What are the Steps for First-Time Homebuyers After Pre-Approval?
When Monica received her mortgage pre-approval letter, she thought the hardest part was over. However, she quickly realized this was just the beginning of her homebuying journey. Like many first-time buyers, she wondered: "What happens next, and how do I make sure I don't miss anything important?"
Being a first time home buyer can be overwhelming, but with the right team and guidance on your side, you could be celebrating sooner than you think.
Starting Your Home Search
Once you have your pre-approval, you know your budget and can begin your search in earnest. However, remember that a pre-approval typically lasts 90-120 days, so timing is important. Think of your pre-approval as a key that unlocks the door to home shopping – but that key has an expiration date.
Build Your Professional Team
Before diving into viewings, assemble your support team of professionals who will guide you through different stages of your purchase. When choosing your home-buying team, it's crucial to work with professionals who not only have experience but also genuinely understand and prioritize your needs as a first-time buyer.
Start by researching real estate agents who have a strong track record with first-time buyers and can explain complex processes in simple terms. Choose a mortgage broker or lender who takes the time to explain different financing options and helps you understand what you can comfortably afford, not just what you're approved for.
For your real estate lawyer, look for a firm like Deeded that combines legal expertise with modern technology to make the closing process more transparent and accessible.
Finally, have a qualified home inspector ready who's known for their thoroughness and ability to explain issues clearly. The right team won't just help you buy a home – they'll educate you throughout the process, answer your questions promptly, and help you make informed decisions at every step. Remember, as a first-time buyer, you'll rely heavily on your team's expertise, so take time to find professionals who make you feel comfortable and supported.
Making an Offer and Purchase Agreement
When you find a home you love, your real estate agent will help prepare an offer. This is where your pre-approval becomes crucial – it shows sellers you're a serious buyer who can secure financing. Your offer should include several conditions to protect your interests. Think of conditions as your safety net – they give you time to verify important details before the deal becomes firm.
Here are the most common conditions we see homebuyers request when purchasing a property:
Financing Condition (5-7 business days)
Even with a pre-approval, your lender needs to review and approve this specific property. Some lenders will not lend on certain properties, so this is very important. This condition gives you time to finalize your mortgage and back out if financing falls through.
Home Inspection Condition (5-7 business days)
This allows you to hire a professional to examine the property for any structural, electrical, plumbing, or other issues. If significant problems are discovered, you can either negotiate repairs with the seller or walk away from the deal.
Status Certificate Review (7-10 business days - for condos)
When buying a condo, your real estate lawyer will review the condo’s documents. This crucial review reveals things like:
- The condo corporation's financial health
- Any upcoming special assessments or major repairs
- Building rules about rentals, pets, or renovations
- Reserve fund status and adequacy
- Ongoing legal issues or litigation
- Building's insurance coverage
For example, if the status certificate shows the building needs a $2 million roof repair but has only $500,000 in the reserve fund, you might face significant special assessments in the future. This information could affect your purchase decision or help you negotiate a better price.
After Your Offer is Accepted
Once your offer is accepted and you fulfil all conditions during the conditional period, submit your accepted offer to your lender or mortgage broker to finalize your mortgage. They'll want an appraisal of the property to ensure it justifies the purchase price. Your real estate lawyer will begin reviewing title documents and start the closing process.
You’ll need to start thinking about the logistics of your downpayment and closing costs. If you are using any first-time-homebuyer incentives such as the HBP (HomeBuyers Plan) or withdrawing funds from your FHSA, you’ll need to coordinate those logistics with your real estate lawyer prior to your closing date.
The Final Stretch: Closing Process with your Real Estate Lawyer
Your real estate lawyer will conduct a title search and prepare closing documents. They'll calculate the exact amount you need for closing, including:
- The remainder of your down payment
- Legal fees
- Property tax adjustments
You'll need to arrange home insurance before closing. Your lawyer and mortgage lender will need proof of insurance before completing the transaction.
Final Steps Before Getting Your Keys
In the days before closing:
1. Do a final walkthrough of the property
2. Meet with your lawyer to sign closing documents (you can do this virtually and securely with Deeded)
3. Arrange for your closing funds to be transferred to your lawyer's trust account
4. Schedule utilities and services to be connected
Frequently Asked Questions (FAQs)
Q: What happens if interest rates change after my pre-approval?
A: Your pre-approval usually guarantees the rate for 90-120 days. If rates go up after that, you may need to adjust your home search accordingly.
Q: Should I ever waive conditions to make my offer more attractive?
A: While waiving conditions might make your offer more appealing, it's risky. Conditions protect you from significant financial and legal issues. Always consult with your real estate lawyer before waiving any conditions.
Q: How much time do I need for condition fulfillment?
A: Typically, you need 5-7 business days for financing and home inspection, and 10 business days for a status certificate review in condo purchases. Your real estate agent can help determine appropriate timeframes based on your specific situation.
At Deeded, we love working with first-time buyers. We guide first-time homebuyers through every legal aspect of their purchase, including thorough review of conditions and status certificates. Our digital platform makes document signing and communication effortless, while our experienced real estate lawyers ensure your interests are protected throughout the process. From reviewing your purchase agreement to handling the final closing, we're here to make your first home purchase smooth and stress-free.
Remember, while the path from pre-approval to homeownership involves many steps, having the right professionals on your side makes each stage manageable. Keep your documents organized, ask questions when needed, and lean on your team of professionals to guide you through the process.
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