Buying a home, particularly if it is your first purchase, is often an exciting but stressful process. Most of the stress is due to uncertainty about what will happen and what steps you should be taking. Hopefully, this article will take some of the mystery away. This is not meant to be entirely comprehensive, and there may be more or less to do in your circumstance, but it should serve as a handy guide going forward.
1. Once the material terms (price, closing date, contingencies) are negotiated and agreed on (and, in some circumstances, memorialized in a “binder”), your first step will be to arrange for a building inspection. You should expect to have a general building inspection and separate inspections of the septic system and well if the property is not served by public sewer and water. In addition to the building inspection, a water test for radon, lead, uranium, arsenic, and bacteria should be performed if a well serves the property. Finally, a radon test of the air should be performed in most circumstances.
2. Once building inspections are complete, there are typically further negotiations related to the building inspection. These negotiations often result in a seller making repairs or giving a buyer a credit against the purchase price.
3. After the inspection items are negotiated, a formal contract of sale will be executed, first by you as buyer and then by the seller. You will also be required to pay the remaining deposit when you sign the contract of sale. The deposit is held in escrow by the seller’s attorney. The attorneys often oversee preliminary negotiations on the agreement while the inspections are being performed and negotiated to keep the process moving in a timely fashion.
4. If you are obtaining a mortgage, you should begin the process immediately. Before the contract is signed, you should start the application process and provide information to your mortgage broker or bank. Once the contract is signed, the bank will order an appraisal of the property and you should continue to provide the information requested by your lender. Once a commitment letter is issued, your attorney should review the commitment, and you should discuss any remaining conditions before releasing any financing contingencies.
5. Once you sign the contract, your attorney will order a title search and search of the various municipal departments (zoning, health, fire, etc.) The searches will be reviewed to ensure the seller can provide clean title and there are no municipal violations.
6. When your mortgage commitment is issued, you will need to obtain a binder for homeowner’s insurance. Your insurance agent will need certain information from the bank to comply with the loan terms.
7. Approximately one week before closing, you should receive estimated closing figures. You should be prepared to transfer the closing funds 1-2 days before closing.
8. On the day of closing, you should do a final walkthrough of the property to ensure everything is still working and there is no new damage. After the walkthrough, you will need to sign your mortgage documents, and the actual closing will occur.
You can appreciate this list is “big picture.” Each real estate transaction has its nuances and particular issues. Should you have any questions, please do not hesitate to contact us, and we will be happy to provide more information.