The Home Buying Process in Pennsylvania
Bill Remorenko
Realtor ®
Accredited Buyer's Representative ®
Certified new Home Specialist ®
717-201-2666 cell
CONSUMER NOTICE: Pennsylvania Law requires real estate brokers and sales persons to advise consumers of the business relationship permitted by the Real Estate Licensing and Registration Act. This notice MUST be presented to all consumers at the first substantive discussion about real estate.
- Buyer makes offer to purchase seller's property.
Agreement of sale
- The agreement of sale form is approved by the Pennsylvania Association of Realtors or local Board of Realtors.
This preprinted form is used by most major firms in our market area and may be completed with broker assistance.
- Deposit
The earnest money or good faith deposit accompanies the offer is often ten percent (5%) of the purchase price. The buyer's personal check is made payable to the listing broker who must, by law, deposit the check in a separate insured escrow trust account when the offer is presented and accepted.
- Customary Provisions
- Mortgage Loan Contingency
Any conditions regarding new financing or loan assumption are written in the agreement of sale. As a rule, a buyer is given four to five weeks to obtain a firm loan commitment. A buyer has ten (10) working days to make a completed application for a mortgage after acceptance of offer by a seller.
- Termite Inspection
Under the provisions of the agreement of sale, the buyer may request that the seller provide a report and inspection warranty from a licensed exterminating company showing absence of termites, wood-destroying insects and organisms, and any associated structural damage. Most mortgage companies require this inspection. If infestation and/or damage is discovered, specific remedies are contained in the wood infestation addendum.
- Home Inspection
A buyer has the option to have (at his or her expense) an inspection of electrical, plumbing, heating, and cooling systems and built-in appliances.
- Adjustments and Prorations
Unless otherwise provided, the following items shall be prorated and adjusted between the parties or paid at closing:
- Taxes on real property shall be prorated on a fiscal year or calendar year basis, as appropriate, to the date of closing.
- Rents, if any, for the property shall be prorated to the date of closing.
- Accrued, but unpaid, interest and other charges to seller, if any, shall be computed to the date of closing and paid by the seller. Interest and other charges prepaid by the seller shall be credited to seller at closing and paid by the buyer. (Other charges to buyer may include FHA mortgage insurance premiums and private mortgage insurance premiums.)
- Conveyance of Title
Seller agrees to convey title by Special Warranty Deed at closing. The average time from execution of agreement of sale to transfer of title varies but is approx. 60-90 days.
- Offer to purchase is presented to seller and, if acceptable, is signed by seller and becomes a binding contract.
- Buyer makes mortgage loan application to lending institution.
Mortgage Loan Procedure
- Application
The buyer completes an application with the loan officer, supplying necessary information such as past and present employment, credit history, assets and liabilities. Accurate names, addresses, all account numbers and balances are important for expedient lender verification. The buyer generally pays appraisal and credit report fees at time of application.
- Processing
Lender orders a credit report and verifies all information supplied by borrower (buyer). Lender orders appraisal of subject property. When loan package is complete, loan officer submits package to loan committee for review and approval.
- Lender approves application and issues a commitment to borrower.
Buyer should instruct the mortgage lending institution to provide the Realtor with a copy of the mortgage commitment document.
- Lender submits closing instructions to buyer's title company that completes preparation for settlement.
It is customary for buyers to retain a title insurance company and/or attorney during the closing process. The buyer's title insurance company performs or orders a title examination, title insurance, mortgage insurance (if necessary), and begins closing statement calculations and preparation of necessary documents.
- A buyer exercises their right of a pre-settlement inspection and completes arrangements for closing and moving.
Preparation for Closing by the Buyer
- Property Insurance
Buyer arranges appropriate property insurance, for coverage of real estate and personal effects, to begin the day before settlement. Buyer has the option if insuring equitable interest in the property when the agreement of sale is finalized.
- Pre-Settlement Inspection
The buyer exercises the right of pre-settlement inspection of property within 48 hours prior to closing.
- Utilities
The parties involved notify the utilities (gas, electric, water, etc.) to change billing from seller to buyer, effective as of the date of closing or occupancy.
- The settlement takes place to complete the transfer of title, loan documentation and cash settlement.
Closing
- Location
The closing meeting is usually held at the office of the buyer's title company, real estate company, lending institution or attorney. The title officer usually conducts the closing meeting.
- Procedures
- The closer will prepare the closing statement (HUD-1) with the buyer and seller to itemize all receipts and expenditures including prorated adjustments.
- The buyer's usual closing costs, when a new loan has been obtained, include fees for loan origination, credit report and appraisal, title examination, title insurance, document recording and assignment fees.
- The closer will obtain necessary signatures on all documents, including the deed (seller signs).
- The buyer pays the balance due on purchase price and closing expenses with either a cashier's or certified check.
- Allow a minimum of 1 ˝ hours to complete settlement.
- Seller receives proceeds from sale of property and coveys title by Special Warranty Deed to buyer.
- Closing officer records pertinent documents in the public records at the county courthouse.
- Buyer takes possession of property by signed deed, keys and physical possession.
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