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How to buy a house in the United States

Buying a home is a big step in anyone's life. It is a decision that will have long-term effects. First-time home buyers in the United States can be faced with a difficult process. Many do not know how to buy a house. This is why many choose to do it with the help of a real estate agent. Buying a home involves a variety of different state and federal laws and regulations, all of which are in English. Consequently, it is important to know about your rights and obligations as a buyer.

How to buy a house
Qualify for a mortgage in the United States
Most buyers do not have enough money to buy their home. Typically, you have some money for a down payment ("down payment" in English), but you have to ask for a credit for the rest. In addition, closing costs, including real estate agent commissions and lender fees, are often added to the loan.

It is important to check with different banks to see which ones offer you the best loan options. Generally, the lender will give you a pre-approval letter that you can present to the seller when he makes your offer.

Lenders can consider the following factors when deciding whether to grant the loan.

loan amount;
buyer's income-debt ratio;
income and assets of the borrower;
credit history.
These factors also affect the terms of the loan offered. That is, they will affect interest rates, loan duration and whether the purchase of additional private mortgage insurance will be required.

One option for obtaining a home loan is to do so with one that is insured by the Federal Housing Administration (FHA). These loans are for low- and middle-income individuals and often require a lower down payment. FHA loans will also look at your credit history.

The Real Estate Settlement Procedures Act (RESPA) gives rights to mortgage borrowers. This is because how to buy a home is a complex matter. When you apply for a home loan, the lender must provide you with the following information:

Good faith estimate of loan costs.
Mortgage Service Disclosure Statement.
Affiliate business arrangements.
HUD-1 Settlement Statement.
If the lender denies your loan application, you do not need to comply with these aspects of RESPA.

Home inspections
Once you make an offer, it is wise to hire an inspector to see if the home is defective. An inspector can see the status of:

If you do not hire an inspector, problems you discover after purchase will be your responsibility. Consequently, the advantage of hiring a home inspector is that you will have the opportunity to point out any defects prior to purchasing the home. You can use these defects to obtain repair, a reduction in the purchase price, or to withdraw from the purchase. Many contracts allow for withdrawal if the inspection discovers a major defect and the seller cannot be agreed.

Seller's obligation to disclose defects
Usually, the seller is required to fill out certain disclosure forms in order for the buyer to be aware of material defects. The details of these forms vary widely from state to state. Even if your status does not require a seller to disclose a defect to the buyer, failure to do so can lead to future litigation when the defect is discovered.

Title insurance
Obtaining title insurance is a standard procedure when buying a home. A title insurance company will examine the history of the title and try to identify problems that could affect the acquisition of the property. Also, title insurance protects you in the event that someone claims to own or has to defend your title in court.

Another decision to make is how the title will be extended to the buyer (s). That is, like buying a house. If the buyer is single, the title is simply placed in that person's name only. However, when there are two or more buyers, there are different options for acquiring the title to real estate:

Acquisition as joint holders with survivorship rights. If one of the owners dies, then the other (s) automatically receive their share of the property. For married couples, the typical method of acquiring the title is as full holders. Thus, if one spouse dies, the other becomes the sole owner of the property automatically.

Acquisition of the title in common. It does not give the right of survival. If an owner dies, his part of the property passes to his heirs according to his will. If there is no will, it will be distributed according to the laws of intestate succession.
Third-party accounts and the closing process
To finalize a home purchase, buyers and sellers must participate in a closing. In it, the required legal documents are signed and title to the property is formally transferred to the buyers. At this point in the transaction, the Real Estate Settlement Procedures Act (“RESPA”) sets certain requirements. RESPA requires your lending institution to provide you with:

HUD-1 settlement statement. It must be filled out at least one day before closing. This document sets out all the amounts for which sellers and buyers will be responsible at closing.
Affiliate business arrangement disclosure. This is required if there is any business relationship between the suppliers involved during their closing process.
Initial statement of the accounts of a third party. This document sets out the estimated property taxes and insurance premiums that you will pay during the first year of your home loan.
Responsibilities of the home owner
After the settlement of your mortgage loan, the Real Estate Settlement Procedures Act (“RESPA”) also requires lenders to send you an Initial Statement of Third Party Accounts, containing an itemized list of all payments made. in said Declaration during the last year. If the aforementioned Statement is overpaid or underpaid due to changes in your insurance premiums and / or property taxes, your lender must repay the overpayments, or collect the underpayments from you, as well as adjust your monthly mortgage payment as needed. As long as you keep your initial mortgage loan, you are also entitled to the Transfer of Service Statement whenever your lender sells or transfers your loan service to another company or lender.

If you want a home loan in order to buy your home, your financing arrangement with your lender will require that you maintain homeowners insurance at all times. In many cases, your insurance payment will be part of the mortgage payment, as paid by your lender on your third-party statement of accounts. Letting your homeowners insurance policy fall behind can be a default on your financing agreement that could cause you to eventually lose your home.

Once you have gone through all the stages of the buying process, you can say that you already know how to buy a home. You can finally start enjoying your new home. Just remember that you must make the corresponding monthly payments. Learn more about real estate buying & leasing on Al Hartman.

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