April 1, 2019
If you’re considering buying a new house, there are many new people you will soon meet. In fact, it seems that everywhere you turn when buying a home, there is another face in the room.
Each person involved has a role to play, from helping you find your dream home to setting up the perfect mortgage loan. But who are each of these individuals and where do they fit into the home-buying process?
There are nine folks you’ll get acquainted with when you buy a home. Here’s a look at each and the role they play.
Some buyers have a real estate agent before they even begin the home-shopping process. Others will find a home they like and contact the agent for more information. Regardless of which comes first, it’s important as a buyer to have a buyer’s agent on your side.
This agent’s job is to find available properties in a specific area that fit the buyer’s budget and meet their needs. The buyer’s agent will also advocate for the buyer, negotiating a fair selling price, navigating the offer process, and even handling issues that may arise.
Buyer’s agents are paid by the seller’s agent once the home purchase is complete. There is not a fee for the buyer to utilize their services.
While one person can act as both the buyer’s agent and the seller’s agent, this is not usually ideal for a buyer.
When a homeowner decides to sell their home, they have two options: hire a real estate agent or sell their home privately (called For Sale By Owner, or FSBO). Hiring a seller’s agent is the more expensive option but can also be the most lucrative.
The seller’s agent will offer insight into current pricing, selling trends, and home staging. They will host open houses for potential buyers, set up MLS listings, and handle offers that may come in from buyers.
A seller’s agent will charge a fee for their services, usually in the form of a percentage of the selling price. The average fee is 6 percent, which is often split with the buyer’s agent (if there is one), though homes listed with a seller’s agent traditionally sell for more than those sold by owner.
The first point of contact you’ll have with a mortgage lender is a loan officer. This person will answer questions you may have, as well as let you know what you’ll need to provide in order to apply for a home mortgage. They will collect documents, check financials, explain available loan options, and calculate your amortization schedule once the loan is approved.
Your loan officer will also work with an assigned underwriter, to determine whether you qualify for a home loan and the interest rate you’ll be offered.
An underwriter’s job is to calculate the level of risk you pose to a lender, before you’re approved for a mortgage. They will do this by analyzing your financial documents, verifying your credit history, and determining whether the home you want to buy is something you can actually afford.
What if an underwriter determines that the mortgage lender would be undertaking too much risk by extending you the loan? You will either be denied the mortgage or required to provide something additional, such as a higher down payment or a co-signer for the loan.
A home inspection is required by almost all mortgage lenders, and is usually paid for by the buyer.
The home inspector will thoroughly check and assess all aspects of your soon-to-be home, letting you know if there are any problems or necessary repairs. If they find any problems, you can renegotiate with the seller accordingly.
Mortgage lenders often require a home appraisal, as well, to ensure that a home is worth what is being paid for it. A certified appraiser is almost always chosen by the lender to appraise the home, offering their unbiased and trained opinion as to its value.
If the appraiser finds a large discrepancy between your home’s worth and the mortgage you’re requesting, you may be denied or asked to provide a larger down payment.
The closing process is held on the day that you’ll actually “buy” your home and walk away with the keys. Title agents oversee this process, facilitating the mortgage and purchase contract paperwork as well as collecting things like closing costs.
Before a home’s closing, a title attorney will conduct a thorough review of the property while in escrow. This involves title research, to determine that the seller actually owns the home and has the right to sell it to the buyer. If they find issues with the property -- such as tax liens or inconsistencies in the property’s deed history -- closing may be delayed.
Once you have the keys to your new home and all paperwork is signed, your remaining point of contact will be your loan servicer. They are responsible for overseeing your mortgage loan repayment, answering questions, and accepting funds each month. Mortgages are often sold, so you may find that your home loan changes hands over the years and your loan servicer changes accordingly.
There are many faces involved with buying a new home, each with an important role to play. By knowing what each one does and how it impacts you, you will feel prepared throughout the entire process.