Congratulations on your decision to buy a house in the United States. Becoming a property owner could make you some passive income, but you need to start on the right foot. Before paying for that house, understand that it takes a lot of paperwork to complete the buying process.
Before You Begin House Hunting
Some things need to be in place before buying a home. One of the most important factors to consider is finance. How do you intend to finance the cost of the house? The two common options are self-financing and taking a loan.
If you are self-financing the home, it means that you are using personal income to pay for the home. This can be sourced from your salary, any returns from previous investments made, or some money you have in the bank.
But if you are taking a loan, it could be a complicated process. Among many other things, you need to have a good credit score, make a down payment, and prove beyond reasonable doubt that you will be able to repay the loan.
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Documents Needed before Buying a Home in the U.S.
I understand that some prospective homeowners do not know the documents needed to buy a house in the U.S. So, in this article, you will discover some of the documents needed to complete your home-buying process in the United States.
1. Your Credit Score Report
This is the most important document needed for any home-buying in the United States. The Credit Score Report is a breakdown of your financial standing, as interpreted by certain scores.
Lenders look for good or higher credit scores, as that shows you have the financial capacity to pay for the home.
The information contained in the credit score report include but are not limited to:
- Debt Information: This gives an in-depth explanation of any debt you may have.
- Payment History: This is a breakdown of the previous financial transactions you made, especially as they relate to paying off the debts you owe.
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2. Pre-Approval Documents
These are the documents you need to present to get pre-approved for a mortgage. Although the pre-approval letter may not be necessary, it could give you a boost if you have it. Besides, it is one of the documents required by the financial institution where you apply for a mortgage before approving your loan request.
Some of the documents needed for the pre-approval are:
- Statement of your assets. This document should cover all the assets registered in your name, such as retirement accounts and stocks.
- Copies of your pay stubs. The document should also be recent, say, at least, the last two pay periods.
- A copy of your driver’s license.
- Your bank statements.
3. The Deeds
The deeds are one of the most important documents to present anytime you are applying for a mortgage to buy a home. This is because of the ownership claims that come with it. Also, with the deed, you can stand a better chance of laying claims to the property anytime it is challenged.
There are different kinds of deeds required during the house-hunting period. Some of them are:
- The Mother Deed: The relevance of the Mother Deed is that it helps the homebuyer to lay claims to the property. The deed can also be used as collateral against the property for which you want to take a loan.
- The General Warranty Deed: This deed is used for the transfer of ownership of a property from one person to the other.
4. The Sale and Purchase Agreement
The house you are looking to buy is owned by someone willing to sell it. For this transaction to be hitch-free, there is a need to come to a contractual agreement on the terms of the sale. All that is recorded in the Sale and Purchase Agreement.
In this document, the terms and conditions, as reached by the seller and buyer, are recorded. The Sale and Purchase Agreement also includes other important information about the transaction, including:
- The agreement amount for the property (after negotiations by the seller and buyer).
- Information about the facilities or common areas in the property.
- The date of possessing the property (by the buyer).
- The payment plan for the property (assuming you are not paying in full).
5. The Building Approval Plan
This document shows that the builder of the house is legally authorized to commence the construction. Also, the building approval plan has to be issued in a way that it conforms to the set rules and regulations guiding the construction of properties in the area.
6. The Possession Letter
If you are buying a home that is still under construction, there is a chance that you cannot lay claim to it yet. Rather, you have to get the Possession Letter, which shows the date that the builder or developer is ready to hand over the house to you.
7. The Completion Certificate
The Completion Certificate is issued only when the building or home has been constructed according to the approved building plan.
The Completion Certificate also shows that the building has been inspected and discovered to comply with the laws under the local authority.
Conclusion: Don’t Buy a House without Getting the Necessary Documents
Buying a house or taking a loan to buy one is a profitable venture. But having the relevant documents is one sure way to lay claims to the building anytime you are called to answer for its legitimacy. You now know some of the documents to get handy so your next home-buying process will be hitch-free.