Purchasing your first home can be an extremely intimidating process. You are confronted by many terms that you may not understand, and you may not realize how many necessary steps there are in the process. To make matters worse, everyone else, including the seller, banker, and real estate agent, may seem like they know exactly what is going on, so you may not feel comfortable asking questions.
Thankfully, there are a variety of outside resources available to you so you can research the process before you start to get serious about a home purchase. One of the many things that you should consider as part of your home-buying process is all of the paperwork that you may need to complete to make the sale “official.”
If you are using a real estate agent or bank, they can help you through the paperwork involved in the buying process. However, having some background information can still be helpful even in those situations. In addition, if you are trying to cut costs and navigate the process on your own, knowing which documents are “must-haves” will be essential information for a valid home purchase.
If you are financing your home—and the vast majority of first-time homebuyers will—you should take a look at your credit information before you begin applying for mortgages or even considering houses. Your credit score will have a profound impact on your ability to obtain financing, so it is important to know where you stand before you get the process started.
You can get a free credit report once a year from AnnualCreditReport.com. Other sites offer less complete information regarding your credit score that you can check more often as well. Regardless of how you check your report, you should.
One of the most important reasons to check your credit score is to ensure that the information on the report is accurate. Inaccurate information can result in a much lower credit score. If you have a dispute, you should take care of those issues before you begin the mortgage application process. It can take considerable time and effort to dispute derogatory marks on your credit report to repair your credit score, so start the process early.
You may also need to consider saving for a down payment. While down payments are not always necessary, depending on the type of financing you use, having a lump sum to put down on the home can significantly decrease your monthly obligations. It can also make a seller more likely to accept your offer on a home.
The type of paperwork you need will also depend on where you are in the home-buying process. If you have not yet been approved for a mortgage or financing, the documents you need at that point may look very different from the actual sales materials.
Getting your pre-approval letter is one of the first steps in the home-buying process. Your financial institution will require extensive information about your identity and finances to obtain this letter. The pre-approval letter provides you with preliminary approval for a set amount of financing for your home.
Getting the pre-approval letter first will allow you to get a better idea of what type of mortgage payment you can afford and how much financing you can obtain. You can certainly start the house-hunting process without the letter, but potential sellers will be more likely to assume that you are a serious buyer if you already have your pre-approval letter in hand.
Examples of the necessary documents to obtain a pre-approval letter will include:
You may also need additional information, which will vary depending on your financial situation. For example, after taking a close look at your bank account records, your lending institution may ask for more details about how money was spent or for an explanation of large, recent purchases.
You must write up a formal offer to get the negotiation process started. The proposal will include vital information, such as:
The seller will then respond with either an acceptance or rejection of your offer. If they reject your offer, they may provide a counter offer as well. Regardless of how the seller responds, they should do so in writing.
The document used to convey an offer and acceptance is often referred to as the purchase agreement. It contains all of the necessary conditions for the sale and what exactly is being sold.
Once you have made an offer on a home and it has been accepted, you will receive additional information about the house. This information may result in a renegotiation of the price or may even discourage you from making the purchase altogether. The following documents are necessary to finalize the sale.
Once you have decided on a potential home and the seller has shared additional information regarding the home, you will begin to see a lot of unfamiliar paperwork to actually finalize the purchase. Most of these documents will be prepared and reviewed by the seller and then delivered to you.
Although the documents for the mortgage and the real estate transfer are often presented together, they are really two separate legal processes. The property transfer will require the following documents:
If you are also obtaining a mortgage on the home, you will be required to complete additional documents. Unlike the sale papers, mortgage documents affect only you and your financial institution.
Selling your home on your own may be challenging, but it is certainly possible. It can also cut down significantly on costs associated with paying realtors and other professionals. Find the legal forms you need to sell or buy a home in our property documents section or from the links below.