Everything You Need to Know About Home Buying Paperwork in IL
From securing financing to understanding legal requirements, purchasing a home is a complicated task. In this blog we discuss some of the forms/contracts you will use and we will give homebuyers tips for preparing for their big purchase.
Proof of Income and Assets
Before you even start looking for a home you need to gather all your proof of income and assets. If you are going to apply for a mortgage, the lender will be looking over all your finances so its best to have everything prepared. You will need:
Pay stubs or employment verification letters
Bank statements
Retirement account statements
Recent tax returns
Gift letters, if applicable
Form 4506-T
Proof of Employment
You will need to show a proof of employment, so that the lender can assess your situation and confirm that you have a consistent stream of income. It is much easier for a lender to assess you if you have regular income.
You may need to provide:
Employment contract or offer letter
Recent pay stubs
Contact information for your employer
Credit Check
Your credit report contains important information about how you borrow money, how well you pay on time, and how you’ve handled any past debts. The three major credit bureaus - Experian, Equifax, and TransUnion create your credit score and credit report which will be read by lenders trying to qualify you for a mortgage.
A higher credit score is better and will help you qualify for a loan. It signifies that you are a trustable borrower and you have a low likelihood to default on your monthly mortgage payments. A credit score of around 760+ will get you the best mortgage rate.
Getting Pre-approved
After providing all the above info to the lenders, they can give you a letter that shows your maximum loan amount that you qualify for. Having a pre approval is super helpful and it lets sellers know that you are a serious buyer when you submit an offer with this pre-approval letter.
Exclusive Buyer Representation Agreement
This is a form that you will sign with your real estate agent. It protects both the buyer and the agent. It sets the terms of the contract and establishes the duties of the agent as well as the buyer. It is a fairly short and straightforward agreement that you are likely to see.
Residential Real Estate Contract
After you find the home that you want to buy, you will have to fill out a larger and very important contract. You will decide the terms of the offer with your realtor. Many things will be negotiated, including: price, contingencies, closing date, personal property, repairs, and more. Your realtor and probably an attorney will help you through this process, getting you the best terms possible.
Home Inspection
In many transactions, a home inspection will be completed. This protects the buyer from buying a house with hidden problems. A professional inspector will look at:
Foundation integrity, including cracks, gaps, or crumbling
Exterior elements, such as siding, gutters, downspouts, and grading
Bathroom fixtures and plumbing systems
Age and condition of the roof
Heating, ventilation, and air conditioning (HVAC) systems
Electrical and gas systems
Included appliances and their functionality
The home inspection contingency, commonly included in real estate contract, allows you to negotiate repairs or credits at closing based on the inspector's findings, helping you make a great decision.
Title Report
A title report will show a summary of ownership and legal information. This report will make sure there are no clouds on the title and that it is free of liens, lawsuits, and other stuff you definitely don’t want on your new home.
Property Survey
An official survey might be performed. It will make sure the boundaries of the property are correctly recorded. This will make sure there are no surprises down the road if you decide to do a building or remodel project on your property.
Verifying Your Identity
Of course, you will need a valid government issued identification to buy a house. You can use a drivers license, passport, state issued ID, among other things.
Stay Prepared
Navigating the real estate market is a very hard thing to do by yourself, especially for a first time homebuyer. Almost 90% of recent buyers used a real estate agent or brokerage to help them buy their home.
Real estate agents have in-depth knowledge of the local markets, negotiation skills, and a comprehensive understanding of the legal and financial aspects of homebuying. They are able to give you references to inspectors, attorneys, mortgage brokers and more. They will help you from the moment you sign a representation agreement all the way to closing and beyond.
Contact Locations, Inc. for your real estate needs!
