Guide to Buying a Home
Getting to the Finish Line
Your offer's accepted! Now it's time to get to work. Before
we can close on the purchase of your new home, we need to take a
few more steps to make sure the purchase is a sound decision.
Step 1: Buy with Confidence
As the buyer, you have the opportunity to hire a professional
inspector to evaluate the condition of the home. An inspection
clause is included in the written contract given to the seller.
The goal of a home inspection is to give you an objective,
independent and comprehensive analysis of the physical condition
of your potential new home and check for any safety issues that
might otherwise be unknowable.
A professional inspector will check on the structure,
construction and mechanical systems of the house. This usually
Plumbing and waste disposal
Water Source and Quality
You will receive a written report of the inspection and an
estimate of the cost of any and all repairs. If you choose to be
present during the inspection, you can ask your inspector about
unique features of the property and get his or her opinion on
the necessary maintenance for each different area.
Depending on the results of the inspection, you will have the
• Get out of the written offer if major problems are discovered
• Renegotiate the purchases price to account for necessary
• Negotiate that repairs are made by the seller before final
purchase of the property
Your lender will require that a legal land survey be completed
of any property on which they issue a mortgage so that they can
obtain a clear lender's title insurance policy.
A surveyor will determine:
• Whether the house is within the property borders
• Whether there are any enchroachments on the property by
• The extent to which any easements on the property may affect
The survey will also provide you as a new owner with invaluable
information. The report will let you know exactly where the
property lines are and will let you know if there are any
building restrictions that could prevent you from adding new
features to your home, like a new fence.
The amount of detail provided in a surveyor's report varies
based on the kind of survey you ask for. Obtaining more
information will cost more money.
Step 2: Clearing the Home Title
Simply explained, "title" is the right to own, possess, use,
control and dispose of property. When you buy a home, you are
actually buying the seller's title to the home. A deed is the
written legal evidence that the seller has conveyed his or her
ownership rights to you.
Before the closing meeting when the actual transfer of
ownership occurs, an attorney or title specialist generally
conducts a title examination. The purpose of the title
examination is to discover any problems that might prevent you
from getting clear title to the home.
Generally, title problems can be cleared up before settlement,
but in some cases severe title problems can delay settlement, or
even cause you to consider voiding your contract with the
Some "clouds on title" can be corrected relatively easily while
others can become quite complicated to remove. You should insist
on being kept informed of every step in the title examination
process. If title problems are uncovered, it is important for
you to understand your legal rights.
What is Title Insurance?
Title insurance is the best way to protect yourself against
title defects that have occurred in the past, which may not
appear until after you've taken ownership of the property.
Before a title insurance policy is issued, a title report is
prepared based on a search of the public records. This report
gives a description of the property, along with any title
defects, liens, or
encumbrances discovered in the course of the title search. It is
different than casualty insurance in that you pay a one-time fee
and it protects against past (as opposed to future) events.
Title insurance will protect you against title defects that were
not discovered in the course of the title search. If such a
defect were discovered later, your title insurance would cover
If title problems are severe enough and not covered by
insurance, you could actually lose your house. A title insurance
policy protects you and your heirs against title defects for as
long as you own your home.
Step 3: Getting an Appraisal
Once you have determined that there are no defects on title
and all inspection concerns have been resolved, it is time to
order an appraisal.
An appraisal is an estimate of the value of a property made by a
qualified professional. The appraisal of your prospective home
is as important as your credit history in obtaining a mortgage.
After all, the property you are purchasing serves as the
collateral for the
Although the primary goal of the appraisal is to justify the
lender's investment, it also protects you from overpaying. Your
lender will generally hire the appraiser and will charge you as
the buyer a fee for the service.
If the appraisal falls short of the amount you wish to borrow
you may be refused a mortgage or offered a smaller amount on the
mortgage. Your offer contract will be contingent on whether the
appraisal comes in at or above the purchase price you and the
seller have agreed upon.
Step 4: Closing
All the preparation is complete. Now it's time for closing!
Closing is the legal transfer of ownership of the home from
seller to buyer. It is a formal meeting that most parties
involved in the transaction will attend. Closing procedures are
usually held at the title company or lawyer's office. Your
closing officer will coordinate the signing of documents and the
collection and disbursement of funds.
In order to ensure a smooth closing you will need to:
• Obtain a homeowner's insurance policy and provide this
information to your lender and/or closing agent.
• Review the Settlement Statement or HUD-1 that your lender or
closing agent will provide you 1 to 2 days before closing. These
documents will contain a detailed description of all costs
associated with the transaction, including the exact dollar
amount you will need to bring to closing.
• Verify with your lender and/or closing agent any other items
that you need to bring with you such as a valid driver's license
or other form of identification.
• Conduct a walk-through of the property prior to closing. This
will give you an opportunity to see that the condition of the
house is the same as it was at the time of contact.
Additionally, you will be able to ensure that any repairs agreed
to by the seller, based on the inspection, have been completed.