Getting Pre-Qualified with a Lender
Because mortgage approval is generally the longest contingency to satisfy in a purchase contract, it is to your advantage to obtain a preapproval letter as soon as you’re ready to begin your search. Lenders will render a decision based on your complete loan application, employment verification and data from all three credit reports. Going through this process will also help you understand how much house you can afford and how much cash you will need for a down payment. Finally, it makes you a stronger buyer! When an offer is submitted with a pre-approval letter from a lender – it allows the seller to feel more confident about your offer.
Purchase and Sale Agreement
This refers to the legal contract between a buyer and seller that outlines all of the terms and timelines that are agreed to when purchasing real property.
Property Inspection
When a buyer makes an offer on a property that is accepted by the seller, the buyer will have an opportunity to inspect the physical components of the house (foundation, electrical and plumbing systems, siding, sewer, etc.). It is strongly encouraged that all buyers hire a professional home inspector to perform a complete inspection of the property and provide a report that details all findings. Following this inspection, the buyer has the opportunity to negotiate any possible repairs, with the seller, that might need to be made in regards to safety, building code violations or lending requirements. To find an AHSI certified home inspector, please click here.
Appraisal Process
Unless the buyer is purchasing a property with cash, all lenders will require an appraisal to be done on the property. This process of having a neutral third party evaluate the value of the property, provides the lender with the security of knowing that the property is actually worth (at least) what the buyer has agreed to pay. The appraisal is a built-in contingency of most sales agreements. Typically, the sale of real property is contingent on the buyer (financing) and the property (appraisal) “qualifying” for a loan from the lender.
Escrow – Title Insurance
Once an offer has been accepted, an escrow account is opened with a title company. Escrow generally refers to earnest money held by a third-party on behalf of parties to a transaction. Title companies also assure that the seller has the right to sell, searches for any outstanding liens on the property, confirms status of property taxes being paid and is responsible for using funds to pay-off any debt against the property before delivering “clean title” to the new buyer.
