The Home Buying Process is indeed tedious but it doesn’t have to be confusing. We have broken it down into 10 easy to follow steps from start to finish. These steps as outlined below will be helpful to the new or experienced home buyer.
1. First, complete a loan application with a mortgage professional based on a thorough review of your income, credit report, cash savings, and other assets. Once you and your loan originator/officer have discussed your proposed mortgage terms, conditions, disclosures, and estimated closing costs then your loan file will be ready for submission to the lender’s underwriting department for approval.
2. Next, you will tour different homes with a real estate agent and select a property on which to make an offer. Though not legally required, it’s customary and highly recommended that a good faith deposit is made with your offer, that’s normally due within a time period of 10 days or less. This deposit will be held in what is called an escrow account, typically by either the Title Company or Attorney’s Office who’s handling your closing.
3. Once your offer is accepted, both parties, buyer, and seller will enter into a contract and begin the due diligence process. Typically this process begins with the ordering of a home inspection to find out more about the physical condition of the subject property. Keep in mind the fee for the buyer’s inspection is an upfront cost. Note: Your Realtor can recommend a reputable home inspector but the final decision is up to the buyer on who to use.
4. Your mortgage professional will then open a title order with the Title Company/Attorney’s Office that’s on contract. The Closing Agent will be responsible for several duties, but the most important ones are as follows:
a. Conduct a title and municipal lien search examination to ensure that the title to the property is free of any outstanding liens or violations.
b. Order title insurance. There are two different types of policies, a lender and owner title insurance policies. Each policy is to protect the lender and buyer against any future claims that is made by an unknown party as to the property’s rightful legal ownership up to the time of sale.
c. Order a survey. A survey is what determines the legal boundary lines of a property. Generally speaking, the survey is billed as part of the buyer’s closing costs to be paid at closing.
5. The buyer shops around and pays for a homeowner’s insurance policy. Lenders tend to require that one year of premium be paid in full, in advance before closing, or the cost can be added to the buyer's overall closing cost.
6. A home appraisal is ordered by your mortgage professional to verify the value of the property. This is also a prepaid cost paid upfront by the buyer.
7. The buyer receives a clear to close notification from the lender once all the loan approval contingencies have been satisfied.
8. The buyer completes a final walk-through of the property right before closing to ensure it’s still in good condition.
9. A Closing Disclosure is issued to the buyer from the lender, which shows all the final fees and cash needed to close the transaction.
10. The buyer and seller attends closing at the title company/attorney’s office to sign all the necessary legal documents to transfer the ownership of the property, exchange keys and the lender funds the loan.
Understanding all the above steps that must be taken by the various parties involved in your home buying transaction, will help to make the process successful. Additionally, choosing to work with the right experienced Realtor and Mortgage Broker will also provide you with peace of mind from the point of signing a contract to opening the front door on your new home. Start by contacting us today to help you achieve your goal of owning a home.