The Loan Pre-Approval Process
Obtaining pre-approval for a home loan cannot be stressed enough. Not only does it assure you that you are looking in the correct price range, it also assures the seller that you are a legitimate buyer. If you need a recommendation of a lender, I can provide you with several contact names. Searching for a home can definitely start in advance of the loan pre-approval, but it is best to be pre-approved before submitting an offer to a seller.
Let's Make An Offer
When you find the right home, the next step is to write an offer on the property. Keep in mind that if you like it, chances are you are not alone. Acting quickly can make the difference between living there and telling your friends about the house that got away. Writing up an offer generally takes about an hour. Once the offer is completed I will call the listing agent and let them know that I have a buyer for their listing. I will need to include a pre-approval letter from your lender and if there are multiple offers it can often work in your favor to include a personal letter talking about the house and why you want to purchase it.
How Firm Is My Foundation? The Inspection...
Most offers to purchase are written subject to the buyer approving of a home inspection. I strongly advise doing this. The cost (around $400) is paid for by you, but it is cheap insurance if it keeps you from buying a money pit. The inspection will cover items such as the roof, gutters, wiring, plumbing, foundation, framing and insulation. It is a good idea to accompany the inspector that you hire so that you can learn the good features about the home as well as the areas that need attention. Should there be other areas of concern (heater, oil tank, foundation issues, etc.) you may want to hire a specialist in those areas. Sewer scopes are also common in the home inspection phase. I will be there during any inspections. If some items come up during the inspection that are not satisfactory to you, it is possible to negotiate with the seller to make the necessary repairs. The seller is not obligated to agree to do this, so if they don't, you are not obligated to complete the purchase.
The Financing Process
Once you have approved the home inspection, the only hurdle left is financing. Since you have taken care of most of this by getting pre-approved, completing the process only takes about two weeks. The two main items needed are: an appraisal on the home and a preliminary title policy showing that the property is free of liens or other clouds on the title.
Appraisers know the purchase price when they do their appraisal, so it is rare for an appraisal to come in above or below the agreed upon price. The main concern with appraisals has to do with the work orders. Quite often, appraisers set a value on a home conditioned upon certain repairs being made. If the repairs are not completed, the appraisal is not acceptable to the lender and the financing is not approved. This can be a problem if your desire is to get a good buy on a home that needs work, with the intention of fixing it up yourself later. I have met many appraisers on site and have a very good idea of what will and what will not get called out. I will council you during the offer preparation as to how to deal with these issues.
A Clear title is usually not difficult to obtain. Rarely do transactions fail due to unmarketable title. You will have an opportunity to review the preliminary title policy prior to signing the closing papers.
The Escrow Process - The Sale Closes, Time to Move In!
When loan approval is obtained, closing documents are drawn up and sent to escrow. The escrow agent's function is to facilitate an orderly transfer of ownership from seller to buyer. Taxes need to be prorated, any underlying liens on the property must be paid off, and many documents will be reviewed, signed and notarized. Utility transfers may possibly be handled by escrow, or you and the seller may agree to handle these on your own.
The signing of documents does not constitute closing. Closing occurs without you being present, when the documents are recorded and the proceeds check is available for the seller. If any questions or concerns arise after closing I will be there to help you.
David Bushnell
Windermere Real Estate - Ballard
(206) 940-0667
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