Buying a home is more than just a social milestone. It could be where you will be spending the rest of your life, or maybe it is just another real estate investment opportunity. Either way, you will be going through a ton of documentation before the sale is finalized. If you are looking forward to purchasing a new home, start by getting these documents together.
The first legal document you should acquire is signing a contract with a real estate agent. Get in touch with a broker or a real estate agent who has an abundance of experience. Look at the agency’s reviews online and get in touch with their past clientele.
The contract between a buyer and a real estate agent is called buyer representation. It’s a way to strengthen the trust between the buyer and the agent. The agreement includes your requirements and guides the real-estate agent in selecting a property that best suits your interests.
How are you planning on paying your mortgage off? And how much will you be paying each month? Your mortgage pre-approval amount will be based on your monthly income, and having proof of employment in hand can speed up the process. Lenders will only approve the sale if they are sure you can pay off your payments consistently. Expect them to contact your employer more than once before the deal closes.
Proof of income is required when you apply for a mortgage pre-approval. The set of documents needed may vary depending on the lender, but here are standard proof of income and assets documents you should have at hand:
- Bank Statements
- Tax returns
- Gift letters
- Retirement account statements
You should also keep your pay stubs and other proof of employment nearby. Securing your paystubs in 30 seconds seems like a dream, and luckily in today’s digital era, you can be provided with the resources needed in no time! These documents prove that your income is what you have claimed and will also showcase the sources for your down payment.
It is a document that will set the ground rules for purchasing your new home. Your real estate agent will assist you with that document, and it will include the terms and agreements of your potential purchase. The information may include the following:
- Your preferred timeline to purchase the home
- Price range
Once you agree on the terms and the document is signed, the purchase agreement transitions into a sales contract. It is an agreement that both parties will be responsible for.
A credit report includes information about your payment history, debts, and collections. A credit score will be generated using the information on your credit report. Typically, the higher it is, the better options you will have. In order to assess your ability to repay the loan, lenders are likely to pull your credit score and reports. You can also get a copy of this document after you put in a request with the credit bureau.
Before diving into loan estimates, let’s talk about Allotment Letters first. It is a requirement by financial institutions before securing a home loan. You can ask the property developer to deliver it to you on the letterhead. It’s a brief description of the property and the funds released by the buyer to construct it.
The lender provides a loan estimate, which includes an estimate of closing costs and terms of the mortgage loan. You may find the following specifics in a loan estimate:
- Estimated closing costs / escrow / cash required to close
- The amount of mortgage insurance
- The current interest rate
- Amount of the loan
- Prepayment penalty
One of the critical documents needed before purchasing a house is a title review. Even though the documentation is only required after the closing process, it is essential to make sure that there are no more hidden problems that can prove to be troublesome in your capacity to hold the property.
The documentation will include estate disputes, tax liens, forgeries, and boundary encroachments. Additionally, it is highly advised that you secure title insurance.
Purchasing a new home can be overwhelming. Especially when you consider the never-ending pages of documents you will be drafting and signing. The process is lengthy and challenging. It’s best if you get in touch with a local real estate agent to guide you through the process. Not only will you be able to stay on top of all documents, but you will get through the process in no time.