Buying a house is quite possibly the most exciting time in our life. Not only is this a sign of starting a new life, but chances are you’re doing it to accommodate the needs of new family members. Thus, you should do in-depth research on the process. One of the most overlooked things in real estate is the legal aspect.
Not many buyers understand the legal matters when buying a house. But that’s why we’re here to tell you all about it.
The first legal matter is the question of preapproval. Getting preapproved is one of those things that everything else depends on. If the bank doesn’t give you a loan, then how will you buy a house? Unless Bill Gates is your dad, very few Americans have the cash to purchase a $300,000 house.
The mortgage industry in the US is huge. Mortgages are expensive and they’re the main source of debt for US homeowners. Paying off a 30-year mortgage isn’t easy. That’s why getting pre-approved is so difficult. But before you even think about going house buying, getting preapproved is a necessity.
With all that said, you shouldn’t have any issues if your finances are in order. To understand how this process goes, all you need to know is that the bank or lender will take your proof of income, personal information, and credit score and determine your creditworthiness.
Then, the lender will tell you if you’re good to go and for what amount. We should strictly emphasize that preapproval is different from getting a loan. Getting preapproved means that you qualify for a mortgage loan – not that you have been given one.
Regardless, this is one of those legal matters that no one should overlook when buying a house.
Sending An Offer
You can’t buy a house without sending an offer. Luckily for you, a real estate agent can help guide you through the process and even manually take charge of the task. But with all that said, you might want to get another person on board.
During this part of the home buying process, you send an official purchase offer for a house. This is done through a standard form, but you might want to hire a real estate attorney to look over the offer. This person will determine if the terms are correct and if your agent has drafted a full-proof offer.
The last thing you want is to damage yourself by not executing the wording properly. A purchase offer is a complicated document that takes into account multiple things. While we won’t get into what, make sure to hire a good lawyer to review the offer and protect you from any mistakes.
The Purchase Agreement
When a seller accepts your offer, your real estate agent will draft a purchase agreement. This is a document that includes multiple points but is vital for moving forward. It isn’t a legal document, but it is a document that every home purchase must legally use.
The purchase agreement includes multiple points. The first is the earnest money. The earnest money is a 1-2% estimate from the final price that is deposited in an escrow account. This amount sits there until the deal is complete. What’s interesting is that the more earnest money you deposit, the more legit you seem in the eyes of the seller.
The next point is contingencies. Contingencies are safety points that protect both seller and buyer. A contingency will allow either party to back out at any time if something goes wrong. If you, the buyer, back off from a deal using a contingency, then you get your earnest money back.
The third point is the settlement date. Quite straightforward, a settlement date is the date of the closing. You have up until this date to finish any home inspections. Your real estate agent will recommend performing a home inspection to understand the state of the property and uncover any potential hidden issues.
And the final point of the purchase agreement is the date of possession. While many homebuyers confuse the date of possession with the closing date, the difference is that this is the date when you can move into your new house. The seller has up until that date to move out. In most cases, the date of possession is anywhere between 30 and 45 days.