Pennsylvania New Home Buyer's Guide
Buying a home can be one of the most important decisions that you will make. A home buyer is takes on several financial and legal obligations. The home purchase process can be confusing. Therefore, it is important that you understand the series of events that must take place between your decision to move and the possession of your new home.
HOME SHOPPING
When you are finally prepared mentally and financially for your new home search, your first recommended plan of action is to contact a reputable Real Estate Salesperson and Mortgage Broker. A reputable Realtor will save you time and headaches when looking for the home that you desire. He or she will be able to inform you of the best areas to purchase a home, and they will show you homes that are relevant to your search criteria. A reputable Pennsylvania mortgage broker is another crucial tool that you should have at your disposal. Consulting with a mortgage broker will give you valuable home buying information. The mortgage broker will be able to tell you how much you can afford and what types financing options are available to you.
CONTRACT NEGOTIATION
When you find the home that you want to purchase, you will make an offer by submitting an "Agreement of Sale." The contract states the amount you are willing to pay, when you would like to occupy the home, and it outlines the conditions under which the sale will take place. These conditions include the obtainment of financing (mortgage loan, equity line of credit, cash, etc.), a passing home inspection, and anything else that you may have included in the agreement. Your offer only turns into a binding contract once the seller has signed it. Your offer will usually be accompanied by a check, which is known as earnest money. The more earnest money given with an offer, the more serious your offer looks to the seller. Earnest money goes toward the sale price of the property, but if you choose to back out of the agreement without sufficient cause, earnest money will be kept by the seller. The sales contract determines the date at which property ownership will change. This is called the closing or settlement.
GETTING FINANCING
Most home mortgage loans are made by lending institutions, such as savings and loan associations, banks, or mortgage bankers. You can receive information on the mortgage programs that are available to you by calling several of these lenders. There will be several types of PA mortgage loans available. You should compare the loan terms and decide which mortgage loan will best suit your needs. Since the mortgage loan programs differ among lenders, an easier alternative to calling lenders and shopping or rates is to consult a reputable PA mortgage broker. A mortgage broker knows the industry and has connections with many major lending institutions. The mortgage broker will do the calling and shopping for you, all while explaining the documentation, and the pros and cons of each loan program.
When you have decided on the type of mortgage loan, your mortgage broker will request information from you, in order to submit a mortgage loan application. Gather information on your income, debts, and assets. If you are self-employed or work on commission, you will need tax returns for the last three years, or you may wish to go with a stated income/ stated asset mortgage loan.
After you have submitted the loan application, there will be a non-refundable fee (depending on the lender) to cover the appraisal and credit check. During the coming days, the lender views your application and decides if a mortgage loan commitment can be given. The home will be appraised in order to see if it is worth enough to secure the loan. Your credit history, income and debt will be evaluated to see if you can afford to make the mortgage payments on the home loan. After this review you will receive a mortgage commitment letter, which states that the lender will give you financing at a specified rate for a specified amount.
THE CLOSING
The closing will usually take place at a title insurance company. The buyer and seller are present, along with the real estate broker and the mortgage broker. At closing, the deed to the home is given from the buyer to the seller, mortgage documents are signed, and funds are exchanged. Most of the costs that are associated with the sale of the home are paid at closing, and are outlined on a form known as the HUD-1. After the HUD-1 is signed by both parties, and the funds are exchanged, congratulations, you have purchased your home.
