There’s a lot of paperwork that contributes to successfully purchasing a home, and knowing what you’re signing at any given time is a critical part of being an informed home buyer. To help clear up some of your potential confusion and make you a more secure buyer, here are 5 documents to become familiar with when buying a house in Santa Cruz.
Credit Report
One of the first stops when laying the groundwork for buying a house needs to be your credit report. You can get this key piece of information from any major credit reporting agency for free once a year.
After you receive your credit report, you need to go through the entire document and check every bit of it for accuracy. This is the information that sellers and mortgage lenders may get their hands on to judge your worthiness as a buyer, so ensuring each part of it is correct is essential. The other part of going through your credit report that can be beneficial is accounting for any outstanding debts that you can pay down as much as possible if not entirely eliminate.
Disclosure Forms
As your home search begins to narrow and you focus on a specific property or two, you’ll begin collecting disclosure forms on each of them to let you know about any previous or existing issues.
In California, sellers are required to disclose certain information about the property’s condition and any known defects. The most common disclosure is the Transfer Disclosure Statement (TDS), which provides information on the property’s physical condition, any known issues, and any recent repairs or renovations. Other disclosures may include the Natural Hazard Disclosure (NHD), which informs buyers about potential hazards such as earthquake zones or flood zones. Carefully review these disclosures to understand the property’s condition and potential risks.
Seller’s disclosure forms can include a wide range of information, such as instances of flooding, functional issues with the roof, and the age of the home’s appliances or infrastructure. Simply receiving a disclosure form does not necessarily indicate a fundamental problem with the home. Therefore, taking the time to dissect the contents of any disclosures is key to gaining a better understanding of that property and what features or problems could come along when buying a house in Santa Cruz.
Pre-Approval Letter
Most buyers need to secure financing through a mortgage lender, and knowing what that process looks like and how you can use it to your advantage in buying your new home is important.
While it may not carry the same weight as a full asking price cash offer, showing a seller that your mortgage lender has faith in your financial security by obtaining a pre-approval letter is certainly worth something to a seller. However, it is imperative that any buyer understands that a pre-approval letter is not the same thing as having your home loan approved and ready to go.
You should absolutely receive a pre-approval letter from your lender as soon as possible and be sure to include it with any offers on any properties you pursue.
Loan Estimate
Moving forward with your Santa Cruz home loan’s approval, you’ll get a document that breaks down your proposed monthly mortgage payments.
If you’re financing your Santa Cruz home purchase, there will be several loan documents to review and sign. These documents may include the loan application, loan estimate, promissory note, deed of trust, and various disclosures related to the loan terms and costs. It’s important to thoroughly read and understand these documents, as they outline the terms of your loan, interest rates, payment schedules, and any associated fees.
This allows you to see what you can expect to pay in total along with how much of that payment goes toward the loan’s principal, interest, and escrow. It’s not uncommon for buyers to be confused by this a bit, and you should ask your lender any questions that come up when going through your loan estimate.
Purchase Agreement
Finally, as closing begins to loom, you’ll need to know exactly what you’re buying and for how much. These details are all rolled into what is called your purchase agreement.
The purchase agreement, also known as the contract or sales agreement, is a legally binding document that outlines the terms and conditions of the sale. It includes details such as the purchase price, financing terms, contingencies, and the timeline for the transaction. Review this document carefully, as it will form the basis of your rights and obligations as a buyer.
This differs from an offer in that it is the contract that finalizes your purchasing of the property, the last step in buying a house. Prior to closing, you can receive the final draft of the purchase agreement in order to verify everything, and you should take advantage of this opportunity. After both you and the seller sign off on the purchase agreement, the paperwork gets filed and the transaction is a success.
Guidance for Needed Documents When Buying a House in Santa Cruz
Buying a house in Santa Cruz comes with a wide variety of confusing documents. If you need help understanding them, contact us today at 831-588-2334!
I’m Shemeika Fox, your Santa Cruz real estate expert and your personalized real estate concierge! Reach out to me for a complimentary and confidential consultation TODAY!
