to finance the purchase of a home is likely to seriously consider your offer.
Remember that you are under no obligation to obtain a loan from the lender that pre-qualifies you. However, the lender can answer questions and provide further details on the preliminary financial assessments and decisions you need to make as you prepare for homeownership.
By evaluating your household income, your savings and your existing debt, a lender can tell you “how much house” you can afford. (For a quick, do-it-yourself estimate of your mortgage limit, use the Mortgage Payment Calculator)
During the preapproval process, you might want to also ask your lender to provide you with a list of potential closing costs. A lender is not required to provide you with a formal quote of these costs until you actually apply for a mortgage, but it may be prudent for you to have this information early so you can budget for the overall costs of the home purchase.
Though a preapproval is not a guarantee of obtaining a mortgage on the home you hope to buy, obtaining a preapproval before you make an offer on a home can strengthen your negotiating position. A seller who is confident in your ability to finance the purchase of a home is likely to seriously consider your offer.
Remember that you are under no obligation to obtain a loan from the lender that pre-qualifies you. However, the lender can answer questions and provide further details on the preliminary financial assessments and decisions you need to make as you prepare for homeownership.
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