Steps Of Getting A House

Posted on December 16, 2019 by Nancy Liu | Category: Real Estate

Essential Steps of buying a house

1. Loan Pre-Qualification

         As a buyer, the first thing you need to do is not to look for a desirable house or look for a real estate agent, but to find a mortgage broker. A mortgage broker can help you by examine your credit and your finance; therefore assess your actual borrowing power.  You can then look for a property affordable to you.  It’s preferable if you can get a Pre-Qualification Letter, which makes you an appealing buyer. This step also allows you to discover any credit problem you might have, giving you a chance to repair it before closing. The procedure for loan pre-qualification is very simple, your mortgage broker with your W-2 for the past three months, bank statement, and credit card information should be well enough to get your started.

2. Sales Contract

Once you find the suitable house (considering the school district, location, building structure and building materials) and in affordable price, express your interest to purchase by place an offer with a Purchase and Sale Agreement (Sales Contract). A good sales contract includes the following terms: initially negotiated selling price, who will bear the closing costs, items contained in closing fee, authorized closing attorney, home inspection procedure and requirements, list of conditions to be satisfied before closing, earnest money and who will hold it, and other conditions agreed by each party. Your real estate agent usually uses the contract template from the Association of Realtors, which is neutral and a good negotiation basis for both parties.  Real estate agents often play a very important role in draft of contract.  An experienced agent can protect the clients by negotiating terms and conditions beneficial for the clients, such as house repair, retain certain appliances or furnish of the house. 

3. Loan application

When the sales contract is signed by all parties, it becomes a legally binding agreement. The buyer shall start to apply for a loan.  Lender may request for various materials from you; provide materials required timely will hasten loan process and avoid delay of closing.  Usually mortgage broker will ask the buyer to prepay for appraisal and credit report. Click Here for information on how to prepare for your loan application or what kind of loans is best for you.     

4. Loan Approval

Your mortgage broker will send all documents provided to Lender for loan approval.  You should let your employer know that you have applied a loan, because Lender may call to verify employment and your salary. Your mortgage broker will provide a “Good Faith Estimate”, which should give you some ideas what fees will be charged at closing.

5. Home Inspection

Home Inspection usually focus on the sanitation, building structure, and the decoration of the house, to see whether there is any portion or item needs repair, improvement, or has significant defect. If the building structure, sanitation or building materials have any defect, the sales contract should allow a room for buyer to renegotiate. Although 2007 standard Purchase and Sales Agreement no longer requires the seller to provide Termite Inspection Report, it is still a good idea for the buyer to obtain one in case there is termite damage on the property.   If yes, it should be repaired before closing. The buyer could negotiate with the seller to transfer the existing Termite Bond at closing. Termite Bond does not warrant against termite damage in the future; it is an assurance that your pest company will provide treatments for termite damage as long as the bond is valid.

6. Property Appraisal

One of the conditions that the Lender will evaluate the loan approval upon is the appraised value of the property. The appraiser will estimate the market value of the property by evaluate the building structure, size, community, property tax of the house and selling price of the neighboring properties in the recent years, and then make a comprehensive appraisal report.  If the appraised value is lower than the sales price, it will be hard for the loan get approval. 

7. Closing

After finishing all the above procedure, the sales contract and loan approval materials will be send to the closing attorney, the attorney will investigate the title of the house and prepare the documentation for closing. In most cases when there’s a loan involved, closing attorney represents neither seller nor buyer, but the Lender. Many closing documents are regulated by the bank, and there is no room for negotiation. There are various documents for buyer to sign, some of them are relatively important, such as Closing Statement (HUD-1), Note, Security Deed etc. Within two to six months after closing, the buyer will receive the title and the title insurance policy from closing attorney.  Buyer should keep these documents carefully against a rainy day. 

The above is a general steps the house buyer will experience, hoping it can help you to get your dream house 

This article is only for your reference. Please do not apply mechanically to any exact cases. You are welcome to consult our attorneys at Liu & Associates, P.C. For contact information, please click here.