Moving to the Dallas - Fort Worth Metroplex? Get your answers and make your buying decisions easy by using our resource guide.
| Financing and Mortgages |
–Veterans Administration (VA)
VA loans are partially guaranteed through the Veterans Administration. The VA recently expanded its qualifying criteria to include more veterans, so all vets should contact the VA for the most current information.
Navigating the Financing Process
The financing process can take anywhere from 15 to 45 days, but typically runs 30 days. Your agent should be involved throughout the process to help it run smoothly. The basic timeline for what will happen along the way is as follows:
• You submit the completed 1003 application and any required supporting documentation to the lender;
• The lender orders an appraisal of the property, a credit report and begins verifying your
employment and assets. Note that by federal law, your lender must provide these within three days of first pulling your credit report.
• The lender provides a good faith estimate of closing and related costs, plus initial Truth in Lending disclosures;
• The lender evaluates the application and your supporting documents, approves the loan and issues a letter of commitment;
• You sign the closing loan documents and the loan is funded;
• The lender sends its funds to escrow; and
• All appropriate documents are recorded at the County Recorder’s Office, the seller is paid, and the title to the home is yours.
Making the Offer
You’ve found the home you love, and now it’s time for the agent to make the offer. Oral promises are not legally enforceable when it comes to the sale of real estate. Therefore, you need to enter into a written contract, which starts with your written proposal. This proposal not only specifies price, but all the terms and conditions of the purchase. For example, if the sellers said they'd help with $2,000 toward your closing costs, be sure that's included in your written offer and in the final completed contract, or you won't have grounds for collecting it later.
Realtors® usually have a variety of standard forms (including Residential Purchase Agreements) that are kept up to date with the changing laws. When you use a Realtors® these forms will be available to you. In addition, Realtors® cover the questions that need to be answered during the process. In many states certain disclosure laws must be complied with by the seller, and the Realtors® will ensure that this takes place.
If you are not working with a Realtor®, keep in mind that you must draw up a purchase offer or contract that conforms to state and local laws and that incorporates all of the key items. State laws vary, and certain provisions may be required in your area.
After the offer is drawn up and signed, it will usually be presented to the seller by your Realtors®, by the seller's Realtors® if that's a different agent, or often by the two together. In a few areas, sales contracts are typically drawn up by the parties' lawyers.
What the Offer Contains
The purchase offer you submit, if accepted as it stands, will become a binding sales contract (known in some areas as a purchase agreement, earnest money agreement or deposit receipt). It's important, therefore, that it contains all the items that will serve as a “blueprint for the final sale.” These purchase offer items include such things as:
• Address and sometimes a legal description of the property
• Sale price
• Terms – for example, all cash or subject to your obtaining a mortgage for a given amount
• Seller's promise to provide clear title (ownership)
• Target date for closing (the actual sale)
• Amount of earnest money deposit accompanying the offer, and whether it's a check, cash or promissory note, and how it's to be returned to you if the offer is rejected, or kept as damages if you later back out for no good reason
• Method by which real estate taxes, rents, fuel, water bills and utilities are to be adjusted (prorated) between buyer and seller
• Provisions about who will pay for title insurance, survey, termite inspections and the like
• Type of deed to be given
• Other requirements specific to your state, which might include a chance for attorney review of the contract, disclosure of specific environmental hazards or other state-specific clauses
• A provision that the buyer may make a last-minute walk-through inspection of the property just before the closing
• A time limit (preferably short) after which the offer will expire
• Contingencies, which are an extremely important matter and discussed in detail below
Contingencies
If your offer says “this offer is contingent upon (or subject to) a certain event,” you're saying that you will only go through with the purchase if that event occurs. The following are two common contingencies contained in a purchase order:
• The buyer obtaining specific financing from a lending institution. If the loan can't be found, the buyer won't be bound by the contract.
• A satisfactory report by a home inspector “within 10 days (for example) after acceptance of the offer.” The seller must wait 10 days to see if the inspector submits a report that satisfies you. If not, the contract would become void. Again, make sure that all the details are nailed down in the written contract.
VA loans are partially guaranteed through the Veterans Administration. The VA recently expanded its qualifying criteria to include more veterans, so all vets should contact the VA for the most current information.
Navigating the Financing Process
The financing process can take anywhere from 15 to 45 days, but typically runs 30 days. Your agent should be involved throughout the process to help it run smoothly. The basic timeline for what will happen along the way is as follows:
• You submit the completed 1003 application and any required supporting documentation to the lender;
• The lender orders an appraisal of the property, a credit report and begins verifying your
employment and assets. Note that by federal law, your lender must provide these within three days of first pulling your credit report.
• The lender provides a good faith estimate of closing and related costs, plus initial Truth in Lending disclosures;
• The lender evaluates the application and your supporting documents, approves the loan and issues a letter of commitment;
• You sign the closing loan documents and the loan is funded;
• The lender sends its funds to escrow; and
• All appropriate documents are recorded at the County Recorder’s Office, the seller is paid, and the title to the home is yours.
Making the Offer
You’ve found the home you love, and now it’s time for the agent to make the offer. Oral promises are not legally enforceable when it comes to the sale of real estate. Therefore, you need to enter into a written contract, which starts with your written proposal. This proposal not only specifies price, but all the terms and conditions of the purchase. For example, if the sellers said they'd help with $2,000 toward your closing costs, be sure that's included in your written offer and in the final completed contract, or you won't have grounds for collecting it later.
Realtors® usually have a variety of standard forms (including Residential Purchase Agreements) that are kept up to date with the changing laws. When you use a Realtors® these forms will be available to you. In addition, Realtors® cover the questions that need to be answered during the process. In many states certain disclosure laws must be complied with by the seller, and the Realtors® will ensure that this takes place.
If you are not working with a Realtor®, keep in mind that you must draw up a purchase offer or contract that conforms to state and local laws and that incorporates all of the key items. State laws vary, and certain provisions may be required in your area.
After the offer is drawn up and signed, it will usually be presented to the seller by your Realtors®, by the seller's Realtors® if that's a different agent, or often by the two together. In a few areas, sales contracts are typically drawn up by the parties' lawyers.
What the Offer Contains
The purchase offer you submit, if accepted as it stands, will become a binding sales contract (known in some areas as a purchase agreement, earnest money agreement or deposit receipt). It's important, therefore, that it contains all the items that will serve as a “blueprint for the final sale.” These purchase offer items include such things as:
• Address and sometimes a legal description of the property
• Sale price
• Terms – for example, all cash or subject to your obtaining a mortgage for a given amount
• Seller's promise to provide clear title (ownership)
• Target date for closing (the actual sale)
• Amount of earnest money deposit accompanying the offer, and whether it's a check, cash or promissory note, and how it's to be returned to you if the offer is rejected, or kept as damages if you later back out for no good reason
• Method by which real estate taxes, rents, fuel, water bills and utilities are to be adjusted (prorated) between buyer and seller
• Provisions about who will pay for title insurance, survey, termite inspections and the like
• Type of deed to be given
• Other requirements specific to your state, which might include a chance for attorney review of the contract, disclosure of specific environmental hazards or other state-specific clauses
• A provision that the buyer may make a last-minute walk-through inspection of the property just before the closing
• A time limit (preferably short) after which the offer will expire
• Contingencies, which are an extremely important matter and discussed in detail below
Contingencies
If your offer says “this offer is contingent upon (or subject to) a certain event,” you're saying that you will only go through with the purchase if that event occurs. The following are two common contingencies contained in a purchase order:
• The buyer obtaining specific financing from a lending institution. If the loan can't be found, the buyer won't be bound by the contract.
• A satisfactory report by a home inspector “within 10 days (for example) after acceptance of the offer.” The seller must wait 10 days to see if the inspector submits a report that satisfies you. If not, the contract would become void. Again, make sure that all the details are nailed down in the written contract.
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