Preparing to Buy: What Do I Need, and When?

Boston Home Buying

A Qualified Team of Professionals

Though it may seem obvious, identifying all necessary professionals before you find an ideal home is crucial. Putting the pieces together as you go can create a stressful experience, especially with many transactions closing in 45 days or less.

Most would correctly guess that finding a reputable real estate agent and specialized lender are the first steps. Having a local lender on speed dial rather than waiting hours for a return phone call can make an enormous difference in a competitive market. With offer deadlines, sometimes followed by a round of “best and final” submissions, knowing your lender is available and ready to make changes if needed is essential!

More prepared buyers can go one step further, building rapport with a buyer’s attorney before placing an offer. This is one less person to research, interview, and worry about once you have an accepted offer. Your attorney will handle the extremely important tasks of ensuring a clear title on the property, and advocating for your best interest on all contract paperwork.

Pre-Approval

Without a pre-approval, your offer will not be taken seriously by a seller. Go through all of the motions with a lender, and know what you’re qualified for. You don’t want to end up at an open house listed for $550,000, only to learn you’ll qualify for $510,000 after the fact. Many factors go into a pre-approval and your loan officer will be able to advise accordingly.

Some lenders can take this one step further and provide a “pre-underwritten” letter, essentially saying they’ve reviewed all of the documentation needed to make a commitment to lend.

EMD

Earnest Money Deposit. This is a fancy name for a good faith deposit made by the buyer to bind the terms of their offer. Once terms have been agreed upon, this is delivered to seller’s agent and put into an escrow account. This will be credited to the overall purchase price and shows the buyer’s commitment to the transaction. Not to be confused with a down payment.

Home Inspector

Home inspections are typically completed within 5 days of an accepted offer. Your real estate agent should be able to provide at least 1–2 inspectors, though some customers prefer to find theirs independently. Another example of a professional you can research before you begin submitting offers.

Purchase & Sale Review

The seller’s attorney will typically submit the first draft of the P&S within one week of an accepted offer. Often, deadlines are set for this to be signed and executed by both parties with 14 days of offer acceptance. This provides a period of time for the buyer’s attorney to make comments and changes, making sure the buyer’s best interests are accurately represented in the final draft.

Homeowner’s Insurance

All lenders will require you to have homeowner’s insurance, and provide a certificate verifying your policy prior to the closing. In a flood plain? You’ll need flood insurance as well!

Mortgage Commitment

The final commitment to lend from the bank. The bank will arrange for an appraiser to visit the property and make a determination the home’s value. Once this has been filed, the bank once again reviews your full financial profile (not a good time to buy a car). Often required 7–14 days before your scheduled closing date.

Down Payment / “Bottom Line” Payment

Your final down payment, less your earnest money deposit and any funds required at the time of P&S signing, is typically wired to the escrow agent within 2–3 days of your closing. Your final figures (factoring in closing costs) will be calculated and the escrow agent may advise you to bring a personal check in the event any additional funds are required at the closing table.

And with that, the house is yours!

Our job as your real estate agent is to make sure all of these deadlines are met, and that the transaction is made seamless with proper communication between all cooperating parties.

–– Michael Valencius