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This blog talks about the required documents needed to buy a house, the legal documents required for purchase of property, and what document provided by the seller describes the condition of the property?
The investment in property buying could lead to complications and may become disorganized and chaotic if proper care and documentation are not carried out, which is why it is important to specify the documents needed to buy a house to all parties.
This blog is intended to address and list down documents needed to buy a house so that this investment in property could be made simpler and protect the interest of all parties. This blog is intended for the users to check the most essential and vital parts of the documentation that are to be verified and stored so that the legal procedures are taken care of. The legal documents required for the purchase of property are a long list, so read with the utmost attention.
Though there are many documents that may need to be studied, verified, and stored as a pre-requisite measure for buying property anywhere, the following is a list that talks about documents needed to buy a house. (1)
This is possibly the first legal document you can encounter. The contract you might sign (which is common in some states) – it is our advice that you do not sign this without a great agent whom you can trust wholeheartedly to find the perfect home.
This is also termed a buyer representation agreement, it is known to solidify the relationship between the buyer and agent. The agreement acts as a foundation – it helps the agent to understand that they must work towards your best interests and represent you to their best ability.
This agreement differs from state to state, as they have different requirements. Some states require sellers to fill out a disclosure statement – this is towards stating and acknowledging known repairs, damages, health hazards, etc in the home.
This can include information and details of the paint used, the seller’s awareness of the water damage, leaky roof, or plumbing issues.
In the states where the agreement is not necessary, buyers must beware of the situation. Order a home inspection to ensure apt and proper due diligence is conducted before you purchase the home.
The document sets the basis for you to purchase your new home. The legal agreement is the contract that an agent will assist you to write, and it includes the terms of your purchase such as:
d) Timeline to purchase the home
When the terms have been mutually agreed upon and accepted, and the document is now signed – the purchase agreement gets converted to a sales contract to which both parties are held liable.
Before we address the Loan Estimate document, it is important to talk about the Allotment Letter. It is required for availing of a home loan from any financial institution. This can be received from the property developer on the letterhead. It would state the description of the property, the amount paid by the buyer to construct the property, etc.
Now, a loan estimate is a document that is provided by a lender. It consists of the terms of the mortgage loan and an estimate of the closing costs.
This document talks about the following particulars:
a) Loan amount
b) The interest rate it contains
c) Principal amount and interest amount
d) Mortgage insurance amount
e) Prepayment penalty if it exists
f) Estimated closing costs, escrow for prepaid, cash needed to close, etc
This is a crucial part of the documents needed to buy a house.
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This acts like a ‘good faith’ deposit. If you are serious about purchasing the home, include an earnest money check. Remember that this is something that your agent will advise as well. Roughly, 1% to 3% of the purchase price is considered normal.
When you purchase a property, you take control over the title of that home. This represents the legal ownership of the property. The title is less a document and speaks more about the rights:
a) Right of possession
b) Right of control
c) Right of exclusion
d) Right of enjoyment
e) Right of disposition
The title is not part of the documents needed to buy a house, per se. You will be signing a physical deed to the home when you close it. This acts as a record and solidifies the ownership and after the deed is filed with your local county, it becomes official.
Another critical component that falls under documents needed to buy a house. This is performed during the closing process. It ensures that there are no more hidden problems that could interfere with your capacity to hold the property.
This could include tax liens, boundary encroachments, estate disputes, forgeries, etc. It is advised to get title insurance. This suggests that the new owner shall not bear responsibility for someone else’s lien if it wasn’t discovered before your purchase.
This is a document that indicates property lines, basically highlighting what you own and what you do not own. This is useful when adding fences, storage sheds, etc to your property.
This legal document is one of the most critical documents. This document is the agreement to transfer the said property from the existing owner to the new buyer. The contents need to be verified by a qualified legal consultant so that the transfer of ownership is done properly. This document lists all the relevant information about the property; the terms and conditions, and the specifications of the property which include but are limited to the facilities provided.
This is a fee that is charged by the county or state for the process of transferring ownership. The fee varies from state to state. The real estate transfer tax is part of your closing costs, but do your research – as in some states, the sellers bear the cost.
Additional information: These are the 13 states that do not charge the tax.
This is part of the documents needed to buy a house. This document certifies that the home is all set to move into and it has met all the legal requirements – it is safe to inhabit. This legal document is issued by the zoning authority, and it can be reissued when there is a title change.
This is an important document – it contains all the information about the loan closing, fine and final details to close the agreement and change the title of the home.
It’s best to keep in touch with your agent and clarify all your doubts.
There are always miscellaneous costs that you need to consider when you’re buying a house. This is not part of the documents needed to buy a house, but it is important to bring some amount of money when you are closing the deal.
A mortgage note is also known as a promissory or borrower’s note. It outlines the terms of the loan and how to repay it. It includes the interest rate, loan amount, payment dates, payment terms, and the ‘worst-case scenario’ – what happens if you fail to do so.
This is when all approvals have been completed, and now this states that you have a mortgage loan to pay.
This document is only when you are purchasing a newly constructed home, if not, this is not something you need to worry about.
There is additional paperwork you can expect, such as:
a) A construction contract agreement is something you must sign.
b) A detailed scope of work.
c) BoQ – bill of quantities outlines the materials and labor involved.
d) Construction insurance.
e) Zoning and utility documents.
While there are misconceptions that this document is obsolete – not entirely!
This legal document outlines charges and credits between the parties in the real estate transaction. Depending on your mortgage, you may or may not see a HUD-1. Keep in mind that this is important during your closing disclosure.
The attorney definitely takes over, which is why it is necessary to involve an attorney to ensure a seamless and smooth sailing process.
This blog provides the documents needed to buy a house in an extensive manner. It is important to note that you bring two forms of identification – a passport, driver’s license, government-issued ID, etc.
Do bring your secondary identity document as well, social security cards will help.
When it is time for the closing process, it is advised that you step back – your attorney will facilitate the entire thing.
Including the documents needed to buy a house, feel free to ask any questions to your closing attorney. This is a time-consuming process as it is, it helps to be involved to pave the way towards a streamlined process.
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