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Process for Purchasing

It's Fall!

Purchasing a home can be overwhelming for any person. Many questions can cross your mind: Is now a good time to buy a house? How do I decide what to offer for a home? Do I need a home inspection? What are my closing costs likely to be?

The right real estate agent will answer all your questions, guide you, and alleviate any problems you can have during the transaction.

Let’s answer a big question: What’s the process for purchasing a home? There are many steps when it comes to buying a home.

 

  1. Consult with Realtor
    • First things first, you’ll need to find an agent. Ask your friends and family for a trusted real estate agent. The best kind of referral is from a trusted member of your circle.
    • Once you have found an agent you’d like to work with, schedule an in-person meeting with them. Get to know who you will be working with. Our agents will want to go over the purchase contract with you – the Delaware Agreement of Sale that is most commonly used by Realtors is a lengthy document with many terms and contingencies. The will help to answer most questions you may have about the process. By reviewing it in advance of touring homes you will be more fully prepared when you find the right home.
    • Going into this appointment, have an idea of what you’re looking for in a house. Your agent can help guide you to figure out what you your options are within your budget, and will help narrow down your search.
  2. Mortgage Pre-Approval
    • Now that you’ve met with your real estate agent, contact a mortgage company to get a pre-approval letter. If you’re not sure who to use, your agent can refer you to a trusted local loan officer.
    • Your loan officer will need to review your credit history and your financial documents to get the process started:
      1. Tax returns
      2. Pay stubs, w-2s, or other proof of income
      3. Bank statements and other assets
    • Once they have reviewed your documentation, they will be able to go over your budget and help you determine the best type of loan that fits your needs. Each type of loan (FHA, VA, USDA or Conventional are most common) have different qualifying criteria for the home itself and your finances. They will also give you an estimate of what your closing costs will be (varies with each type of loan).
    • Once you have a pre-approval letter, this will be your foot in the door to look at more houses and get a higher chance of getting an offer accepted. Feel free to “shop around” for other mortgage companies to see if there are any better interest rates or loans that you think would work better for you.
  3. View Homes!
    • You and your agent will look at homes that fit within your budget and criteria. Often times, homes will get sent to your email for you to view first. If you like the house, your agent can schedule a showing for you both to view it.
    • After viewing the house, think about what you liked and disliked in the house.
    • It may take a while to find a home you want to purchase! Don’t be dismayed that houses will go under contract or there are none that you like. The perfect house for you will go on the market when the time is right.
  4. Make an Offer!
    • You found a house that you love!
    • Your agent will draft a contract for you and send the offer to the listing agent. Your agent will help you determine the best terms – including offer price, any contingencies and a timeline for closing.
    • Your pre-approval letter will be sent along with the contract. Listing agents and sellers need to know what the loan terms are they are agreeing to before they accept an offer!
  5. Negotiate Offer
    • Once your offer is submitted to the listing agent and seller, they can either accept, reject or counter. Your agent will begin negotiating at your direction & on your behalf with your best interests in mind.
    • Your offer will be accepted once an agreement is reached on all terms for both parties. Within the next few days (defined in contract) after the offer is accepted, you will need to pay an escrow deposit (the first initial payment) to solidify the agreement.
  6. Apply for a Loan
    • Once the contract is signed by all parties (ratified), you will have to formally apply with the mortgage company of your choice for the particular home you are contracted to purchase. This can be the initial lender you received your pre-approval letter from in the first place, or another company you found afterwards. They may need to update your financial documents to get the process started and will require additional documents:
      1. Updated Pay stubs & a formal employment verification
      2. Updated Bank statements and other assets
      3. Gift letters & possibly other letters of explanation for credit items
      4. Address verifications & Renting history
      5. Details on any long term debts, such as car or student loans
  7. Home Inspection
    • Your real estate agent will schedule any applicable inspections for you through your choice of company. Typically, we use Delmarva Inspection Group and AmeriSpec.
    • There are many types of inspections:
      1. Home: a visual inspection of all parts of the property that are readily accessible. This includes the floors, wall, ceilings, stairs, decks, porches, roof, plumbing, heating and A/C, fireplaces, windows, and much more
      2. Radon: typically a 48-hour test that measures the amount of radon, an odorless, colorless gas that can cause lung cancer.
      3. Wood-Destroying Insect: ensures the home does not already have termite or other insect damage
      4. Septic: makes sure the sewage system is functioning properly without need for repairs.
      5. Well/Water Test: The Water will be sent to a lab to be checked for hazardous substances and potability
      6. Structural: an engineer will make sure the foundation, basement/crawl space, framing, roof, and more are all up to code and structurally sound.
    • Once all inspection reports come to you & your agent, you will both go over what repairs may be deemed as major defects, safety concerns or minor maintenance items. Your agent will negotiate, on your behalf, with the Seller’s Agent to have these repairs completed prior to closing.
  8. Survey
    • Your mortgage lender will order a land survey of the property. This will confirm the property’s boundary lines and legal description, as well as any other restrictions and easements.
    • An easement is a situation in which you may have to share access to some part of your property, like a utility company who has the right to install electrical wires on your land, or a private road or beach that needs to be shared with your neighbors.
    • This cost will be paid at closing.
  9. Title Search
    • You will get to choose your attorney for settlement. Your Agent will have recommendations for high quality Real Estate attorneys.
    • The attorney will do a title search of the property to examine public records for various things including to confirm the seller has full legal right to convey the property to a new owner.
    • This will also reveal if there are any other claims or liens on the property that could affect the purchase.
      • There could be unpaid property taxes, homeowner’s association fees, and bills that might become your responsibility if a title search is not completed.
  10. Homeowners Insurance
    • Your agent will give you a referral to a Homeowners Insurance company or contact your current insurance carrier for a quote.
    • Compare different policies to find the one that suits you best. Be sure to look at the terms, rates, and deductibles for all policies.
    • Once you have selected the best option for you, the policy information will get sent to your lender, they will need to accept that the coverage is sufficient.
  11. Closing Details
    • As you approach settlement, the date, time, and place will be confirmed with all parties involved.
    • Your agent will assist your mortgage company and attorney for the final preparation for settlement.
    • A few weeks before closing, you will contact all utilities to make sure they are put in your name the day of settlement.
  12. Final Closing Costs
    • At least three days before settlement, your loan officer will provide your Closing Disclosure. This document will include all costs associated with your home purchase.
    • You and your agent will go over the details to ensure everything is correct before settlement.
  13. Final Walkthrough
    • Within 48 hours before closing, you will complete one final walkthrough of the property to ensure everything looks good. You want to make sure all items included in the contract are still present and there is no damage to the home.
  14. Last but not least… Settlement!
    • You made it!
    • Make sure you bring your photo ID to closing and verify any funds you still need to bring to closing.
    • You will go to the place of settlement to sign all documents. The attorney will go over everything with you.
    • The seller receives the funds, and you receive the deed and keys to your new home!

Use this PDF as a guide to help you through the transaction: Process for Purchasing PDF