Documents and Requirements to Buy a House In the United States

If you are about to buy the house of your dreams, congratulations! You will be able to say goodbye to paying the rent and you will have the home you have always wanted. But, don’t go so fast! Remember there are some documents you need to buy a house.

To give you an idea, we would be talking about a pile of documents one or two inches thick that even seem to be written in a dead language like Latin, at least for those of us who are not so familiar with these types of forms.

The idea of ​​keeping track of all that documentation – not to mention the potential cost of errors – could be called a bit of a daunting experience. Fortunately, if you are working with a top local real estate agent, you will have a great ally during the process who may even do all the heavy lifting for you.

The good news is that buyers don’t always need to handle a lot of documents, especially after signing the purchase agreement because, in this case, it will be your real estate agent who will take care of most of them. Of course, occasionally they will have to sign some documents. “

So while you don’t need to worry about most of the forms that will be part of that huge tower of papers, it wouldn’t hurt to familiarize yourself with what documents you need to buy a home in America. That is why we made this guide to help you with the requirements to buy a home in the United States.

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What documents do I need to buy a house in the United States?

If you ask yourself “what documents do I need to buy a house in the United States?”, here we will give you the answer. Examine this list very carefully, even if you have a top-notch real estate agent on your side:

#1. Pre-approval letter

The pre-approval letter is a document delivered by the lender of your choice. This document details the amount of the mortgage that the bank has pre-approved for the purchase of your new home.

Arguably, this is perhaps the first document you need, even before you start looking at properties. Why? Because it is your ace up your sleeve to show sellers that you are a serious buyer and that you have the financial capacity to close the deal.

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#2. A loan estimate

This form (which the law requires your lender to send you within three business days of receiving your loan application) is a brief but complete financial description of the type and possible terms of the loan requested.

Consider it as a sheet that will broadly show you everything you would be committing to if you accept the terms of the loan, such as:

  • Estimated interest rate
  • Monthly mortgage payment
  • Estimated closing costs
  • Estimated Tax and Insurance Costs
  • Rate changes or scheduled payments
  • Possible penalties (including prepayment charges)

#3. Letter of the purchase offer

This is an optional document that has unmatched potential because it could help you get the house you want to buy. When a buyer writes an offer letter it is essentially a summary of praise for the sellers, since its main function is to explain why your family wants to buy the property.

Ideally, this letter should include some personal information that describes who you are, who your family is, and why they love that home. Arguably, this is your best chance to personally connect with the seller or the homeowner.

#4. Purchase agreement

The purchase agreement is a document signed by both the buyer and the seller in which both agree to formalize the purchase and to initiate the terms of the contract. Typically, this document is written by the seller’s real estate agent and includes important information, such as the following:

  • Identification of the parties, that is, the buyer and the seller
  • Description and state of conservation of the property
  • All procedures and conditions of the contract
  • The rights and obligations of both parties
  • All items included in the sale, such as appliances and furniture, for example
  • The amount of the security deposit
  • Closing costs (broken down to see who pays for what)
  • Contract closing date
  • Condition of possession, that is, when will you receive the keys to the house
  • The signatures of the buyer and seller

#5. Home inspection report

The home inspection report is a detailed list that includes the general condition of the property and any visible damage. In itself, it is evaluated:

  • The structure and base of the house
  • The outside
  • Bathroom accessories
  • Household appliances
  • Ceiling
  • Plumbing
  • Fireplace
  • HVAC
  • Electrical systems
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Obtaining a home inspection is one of the most common procedures included in purchase agreements because it allows the buyer to back out of the transaction in the event of a major problem with the home.

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#6. Home Appraisal

While the inspection report focuses on the condition of the home, the appraisal is somewhat different. With this step, you can determine the current value of the property in the market. This document is vital for the approval of your mortgage because it is generally the lender who orders the appraisal of the property.

In fact, before the mortgage lender approves your loan for the amount agreed upon with the seller, they will first want to verify that the property is actually at that price. If the appraisal determines that the property has a lower value than what you agreed to pay, you could use this document to try to negotiate a lower price.

#7. Property titles

Nobody likes to be scammed, right? And much less when it comes to buying a property that, far from being cheap, represents an investment of hundreds of thousands of dollars. That’s why the title search is part of the home sale process and is designed to protect the buyer from fraudulent sales or worse.

Ordering a title search of public records will allow you to verify that the seller has, in fact, a legal claim to the home and that they can sell the property without problems. It will also help you examine whether the property has any outstanding legal problems, such as a property tax debt, liens, or lawsuits that list the home as a seller’s asset.

#8. Cashier’s check

The cashier’s check is perhaps the most important document to have on hand to close the home sale. Without this, you won’t be able to close the deal. But why is a cashier’s check required and what does it include? The check contains the final amount of the sale, including closing costs.

A cashier’s check is required because this is what guarantees that funds can be cashed; unlike personal checks that can be written for any amount, whether or not you have the cash available.

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Remember: The amount of this check includes closing costs, prepaid interest, taxes, and homeowners insurance. It could also include the down payment, but this will depend on whether your lender has grouped the closing costs and the cash down payment into that lump sum.

Otherwise, you will need to provide another check with the down payment or follow your real estate agent’s instructions to complete a bank transfer.

#9. Closing Disclosure

The closing disclosure is a five-page form that your mortgage lender must give you. This document details the final terms of the loan.

It could be said that it is a paper much more faithful to reality, this when compared to the estimate of the loan that you had previously been given. What does this document contain? See below:

  • Interest rate
  • Monthly mortgage payment
  • Estimated Tax and Insurance Costs
  • Rate changes or scheduled payments
  •  Estimated closing costs
  • Possible penalties (including prepayment charges)

#10. Home Insurance

The homeowner’s insurance declaration page is nothing more than a summary of the insurance coverage that has been purchased for this purpose. Keep in mind that most lenders don’t make home loans without insurance like this involved. 

Why? Because until your mortgage is fully paid off, the bank will have a special interest in the condition and state of conservation of the property.

In other words, your lender agrees to loan you the funds, as long as, in case you don’t pay, the bank can take possession of the property. Therefore, it makes sense that they need this property to have a good state of conservation so that, when selling it, they get everything that you stopped paying.

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#11. Property study

While not a requirement, ordering an additional property inspection is a good idea because it could give you legal proof of what you are buying. This would be especially important if you are purchasing a home with a disputed asset, such as a beach or road, for example.

As you can see, buying a house is overwhelming, but checking what documents you need is too. Fortunately, you will always have a special person on your side who will help you complete all these documents and requirements: your real estate agent.

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