Purchase A Home
When you are ready to make an offer to purchase a new home, you and your real estate agent prepare a purchase and sale agreement. Your real estate sales professional then presents it to the seller.
There are several components of your purchase and sale agreement. These include:
You may also want to include special contingencies in your offer. A contingency requires a certain act to be performed in order for the contract to take effect. Some of the more common contingencies are home inspection, clear title, financing, repairs, environmental concerns, and appraisals. There are many other contingencies you may want to consider. Ask your real estate sales professional to help you decide the contingencies you should select.
After the Home Purchase Offer
After you make an offer on a home, the seller can accept, reject, or make a counteroffer. Each of these responses may require different actions on your part. In each case, your real estate sales professional will be the one to relay the seller’s response back to you.
If the seller rejects your offer, decide whether you can -- or want to -- make another offer on the home. Start by
reviewing the "wish list" you compiled for the home of your dreams. Or, you can talk with your lender about mortgage
products that may increase your buying power and help you make another offer.
The seller can also make a counteroffer. If you plan to accept it, you should review whether you need additional mortgage financing to pay the new price.
It is also likely that additional negotiation among you, your real estate sales professional, and the seller will take place. You should take your time and carefully review the counteroffer before making any decisions on whether you will proceed with the purchase of the home or make a counteroffer of your own.
About Your Home Closing
Once you have your mortgage loan financing in place from your mortgage lender, you’ll proceed to the mortgage closing (or "settlement"). Your primary role at the mortgage closing is to
review and sign mortgage loan documents related to the mortgage loan and to pay the closing costs.
Each situation is different, so the mortgage closing costs may be part of your new home mortgage, where the seller or the builder of the home may pay some or all of the mortgage closing costs.
Remember, the closing process varies from state to state, and even within the same county or city. Certain activities are standard, and it is to everyone’s benefit that you understand the procedures involved.
Many of the people involved with the purchase of your home may be at the closing -- such as the seller and their real estate sales professional, and a closing agent who manages the paperwork and disburses funds. The meeting is usually held at the closing agent’s office. If you live in an area of the country where there is no formal closing meeting, an escrow agent processes the paperwork, arranges for the documents to be signed, and collects and disburses the required funds.
Preparing for Mortgage Loan Closing
Several important steps need to be taken in the final weeks before the closing, including having title search conducted, getting title insurance, and getting a survey of the property done. These activities will be coordinated with the help of your real estate sales professional.
Additionally, you must arrange for a termite inspection (if required) and to complete a home walk-through inspection before the closing meeting.
You should select a closing (or settlement) agent to coordinate closing-related activities such as preparing and recording the closing documents and disbursing funds. The types of services provided will depend on the closing agent you choose and where you live because closings are conducted differently across the country. Some are conducted by insurance companies or escrow companies; others are held by real estate brokers, lending institutions, or attorneys for both the buyer and the seller.
If you don’t know where to look for a closing agent, ask your real estate sales professional to recommend one. Or, you can ask your friends or neighbors to provide the names of agents they’ve used in the past.
You may want to hire a real estate attorney to represent you in the upcoming legal transaction. Your attorney, if you choose, will review the sales contract before you sign it and represent you at closing. The fees you pay your personal attorney are not part of your closing costs, so you will need to set aside money to pay for them separately. Not everyone finds it necessary to hire an attorney; it depends on how comfortable you feel with the transaction and how much money you have available for attorney’s fees.
Mortgage Loan Closing Costs
One way to review the mortgage related costs associated with your closing is to define them as seller versus buyer costs, mortgage-related closing costs, and government-imposed closing costs.
Make sure that any agreement regarding "seller versus buyer costs" is specified in the sales contract. Mortgage-related closing costs can vary, but the following are paid at or by closing:
Closing Date
An estimated closing date is usually specified in your sales contract, and a final date will be chosen after your mortgage loan application is approved and you’ve signed the commitment letter.
Typically, your real estate sales professional, mortgage lender, and closing agent coordinate the setting of this date. Make sure
the closing occurs before the commitment letter expires and while your mortgage interest rate lock-in remains valid (if applicable).
Ask your closing agent for a statement that lists the date, place, and time of the closing meeting and the items you will need to bring.
At Your Closing
At or after the closing, you should receive the original or copies of the following:
- HUD-1 Settlement Statement -- This document itemizes the funds the buyer and the seller will pay at closing.
- Note -- Often called the promissory note, it represents your promise to pay the lender according to the agreed upon terms of the loan, including when and where to send your payment.
- Affidavits -- A written declaration made under oath before an authorized official, you’ll sign various affidavits at your closing verifying information such as your address, place of employment, checking account number, and more.
- Deed -- This document transfers ownership from the seller to you.
After your closing is completed, keep any paperwork you received in a safe place. Remember to keep a copy of every document you signed.
When you file your taxes, it may be useful to have a copy of the settlement form because it lists the real estate taxes and loan discount points you paid at the closing -- they may be tax deductible. Also make sure you keep all homeowner’s insurance and title insurance records. You may need to access them if you discover a flaw in the title after you’ve purchased your home.
After Your Mortgage Closing
After the closing, you own your home. So, you may begin wondering what you can do to protect your investment -- and perhaps even help it increase in value.
Homeownership brings both rewards and responsibilities. It’s important to keep both your home and your finances in good shape. That means managing your money wisely to ensure you can meet your obligation to repay the mortgage loan. This will enable you to make your home’s equity work for you.
Staying current on your mortgage payments will ensure that you keep your home. Making late payments usually results in late charges, which could reflect poorly on your credit report and could impair your credit rating. Good credit is important for many reasons, especially if you want to apply for a second mortgage to make home improvements, apply for a home equity loan, or refinance.
If you consistently fail to make timely mortgage payments,
you could lose your home and the good credit you’ve worked
to maintain. Contact your lender at the first sign of trouble.
You can potentially increase the value of your home by keeping up with repairs, and maintaining and enhancing the condition and appearance of your home.
For more helpful mortgage tips on mortgage refinancing, home mortgages, reverse mortgages or a home equity line of credit, contact FreeLoanComparison.com today!
Last update: November 14, 2008
