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Real Estate Law Article: How to Buy a Home

If you are a first time home buyer, here is a quick overview of the process.

Step One: Obtain Pre-Approval

Before a realtor will show you houses, they will require you to provide them with proof of pre-approval. That is, they will want written proof from your bank that you qualify for a loan. Contact your bank and ask for pre-approval. They will look at your credit rating and finances and offer you a loan up to a certain amount. If the bank offers you pre-approval up to $350,000.00, then you will know that this is your maximum price range for a home.

Step Two: Hire a Real Estate Agent

A knowledgeable real estate agent will be able to help you find the home that you are looking for at a price you can afford. The best part about hiring a real estate agent is that it does not cost you any money out of pocket. They receive a percentage, around 3% to 6%, of the purchase price upon closing of the deal.

With that in mind, real estate agents are motivated to close deals so they get paid. Be very sure that you do not purchase a house out of your price range or close on a home you are not completely satisfied with. Purchasing a home is an extremely important decision and should not be rushed. Do not worry if the first several homes that your realtor shows you are not to your liking. Keep looking until you find a home that is right for you.

Step Three: Consult an Attorney

Your attorney will be able to draft a purchase and sale agreement and thoroughly explain the clauses therein. Real estate agents will often provide a form for free but keep in mind that these agents are often over-eager to close the deal or are actually a seller’s agent and do not represent the buyer’s interest.

Step Four: Obtain a Mortgage

After you have found a house and drafted and reviewed a purchase contract, you will need to obtain financing. As you have already received pre-approval this should be rather seamless. Depending upon the loan you receive, and the funds you have available, you will make a down payment anywhere from 3% to 40% or more. The remainder of the purchase price you will finance with a mortgage. You will make monthly payments which will cover the interest and principal over the term of the loan, usually 30 years.

Step Five: Title Search

At this point, the real estate agent will typically contact the Title Company to do a title search on the property. This assures that the seller indeed has good and marketable title to the property. That is, that the seller is the true and rightful owner and that there are no liens or easements or other encumbrances on the property.

Once your attorney has determined that the title is good, he or she will order a survey. Once the survey is completed the attorney will order the insurance binder. Once the binder is provided, a closing date will be set and the attorney will prepare a note and mortgage, deed, and closing statement as needed.

Step Six: Closing

Closing is when the parties get together and execute all the necessary documents to transfer title and the buyer provides payment. Once the closing statement is reviewed, the sellers will sign over the deed and the buyers will execute the bond (or note) and mortgage.

Step Seven: Recording

After the closing documents are signed, the attorney will have the deed and mortgage recorded in the County where your home is located. The recorded documents, along with the abstract, mortgage, note or bond, and a certificate of title will then be sent to the bank. The attorney will also send the certificate of title and an application for a mortgage policy to the title company.

Step Eight: Move In

After these general steps have been completed, you will be cleared to move into your new home!

Legal Disclaimer: The information on this page does not constitute legal advice and should not be relied upon as each situation is fact specific and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. The information on this page is solely for the purpose of legal education and is intended to only provide general information about the matters stated therein. The information on this page should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area of the matters stated therein. No attorney-client relationship is formed without an actual agreement confirmed in writing. I am licensed only in Washington and Oregon.