May 21st, 2020
When you’re buying a home, you’ll come in contact with many different kinds of people. Everyone involved plays an integral part from helping you land that dream home to choosing the right mortgage for you. Who are these players and how do they fit in your homebuying timeline? Here’s a spotlight on six of the most important housing professionals that you’ll encounter along the way.
Real Estate Agent
A Realtor may be one of the first housing professionals you come in contact with as a prospective homebuyer. You may have a real estate agent before you even begin the home shopping process, or maybe you have a referral from a friend or family member who had a great experience with their Realtor. You might find a home you like and contact the agent for more information. Whichever came first, it’s important to have a buyer’s agent on your side.
A real estate agent will charge a fee for their services, generally a percentage of the selling price. The average fee is 6 percent to be split between the buyer’s agent and the seller’s agent. This may be negotiable.
A buyer agent’s job is to find available properties in a location that fits the buyer’s budget, needs, and preferences. A buyer’s agent will advocate for the buyer to negotiate a fair selling price, navigate through the offer process, and handle any issues that arise.
Buyer’s agents are paid by the seller’s agent once the home purchase is complete.
While one real estate agent can act as both the buyer’s agent and the seller’s agent, this is not usually ideal for a buyer as you want someone who will negotiate the best deal for the buyer.
A homeowner can sell their home one of two ways: they can hire a real estate agent or sell their home privately (For Sale By Owner - FSBO). Hiring a seller’s agent requires more expenses, but can also be more lucrative in getting the best price for the homeowner.
The seller’s agent brings expertise to the table with insight on home prices, market conditions, selling trends, and helpful strategies like home staging. They will host open houses for potential buyers, take care of logistics and set up MLS listings, and handle offers that come in from buyers.
A loan officer is a representative of a mortgage lender who assists buyers with the mortgage application process and will be your first point of contact with a lender. The loan officer is there to guide you through the homebuying process and is there to answer any questions and help you with a mortgage application. They help you prepare and collect documents, check your financial profile, break down the different mortgage options available to you, and calculate a payment (amortization) schedule once the loan is approved.
Your loan officer will work with an assigned underwriter (see next section) to determine if you qualify for a home loan and your interest rate!
An underwriter determines the risk of taking you on as a borrower based on your financial profile. They analyze financial documents, tax and credit history, and determine if the home you want to buy is in your budget.
If an underwriter determines that you would be too much of a risk for the lender to take on, you’ll either be denied the mortgage or required to provide additional payment verification like a larger down payment or a co-signer for the loan.
A certified appraiser estimates the value of a home and ensures that it is worth the selling price. Depending on the amount of equity the buyer is bringing to the transaction, mortgage lenders often require a home appraisal as part of the homebuying process to ensure a fair sale. Appraisers are unbiased, third parties randomly chosen through a system developed by the CFPB (Consumer Financial Protection Bureau), chosen by the lender.
If the appraiser finds a discrepancy between the home’s appraised value and your mortgage amount, the selling price may be adjusted, the loan will be denied, or a larger down payment is needed.
A home inspection is required by most mortgage lenders for a sale to go through and usually happens right after the seller accepts the buyer’s offer. The buyer generally covers the expense of a home inspection.
The home inspector performs a thorough check of all major workings of the home, like the HVAC system, plumbing, electrical systems, roof, flooring, and elements that are part of the structural and functional foundation of the home. If there are any problems or required repairs, they report them to the buyer and repairs are negotiated between the buyer and seller.
When you close on your home, the sale is final and the keys are transferred! A title agency does research to make sure that the home for sale is legally available to sell. Their title attorneys will conduct a thorough review of the property in Escrow searching real estate and county records of the ownership history of the property. If there are any discrepancies like tax liens or inconsistencies in the property’s deed history, closing may be delayed.
Title agents oversee the closing process and handle all of the legal paperwork necessary to transfer the title to the new owner. Title agents also collect and distribute any closing costs.
Once all the paperwork has been signed, and you have the keys to your new home… you should celebrate! Beyond that, your main point of contact for anything mortgage related will be your loan servicer. Mortgages are often sold after closing, and your loan will be managed by different parties over the years. This is often a surprise for homeowners, so be aware of this and don’t be afraid to ask your loan officer about this!
Your loan servicer is responsible for overseeing your mortgage payments, answering questions, and dealing with things like payoffs if you choose to refinance your home as you pay down your mortgage over the years.
There are quite a few people involved in buying your home, but the more you understand the process, the less daunting it will be! If you have any questions about any of these stages or people, reach out and send us a message. All of the faces involved in your home purchase are there to help facilitate the process and make it easy and enjoyable for you. After all, buying a home is something to be excited about!