What are the usual items involved with buying a home?
So, you see a house you love, you put in a bid and it is accepted. Does that mean you have bought a house? There are many issues that will arise between the time you see the home you intend to buy and the time you move in to that home. Following are some terms, explanations and issues with which you should be familiar so you will be able to ask the right questions.
- ATTORNEY REVIEW – Within 3 days of receipt of a fully executed contract, the buyer or seller may have an attorney review and, if recommended, cancel the contract. Once the contract is cancelled it is no longer valid and the parties must then, usually through their attorneys, negotiate the terms of a new contract. If the contract is not cancelled, then it is binding as written.
- MORTGAGE CONTINGENCY – The mortgage contingency clause conditions the contract upon the buyer obtaining a mortgage loan commitment. The buyer must make a good faith attempt to obtain the commitment. The issuance of a commitment is dependent upon many factors, including, but not limited to, verification of information provided to the lender and appraisal of the property. The underwriting process takes time which should be considered when committing to a contingency deadline and closing date.
- INSPECTIONS – The inspections provide the buyer with the opportunity to have a professional examine the property to determine the presence of any defects, insect infestation or environmental contaminants which may affect the buyer’s decision to purchase the home.
- TITLE SEARCH – Before the closing, a title search will be performed to determine if any other persons or entities have an interest in the property or if any other persons or entities have placed restrictions on the use or enjoyment of the property.
- SURVEY AND CORNER MARKERS – A survey is a map showing the location of the property, as well as visible improvements on neighboring properties which may encroach over the property lines. Surveyors must place permanent markers at all property corners where none currently exist, unless a written waiver is provided by the buyer. Placement of the corner markers may dramatically increase the price of the survey; however, boundary lines may be difficult to locate without corner markers.
- HUD-1 UNIFORM SETTLEMENT STATEMENT – This is a federally mandated document which details all the funds being used to purchase the property and all funds being paid out at the closing.
- CLOSING – The buyer will attend the mortgage loan closing and sign all the lender’s required documents. Then, the title closing will occur – the seller delivers the deed and other required documents and the buyer delivers the closing proceeds to the seller. Now, you have bought a house!