The Home Buying Process

Overview of the Home Buying Process

The home buying process in Missouri is much like other states. A Closing, or Settlement, Agent prepares all closing documents and facilitates the closing transaction. A closing can take place at the same time, or each party can close at different times.

Step By Step - Disclosures, Inspections, and Title

The first step after an offer is accepted and a contract issigned is to pay a deposit, or earnest money, to an escrow agent, attorney, orbroker. The signed contract is then sent to a title company or attorney to begin the title search and all work related to transferring and changing thetitle to the new owners and preparing the title commitment.

It is important to get a title search done as early aspossible so that any potential problems can be found and resolved before they cause delays later. Once the title search is complete and everything is in order, the next step is to apply for a mortgage.

The mortgage process can be confusing and time-consuming, so it is important to work with a lender you trust and who will help guide you through the process. Once you have applied for a mortgage and it has been approved, the next step is to schedule a home inspection.

A home inspection is an examination of the property to identify any potential problems that could cause issues down the road. After the inspection is complete, the next step is to obtain homeowners insurance.

Homeowners insurance protects you from financial loss if your home is damaged or destroyed. The last step in the process is to close on the sale of the property.

Buyers need to be aware of any disclosures that sellers are required to provide. These disclosures can vary based on the type of property, but often include things like known flaws with the property, prior improvementsor repairs, and potential environmental hazards.

The Seller's Disclosure Statement for Residential Propertyis a mandatory form that must be provided by the seller on or before the day the contract is signed. Though it's required by law, some sellers may see this as beneficial to themselves, believing that buyers will build these pre-disclosed facts into the contract price (and thus sellers may not have to negotiate as much on price).

As a buyer, it's important to be aware of all disclosures that are made and to factor them into your decision-making process. If you have any questions or concerns about the disclosures, be sure to raise them with your real estate agent or attorney.

If you're buying a home in Missouri, it's important to be aware that termite inspections (also called wood-destroying insect infestation inspections) are somewhat common. Many contracts contain language that puts the responsibility on the seller to rectify any termite or other wood-destroying insect problem if found during the inspection.

Based on the outcome of inspections -and within the numberof days designated for the inspection period- buyers may either
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• provide a report of defects and walk away
• provide a report of defects and ask the seller for repair work, closing cost credits, or a reduction in the sale price
• or move forward with the purchase without requesting any repairs.

If you're concerned about the possibility of termites or other wood-destroying insects, be sure to discuss this with your real estate agent so they can help you navigate the inspection process.

At closing, all the paperwork related to the sale will be finalized and the deeds to the property will be transferred to the new owners. Congratulations, you are now a homeowner!

The Following is the General Buying Process in Missouri

A buyer submits a loan application to their lender, either directly or through a mortgage broker. See a sample Uniform Residential Loan Application used in Missouri. Of course, well before this point, a pre-qualification or pre-approval with a lender should have been acquired.

Within 3 days, the lender sends a “Good Faith Estimate” of closing costs to the borrower, which itemizes all fees associated with originating and processing the loan.

Once the appraisal is complete, the lender will provide a“Loan Estimate” to the borrower, which outlines all terms and costs of the loan.

At this point, the borrower has 3 days to review the Loan Estimate and decide if they want to proceed with the loan. If so, they will provide their “Intent to Proceed” to the lender.

Once the Intent to Proceed is received, the lender will order a title search on the property. The title company will look for any outstanding liens or claims on the property which could affect the buyer’s ownership.The lender will also require insurance on the property to protect their investment in case of fire, flooding, or other damage. In Missouri, lenders typically require “hazard insurance” with a policy limit of at least $100,000.

The buyer sends a series of personal financial disclosures to their lender. These vary by situation, but the most requested documents are several months of statements for each bank account a borrower holds (including any investment accounts), and several months of statements for any outstanding loans, lines of credit, or other liabilities.

This can also include documentation of rent payments, up to two years of tax returns, released to the lender via an authorization submitted by the buyer using IRS form 4506-T, and recent pay stubs and contact information for each borrower’s employer. The lender will use this information to assess the buyer’s financial situation and determine whether they are a good candidate for a loan.

If you're approved for a mortgage loan, your lender will issue a loan commitment letter. This letter states that the lender is willing to provide funding for your mortgage, provided certain conditions are met.These conditions typically include an appraisal (to confirm that the property you're buying isn't worth far less than you're paying) and may also include any material changes in your situation or the property as initially disclosed to your lender.

You can remove the loan contingency by acting before the expiration of the loan contingency date, which is defined in the contract. This date is usually a certain number of days after you execute the purchase contract.

Once the loan contingency is removed, you're obligated to complete the purchase even if you can't obtain financing. Therefore, it's important to make sure you can obtain financing before removing the loan contingency.The lender also orders a property appraisal currently in Missouri, the appraiser must be state licensed and cannot be associated with the lending institution in any way.Once all the above have been completed, the borrower will sign the loan documents and closing will occur. At this time, the borrower will pay any remaining closing costs and their down payment on the loan. The title company will then transfer ownership of the property to the buyer.

If you're thinking of buying a home in Missouri, it's important to be aware of the mortgage process and what steps you'll need to take. By starting early and being prepared with documentation, you can help make the process go as smoothly as possible.

Closing

As part of the preparation for closing, the attorney or title company performs a title search (if they haven't already done so during the home-buying process). This is to ensure that there are no outstandingclaims or liens against the property. Once the title search is complete, all parties involved in the transaction will meet at the closing table.

At the closing table, buyers will sign all documents related to their loan and the transaction itself. After all, documents are signed and payments exchanged, buyers generally take possession of the keys after the deed is recorded unless a separate agreement has been reached to allow the seller to stay in the property for a period after closing. In some cases, buyers may not receive keys at the closing table but may have to pick them up from the listing agent or another designated party.

It's important to note that buyers should not sign any documents at the closing table without first reviewing and understanding them.If there are any terms in the documents that buyers are not comfortable with, they should bring these up with their attorney or closing agent before signing anything. The closing process can be daunting, but buyers need to remember that they have professionals on their side to help guide them through it.

By being prepared and working with a knowledgeable real estateagent, buyers can ensure that their closing goes smoothly.