Buying a home is the biggest legal transaction you will enter into. At least, that’s the case for most people. Before you think about signing that check, consider all the legalities of owning a real estate property—from the mortgage preapproval to the transfer of the title to your name. While the legalities involved in purchasing real estate are overwhelming, they should not be a hindrance to your plan to buy your dream home.
Remember that when it comes to owning a home, the law is on your side. The government, including the Internal Revenue Service (IRS)—wants you to own a home, so much so that first-time homebuyers can apply for certain tax credits. Homeownership is good for the economy—state and country-wide.
If you are planning to buy a home and you have your eyes set on a certain property, think before you make an offer. Study your options well. Consider all the legalities involved and prepare the paper works. There is nothing more frustrating than having to let go of a dream home because of a legal impediment.
The first thing you have to do is to get a mortgage preapproval. Don’t start looking for a home if you are not preapproved for a mortgage yet. This document will tell you the interest rates that you are eligible, too. It will also make it easier for you and the real estate broker to find a property that fits the amount of the approved loan.
You have to look at the interest rate. Are you comfortable with it? Can you find another lender? Should you shorten the term of the loan? If you cannot afford the interest rate, then you have to rethink about buying a home right now. If your finances are not in order and you have a bad credit score, this is not the right time to buy real estate. You will be forced to pay high-interest rates even on a short-term mortgage.
With the help of a real estate agent, you can make a purchase offer. It is a legal document meant to tell the seller how much you want to buy the home. Consider how much you are willing to pay for the property. Often, you will offer less than what the seller is asking. But in some cases, when the market is hot, you have to offer more to get a shot at the property.
Think of the purchase offer as an initial contract. For the sale to push through, the seller needs to sign that purchase offer. You can hire a lawyer who specializes in real estate law to review the purchase offer before giving it to the seller.
Once the seller approves of the loan, you have to go through the mortgage approval process. You have to tell the lender that the seller approves of the loan. The lender will ask for more documents to prove that you can pay the loan.
If you are a first-time homebuyer, you might overlook the need for a home inspection. That’s why you need a lawyer or a real estate broker. They will explain the importance of this clause in the contract. A home inspection allows the buyer to hire a home inspector to look for potential problems in the home.
Usually, the problems aren’t dealbreakers that you will have to let go of your dream home. But in rare cases when there are repairs the home needs, you might have to renegotiate with the seller or buy the home for less the asking price.
The mortgage company will require a title insurance. This is an assurance that the ownership rights or title you receive are valid. This protects both the lenders and the homebuyers if there are defects in the title of a property.
Mortgage Closing and Deed
Your lawyer or real estate broker will accompany you during the mortgage closing. This is the part where you will settle the agreement to buy a property. During the meeting, your lawyer or broker will review the documents to make sure they meet the legal requirements of purchasing and owning a home. You have to sign your name on all the pages of the contract. Make sure to review the financials before signing the papers.
This is also when you will receive the deed to the home. This is proof that you are now the owner of the home. You will have to transfer the title to your name but talk to your lawyer first about how you want to own the home. If you are married, you can choose to include your spouse’s name on the title.
Once the title is in your name, congratulate yourself for going through the tedious legal process of buying a home. Review all the documents. Photocopy them and store them in a secure place in your home or a vault in a bank.