Home Buying 101
Trainor Law PLLC
Being a first-time homebuyer is exciting but can be overwhelming especially in today’s market.
With real estate trends, you might be tempted to make an impulsive purchase that can hurt you in the long run. So whether you are looking for a $100,000 house or a $1,000,000 house, make sure you are aware of the process and steps you can take to facilitate your purchase.
Start with your own financial picture. Make sure your debt to income ratio is low and your credit score is average or above. Both of these factors will play into getting a home mortgage pre-qualification/pre-approval from a lender. Know how much house you can afford before getting your heart set on the little ranch with the white picket fence, only to be disappointed when you can’t qualify to purchase it. You will need to know if you can go with a conventional mortgage, VA or FHA and what type of down payment amount (typically 20% but can be less with VA and FHA mortgages) you will need.
Start your home-buying research regarding what type of house, location, school district, etc. you are looking for. Knowing how much you can afford and the purchase price you are approved for can help facilitate your efforts in finding the house of your dreams and knowing you can afford it.
With your research you may want to enlist the help of a realtor. Realtors are licensed by the State and can facilitate the process by finding homes exactly in your price range with the specifications you are looking for. They are also able to negotiate the price and put in an offer on your behalf. Some houses are For Sale By Owner and in that situation, you may need the help of an attorney to draw up the contract.
Attorney for the Purchaser
Make sure while you are searching for that dream home, you keep in mind you will need an attorney for the closing. The attorney you use for your closing will be separate from the bank attorney and the seller’s attorney. The purchaser’s attorney will review the contract, answer any questions throughout the entire contract period and make sure your contingency dates within the contract are met and they will also attend closing with you to make sure you understand all the paperwork that you are signing.
Offer and Acceptance
Once you have your pre-approval and you have decided on the house you want to put the offer in on and the offer has been accepted, your attorney will review the contract, follow you through inspection and mortgage contingencies and keep you on track for a closing date. You should get an inspection on the home you are purchasing. The inspection will allow you the opportunity to make sure everything is in good condition or if there are any items that may need repair. Under most contracts, any deficiency over $1,500.00 is considered a major defect. The Seller will have the opportunity to repair the defect or possibly give you a credit towards correcting the defect.
Your bank will have its own attorney and will have an appraisal done to make sure the house will be worth at least the value of the mortgage and hopefully the full purchase price.
Your lender will require title insurance. Title companies will do a 40-year search and make sure you have marketable title. They will also insure the mortgage amount with the lender you choose. Title companies have representatives who attend the closing to discuss the lender’s policy and an owner’s policy that’s available at additional cost at closing.
Once contingencies are met, your loan is approved and through underwriting, your bank will give you a CTC (Clear to Close)! This means that you can finally set a closing date for your loan and you will have the keys in hand upon signing all closing paperwork with the bank. Once again, your attorney will be by your side, to answer any questions or concerns you may have during the closing. Prior to closing, you and your realtor will have a walkthrough to make sure the house is in an acceptable condition.
The entire process can take 6 weeks, 3 months, 6 months or a year. What is important to remember is that having an idea of your financial situation, of what type of home you can afford, choosing an attorney to steer you through the process and answer any questions, and having a general idea of the timeframe the process will take and the funds you may need at closing, makes the process go much smoother for all involved.
If you are a first time homebuyer who needs advice, call our office at (518) 899-9200 or contact us to see how we can help you.
The article is intended to be educational and is not intended to be legal advice, which can only be given after an attorney-client relationship is established.