The process of buying a home can be complex. Many people think the purchase process is as simple as attending a showing, making an offer and sealing the deal at closing. But as you prepare for the transaction, you will have to consider other details. The following three considerations are especially important to keep in mind.
Mortgage preapproval
If you are preapproved for a mortgage, you may have an advantage over other prospective buyers. You’ll want to begin this process before you start searching for a new home, so you can show your letter of approval to your real estate agent. To receive preapproval, you will need to submit proof of your employment, income, assets and credit history to your mortgage lender. Based on these factors, the lender will calculate how much you can borrow to make your purchase. This amount will help your real estate agent know you can afford the property you’re interested in.
Title searches
Your mortgage lender will have a title insurance company perform a title search on your new home before you close on it. This search will make sure your property has no issues that could prevent its sale. Yet, all kinds of issues can turn up. These can include:
- Easements
- Encumbrances
- Public record errors
- Boundary disputes
- Liens against the property
- Illegal deeds
Fixing these issues without title insurance can prove to be costly and challenging. Purchasing a policy can keep these problems from derailing your transaction.
Closing challenges
Beyond title issues, you may face other challenges during the closing process. Your offer likely contained a home inspection contingency. The results of this inspection could turn up problems that could prove costly to fix, or which compromise the property’s integrity. Furthermore, your circumstances may have changed after you submitted your offer. You may have changed jobs, lost your job or experienced a dip in your credit score. Interest rates, too, may have changed since your preapproval. In these cases, you may no longer qualify for the loan you were preapproved for. And in rare circumstances, the home’s seller may back out of the transaction if they accept another offer or decide not to move. You will likely lose your deposit on the home if this happens.
Performing due diligence when buying a home can save you from headaches during the transaction. And knowing the potential pitfalls that may arise will allow you to plan for them. An attorney with real estate experience can help you navigate the challenges of the homebuying process.
