From offer to mortgage with Liz & Ellie Real Estate, Compass, Cambridge.

The Thick of Things

Making an Offer to Purchase (read our blog for a full explanation)
Once you find a house you love, you will enter into negotiations, which will ideally end in a contract. Some things to keep in mind are:
• All written offers must be presented to the seller.
• Verbal offers are not valid in Massachusetts.
• Time is of the essence. Once a deadline passes the offer is technically no longer valid.
• Buyers and sellers should be careful to understand all the terms and conditions in the offer and any contingencies included therein.

Performing your Due Diligence
You should hire an expert to conduct a home inspection after the offer has been signed, but before you sign the Purchase and Sale Agreement. This period of time is called the “Due Diligence Period” during which you research the house. You may also look into building permits, examine condominium documents, or have other types of inspections. 

Finding a home inspector
• Ask friends whom they have used for their inspections.
• Get referrals from your lawyer or agent (only a Buyer’s agent can refer inspectors). 
• Go to the American Society of Home Inspectors web site. Be sure to contact several people and compare prices.

Selecting an attorney

(here's our blog on how important the attorney is)
Real estate agents know the market and the process, not the law. You need an attorney when buying a home for legal advice and to assist with any problem areas that may arise during the process. The attorney will also help negotiate on your behalf if issues occur after the offer or the home inspection. Finally, the attorney will draft and revise the Purchase and Sale Agreement to protect your interests.

Tips for working with your attorney

  • Be sure to discuss fees in the first meeting so that your bill is not a surprise! Some attorneys charge a flat fee when they are representing both you and the lender, but you may prefer an attorney who bills hourly for services rendered. If your transaction is uncomplicated, your bill may be lower if you are billed hourly rather than charged a flat fee.

  • Confirm that your lawyer is a local real estate expert (especially if you are purchasing a condo or new construction).

Signing the Purchase and Sale Agreement (Read our P&S blog here)
A Purchase and Sale Agreement is a detailed contract for the purchase of property, which includes a list of inspections, services and fees agreed upon by both buyer and seller. Typically there is a negotiation process between the Seller’s attorney and the buyer’s attorney to draft a document acceptable to both parties. When the Purchase and Sale is signed, buyers usually put down a deposit to secure the property. This money will be credited to the buyer at closing.

Submitting a full loan application
Once the Purchase and Sale has been signed it’s time to submit your loan application. You have probably already chosen a lender and decided on a loan program. Your pre-approval says that the lender has approved you for a loan; however, every pre-approval is subject to an independent appraisal of the property.

In addition, we teach our clients that the mortgage process is just that: a process. Your initial application demands sheafs of paperwork, but that's not the end of it. Because of strict guidelines, you’ll need to provide paperwork at intervals throughout the process, no matter which bank, broker, or lender you choose. Understanding that securing a mortgage is a marathon and not a sprint can ease stress and prevent feeling blindsided by repeated paperwork requests.

Acquiring insurance

At some point in this process, you'll also review and act on your insurance needs for your home. If you're putting less than 20% down, you'll most likely need to purchase personal mortgage insurance (PMI). In addition, we recommend all home buyers to purchase homeowner's insurance; and if you're buying a condo, you'll need to understand the association's Master Insurance Policy before purchasing individual unit protection. Read our blog about insurance here, or learn more about PMI here.