10 Legal Considerations When Buying a New Home!
Mahadev Desai is the Founder and CEO of gharpedia.com and SDCPL a leading design consultancy firm having strong national presence. He has a degree in Civil Engineering (BE) and Law (LLB) and has rich experience of 45 years. Besides being the Editor in Chief, he also mentors team at GharPedia. He is associated with many professional bodies. He is also co-founder of 1mnt.in the first in Industry software for contractors’ billing. He is a voracious reader, edited 4 books, and pioneer of book reading movement in Gujarat, India.
Buying a new home is probably one of the most important legal transactions. Knowing all the legal requirements while buying a home will allow you to avoid problems or, at the very least, it may prepare you to deal with them. Every nation has different laws and different practices. This article deals with system and practices followed in US and other countries, for rest, say India, you may refer:
20 Documents You Must Ask the Builder While Taking Possession
01. Getting Preapproved for a Mortgage
If you have a mortgage preapproval, the seller is more likely to accept your purchase offer because this is proof that you’ve been approved for the necessary financing.
A mortgage preapproval is a letter issued by a lender after they have evaluated your financial history. However, this letter doesn’t guarantee that you will get a loan; it only means that you’re qualified to get one. To get a formally approved loan for buying a new home, the lender will require additional documentation.
02. Purchase Offer
Once you find the home you want to buy, you’ll need to put in an offer. Think about how much money you’re ready to offer. It would be wise to consult with your agent as he knows the market best. You should also consider hiring a property lawyer to review your buying offer. Legal firms like McQuarrie (Canada), Gardiner Roberts LLP (Canada), Paul Hastings LLP (US), Akerman LLP (US), etc. Can assist you with your purchase and ensure that the offer is properly completed and executed.
Once your purchase offer is submitted, the seller may accept it or reject it. The seller may also change or counter certain conditions in the offer which should be reviewed by your property lawyer.
Also Read: How do Realtors Help You to Buy a House?
04. Mortgage Approval
After the seller accepts your offer, the mortgage loan approval process begins. As mentioned earlier, the lender will require additional information and documentation in the preapproval stage.
05. Home Inspection
Make sure your property lawyer or real estate agent inserts a clause for a home inspection in the contract. This will allow you to hire an inspector who will go through the entire home and see if there are any problems. If the inspector detects a problem, your property lawyer can ask the seller to make the necessary repairs before the sale moves forward. However, in case the seller refuses to make the required repairs, there might be additional negotiations and you could offer a lower price.
06. Meeting Other Contingencies
When the inspection is completed and the contract is finalized, you will need to meet other contract contingencies. For instance, buying a home contingent on selling yours means that you will be able to buy a house only after you sell your current home. In this case, your real estate agent will add the home offer in the contingency clause. The goal of contingencies is to make sure that the buyer is protected from paying two mortgages.
07. Title Insurance
Title insurance is very important because it protects you (the home buyer) and your lender from the possibility that your seller doesn’t have free and clear ownership of the property and, for that reason, can’t rightfully transfer full ownership to you.
Also Read: Home Warranty Plans: How Do They Work?
During the settlement meeting, you will close on the mortgage and the home. Your agent or your property lawyer should accompany you in order to ensure that all the documents you sign meet all the legal requirements.
When you close on the home, you will receive the deed, which is a written document confirming that the property’s ownership rights have been transferred to you.
The purchase isn’t complete until the documentation of buying a new home has been filed with the county, which can be handled by your property lawyer.
As exciting as buying a new home might be, it’s important to remember that it is a huge investment. For that reason, you’ll want to make sure that all the legal requirements are met. As mentioned earlier, to make things as smooth and stress-free as possible, consider seeking legal assistance before buying a new home.