Chapter 2 – The Home Buyer’s Process in a Nutshell
The idea of buying a home can seem really overwhelming, but it’s actually pretty straight forward.
You decide that it’s time to buy. The first step is to contact your mortgage broker or bank to figure out how much you can afford based on your income and your down payment. They will usually send in your application to hold the current rates for 90-120 days. This is called a pre-approval and it requires minimal documentation
Contact a realtor and let them know what you’re looking for so they can keep an eye out. Giving them your maximum price range will save a lot of frustration down the road.
You find a property that you love and the sellers accept your offer. Usually there is small period of time (1-2 weeks usually) where you can withdraw from the agreement if certain ‘subjects’ aren’t met.
The subject removal date is a very important date because until that point, you aren’t locked into to the contract. As soon as you remove subjects, you are officially proceeding with the purchase of the property. That’s why you want to make sure that you don’t miss anything.
A common subject is ‘subject to inspection’. Usually, the purchaser hires an inspector to go through the property and make sure there are no major defects. Sometimes, lenders will also require an appraiser to confirm the value of the property – your broker can help you arrange the appraisal.
Another common subject is ‘subject to financing’. Until now, you only have a pre-approval which is not a full approval. Many first time buyers make the mistake of assuming since they have a pre-approval, they will get approved. The problem is that until now, lenders haven’t actually seen any of your documentation. Certain issues may come up which is why it’s important to have a financing subject in your offer.
As soon as you’ve made an offer, contact your broker or bank. Since the subject removal period is usually very short, it’s crucial to get the most important documents to the lender first. Usually this includes paystubs, notice of assessments, bank account screenshots, job letters, and purchase contracts.
Once the most important documents are signed off by the lender, they will issue an official approval and you can remove subjects. Once subjects are removed, you have successfully completed the most stressful part of the purchase!
You’ll need to use a lawyer or notary to help you with the paperwork involved. Although notaries are less expensive, I usually recommend that first time home buyers use a lawyer. They’ll make sure everything goes smooth and they’re only a couple hundred more.
The lender will send the mortgage details to the lawyer or notary that you have chosen. The lawyer/notary will take care of all the background paperwork, and they will arrange a time for you to come in and sign the final documents. Usually this appointment is made a few days prior to completion, and it takes about half an hour.
Completion Date! You’re officially a home owner now.