The Home Buying Process

1. Pennsylvania Law requires real estate brokers and sales persons to advise consumers of the business relationship permitted by the Real Estate Licensing and Registration Act. This notice MUST be presented to all consumers at the first substantive discussion about real estate. (Go to Consumer Notice from Home Page.)
   
2. Buyer secures a mortgage preapproval from a reputable lender.
   The mortgage preapproval will be submitted along with your offer on a property. If you want your offer to be seriously considered, especially if you are competing with other offers, get a preapproval from a local, reputable lender. If you need assistance, your REALTOR shoold have recommendations.
   
3. Buyer makes offer to purchase seller's property.
   Once you have decided you want to buy the property, you shoold waste no time in filling out the Agreement of Sale. The Sellers Property Disclosure shoold be reviewed prior to completing the Agreement of Sale as well as reviewing the Estimated Closing Costs.
1. The agreement of sale form is approved by the Pennsylvania Association of Realtors or local Board of Realtors. This preprinted form is used by most major firms in our market area and will take approximately one to two hours for you and the REALTOR to complete.
2. Deposit
   The earnest money or good faith deposit typically accompanies the offer. The buyer's personal check is made payable to the listing broker who must, by law, deposit the check in a separate insured escrow trust account when the offer is presented and accepted. This deposit will be credited toward the total purchase price and/or closing costs at time of settlement.
3. Customary Provisions
1. Mortgage Loan Contingency
   Any conditions regarding new financing or loan assumption are written in the agreement of sale. A buyer has ten (10) working days to make a completed application for a mortgage after acceptance of offer by a seller. As a role, a buyer is given four to five weeks to obtain a firm loan commitment.
2. Inspections
   A buyer has the option to have (at his or her expense) the following inspections: Home, Wood Infestation, Lead-Based Paint, Mold, Radon, Water System and Sewage System. The seller agrees to allow access to the property for all inspections and the buyer agrees to use licensed/certified inspectors.
3. Adjustments and Prorations
   Unless otherwise provided, the following items shall be prorated and adjusted between the parties or paid at closing:
1. Taxes on real property shall be prorated on a fiscal year or calendar year basis, as appropriate, to the date of closing.
2. Rents, if any, for the property shall be prorated to the date of closing.
3. Accrued, but unpaid, interest and other charges to seller, if any, shall be computed to the date of closing and paid by the seller. Interest and other charges prepaid by the seller shall be credited to seller at closing and paid by the buyer. (Other charges to buyer may include FHA mortgage insurance premiums and private mortgage insurance premiums.)
4. Conveyance of Title
   Seller agrees to convey title by Special Warranty Deed at closing.
   
4. Offer to purchase is presented to seller and, if acceptable, is signed by seller and becomes a binding contract.
   
5. Buyer makes mortgage loan application to lending institution.
   Mortgage Loan Procedure
   1. Application
      The buyer completes an application with the loan officer, supplying necessary information such as past and present employment, credit history, assets and liabilities. Accurate names, addresses, all account numbers and balances are important for expedient lender verification. The buyer generally pays appraisal and credit report fees at time of application.
   2. Processing
      Lender orders a credit report and verifies all information supplied by borrower (buyer). Lender orders appraisal of subject property. When loan package is complete, loan officer submits package to loan committee for review and approval.
      
6. Lender approves application and issues a commitment to borrower.
   Buyer should instruct the mortgage lending institution to provide the Realtor with a copy of the mortgage commitment document.
   
7. Lender submits closing instructions to buyer's title company that completes preparation for settlement.
   It is customary for buyers to retain a title insurance company and/or attorney during the closing process. The buyer's title insurance company performs or orders a title examination, title insurance, mortgage insurance (if necessary), and begins closing statement calcolations and preparation of necessary documents.Your REALTOR may offer recommendations on Title Companies. Once the selection of a company is made, your
   REALTOR shoold coordinate everything with them on your behalf.
   
8. Preparation for Closing by the Buyer
1. Property Insurance
   Buyer arranges appropriate property insurance, for coverage of real estate and personal effects, to begin the day before settlement. Buyer has the option if insuring equitable interest in the property when the agreement of sale is finalized.
2. Pre-Settlement Inspection
   The buyer exercises the right of pre-settlement inspection of property within 48 hours prior to closing.
3. Utilities
   The parties involved notify the utilities (gas, electric, water, etc.) to change billing from seller to buyer, effective as of the date of closing or occupancy.
   
9. The settlement takes place to complete the transfer of title, loan documentation and cash settlement.
   Closing
1. Location
   The settlement is usually held at the office of the buyer's title company, real estate company, lending institution or attorney. The title officer usually conducts the closing meeting.
2. Procedures
1. The closer will prepare the closing statement (HUD-1) with the buyer and seller to itemize all receipts and expenditures including prorated adjustments.
2. The buyer's usual closing costs, when a new loan has been obtained, include fees for loan origination, credit report and appraisal, title examination, title insurance, document recording and assignment fees.
3. The closer will obtain necessary signatures on all documents, including the deed (seller signs).
4. The buyer pays the balance due on purchase price and closing expenses with a certified check made payable to the Title Company.
5. Allow a minimum of 1 hour to complete settlement.
   
10. Seller receives proceeds from sale of property and coveys title by Special Warranty Deed to buyer.
    
11. Closing officer records pertinent documents in the public records at the county courthouse.
    
12. Buyer takes possession of property by signed deed, keys and physical possession.