Process of Home Buying

Looking to buy a home but not sure where to start? Here’s a quick snapshot of the steps involved with purchasing a home.

1.            Get a pre-approval letter: Contact a local mortgage lender in MA and ask them for a preapproval letter outlining how much money you’ll be able to borrow to buy a home. They’ll ask you some basic information about your income and assets, and will need your social security number to run a credit report.  Note: You are not required to use this lender for your mortgage. You can continue to shop for the best interest rates and closing costs once you have an accepted offer on a property.

2.             Working with a buyer’s agent. It’s beneficial to work with a buyer’s agent to help you find a home and negotiate the best price. A buyer’s agent has fiduciary duties to represent your best interests, while the listing agent represents the seller’s interests.

3.            Making an offer. In Massachusetts, offers to purchase real estate must be made in writing to be enforceable. Verbal contracts are not binding. When you submit an offer, you will need to provide a copy of your preapproval letter, along with a good faith deposit check of $1,000.  Most offers are contingent on a home inspection and on securing a mortgage.

How much to offer depends on comparable sales of similar properties, and the current state of the market.  A market analysis will help determine if the property is priced accurately.

Negotiating the offer. The homeowner may choose to accept, reject, or (most commonly) make a counter offer. It is very common to negotiate several times before settling on a price that both parties can agree to. The time involved with this negotiation process is typically within 24 - 48 hours. If both parties come to an agreement on the price and terms of the purchase, both parties will sign the updated offer, and the deposit check will be placed into an escrow account.

4.            Hiring a home inspector. Typically, a home inspection is done within five days of an accepted offer on the home and you usually have 1-2 days after the inspection to decide whether or not you wish to move forward with the purchase. Most certified home inspectors, depending on the size of the home, charge between $400-$700 for their services.

Conducting the home inspection. Homebuyers typically attend the inspection so they can see any issues that the inspector uncovers, and understand homeowner maintenance. Inspections often take up to a couple of hours. During this time, the inspector will walk around the perimeter of the home, look at the roof, siding, gutters, plumbing, electrical, and heating systems, etc. Once this is done, your inspector will write up an inspection report to share with you their findings.  If the inspection uncovered major structural or hazardous issues you were not aware of, you might want to consider asking the seller to fix it, or ask for concessions so that you can fix the problem once you take ownership.

5.            Signing a Purchase and Sale agreement. At this point, a Purchase and Sale (P&S) agreement will be drawn up outlining all of the terms of the purchase in further detail. It is highly recommended to have an attorney review the purchase and sale agreement to ensure the terms are written in a way that protects your interests. Once the language is agreed upon, you and the seller will both sign the P&S. Your lender will also want a copy of the executed (signed) P&S. At this point in time, the buyer is required to make a further deposit (typically 5% of the purchase price), which is deposited into an escrow account.

6.             Starting the mortgage application. Once you have the Purchase and Sale signed, contact your lender and complete a formal mortgage application. It usually takes a few weeks for your lender to review your mortgage application.  During this process, they may ask you for many different documents pertaining to your income, debts, credit status, and assets. The lender will also send an appraiser to the home to make a determination of its value and whether they can issue the loan on this property.  Note: Your offer to purchase (and subsequent P&S) will include a mortgage commitment date. This is the date you have until to secure a loan. If you can’t secure a loan by that date, it’s very important to notify the seller in writing by that date so that you don’t put your deposit in jeopardy.

7.             Walk-Through. Typically the morning of the closing, you’ll want to walk through the home to make sure there hasn’t been any major damages, and that the owner’s belongings have been removed before you take ownership. The final walk-thru is also the time to determine the status of any agreed-upon repairs or modifications.

8.            Closing. The closing is usually scheduled at the real estate agent’s office, or at the local Registry of Deeds. Your attorney will be there to walk you through the paperwork to be signed and answer any questions you may have. Closing costs, which are typically between $3,000 -$5,000, include the attorney's fees, cost of preparing mortgage documents, performing a title search, recording charge for deed, and miscellaneous expenses such as title insurance, and property taxes for the next quarter. Once all the paperwork is signed, the attorney will record your new title at the Registry of Deeds, and you are officially a homeowner to the property at hand.  Congratulations and Welcome Home.