Buying Real Estate

If you’re a first time homebuyer, you’re hearing a lot of terms that are unfamiliar. Title Insurance, Hazard Insurance, Points, Settlement, Closing, Amortization, it may all sound foreign to you.
We are going to help you understand the terms as well as the process involved in buying Real Estate.

Let’s Begin . . .
If it hasn’t already, the reality of buying a home will hit you at the settlement table. Before you receive any keys you must complete a pile of paperwork. To understand what you’re signing you should understand each step leading to your settlement.

1. The Agreement of Sale.
To start, you will need to present to the seller an offer to purchase. The real estate agent will prepare the “agreement of sale” and arrange for meetings so that the transaction details can be discussed and agreed on and arrange for signing the agreement. After all parties sign the agreement of sale, the property is considered “under contract”. The buyer will need to present a check along with the agreement of sale. This is called the “earnest money deposit”. This check is held in an escrow account until closing. This account may gain interest for you, but, only if you request it in the agreement of sale.  This deposit shows the seller you are serious about buying their home. At this time, your Real Estate agent will start the process towards settlement. Your Real Estate Agent will make a request to a title insurance agent for a title report, also known as a title commitment.

2. The Title.
A title agent begins examining the property’s title. A title insurance agent examines the property's ownership history and makes sure the title does not have any encumbrances. Each home has a set of documents recorded at the county courthouse that reflect the history of prior owners, lenders and other parties who have had any interest in the property. These documents are examined to check for any outstanding interests. This is the title search. The search is forwarded to the title agent’s office. It is then typed and turned into a title report a/k/a a title commitment.

3. The Mortgage .
In Pennsylvania and New Jersey your title agent will also serve as your settlement agent. They will co-ordinate with your mortgage lender to verify the mortgage amount as well as mortgage related fees and other details of the transaction. In addition, if the seller’s old mortgage needs to be paid that will be handled by your title agent.

4. The Property Inspection.
The buyer usually contracts with a professional inspector who will conduct a home inspection. This inspection will determine if there are any potential problems with the home. These problems could include structural, electrical, plumbing, roofing, siding, windows or insulation. The buyer will also need to contact a pest inspection company to inspect for wood boring insects such as termites. If any problems are revealed during the inspections the results are turned over to the seller and further negotiations regarding sale price and/or seller credits begin.

5. The Closing Costs.
 Your settlement agent will prepare a HUD-1. This document discloses all the costs that will be paid at your closing. The HUD-1 includes the sale price, the mortgage lender’s costs, all title insurance company costs, recording costs, reimbursements to the seller for items prepaid by the seller and other items to be paid from the settlement. You will need to check with your settlement agent to confirm the amount you need to bring to the closing. You should call the settlement agent at least 24 hours prior to settlement.

6. The Settlement Day.
You’ll need to bring two picture ID’s and certified funds to settlement. Your certified check should be in the amount that your settlement agent tells you to bring to settlement. The settlement agent makes sure everything is signed and that the appropriate documents are recorded, and that the funds collected for various fees and expenses are properly distributed. During the settlement, the buyers will sign a number of documents, each of which will be explained to you by the settlement agent. The seller will also sign some documents. The settlement agent is responsible for satisfying all the title conditions. After that, the house is yours.

Congratulations!

You can contact us at 215-348-1848 with any further questions or concerns.