Buying a Home: The Cast of Characters
Buying a home is an involved process, and you likely won't do it alone. While it's not quite a cast of thousands, the purchase process will put you in contact with many professionals along the way. Here are just a few of the people you might meet.
Generally, the first meeting on your list should be with the mortgage representative at your credit union. After all, why go shopping without knowing how much you can spend? Typically, a brief visit with the friendly folks at your credit union can put you on the road to mortgage pre-approval. At the very least, you'll know what you can and cannot afford before looking at homes.
Banks, Savings and Loans, and Mortgage Companies will, of course, also lend money to homebuyers. As with any loan decision, it's always wise to shop around for the best rates and most favorable terms. But don't forget the value of good old-fashioned service. After all, this is a loan you will be likely making payments on for thirty years or more. Your relationship with the lender is thus an important consideration.
Finally, keep in mind that many financial institutions sell their home loans to mortgage investors, commonly referred to as the Secondary Market. If your mortgage is sold, you could very well have one, two, or more lenders over the life of your loan.
Real Estate Broker/Agent
While you can shop for a home without one, a real estate agent can do much of the legwork for you - He or she will help find homes available in your market, keeping your price range and desired specifications in mind. The agent will often refer you to many of the other characters in this cast, so it's naturally a good idea to find a hardworking agent you can trust. Ask friends or family who they might recommend. If this won't work, interview several agents in order to find one that you feel comfortable with.
The Property/Mechanical Inspector thoroughly examines the home you are going to buy. This means the plumbing, appliances, electrical wiring, furnace and/or air conditioners, insulation, and overall structure. The lender you choose may require an inspector's services. Either way, it is a wise decision to have this third party go over the house. They won't be swayed by emotions, and will provide you with 'just the facts.' Their inspection could save you thousands in future expenses and help you negotiate a better price on the house.
While an inspector's job is to search for defects, an appraiser determines the fair market value of the house. This is based on a variety of factors including the home's condition and the selling prices of comparable homes in the area.
An attorney is usually present at the closing of a home purchase. They are responsible for ensuring that all documents have been completed properly and signed. This agent will explain each document and collect the transaction fees to be given to the appropriate parties. Many credit unions will have an attorney available for use at the closing.
The Mortgage Insurer comes into the picture if you plan to have a small down payment on the home. A smaller down payment means a greater risk for the lender, therefore they may require Private Mortgage Insurance be purchased by the borrower. If for some reason you cannot make the payments on the house, the mortgage insurance helps cover the lender's losses.