Thinking of Buying an Illinois Home? Get Your Paperwork in Order
Homes are a major purchase for many people, and the process of purchasing your home can be overwhelming. Preparing the documents necessary for home buying is also another major task you need to complete. Having all of the necessary paperwork ready ahead of time can help make the home buying process go more smoothly. Here’s a breakdown of what you’ll need.
Proof of income and assets
If you are planning to apply for a mortgage, you will need to have a mortgage pre-approval from the lender, which means you need to show proof of income. Depending on the lender, proof of income can be any of the following:
- Pay stubs or other proof of employment
- Bank statements
- Retirement account statements
- Tax returns
- Gift letters
- Form 4506-T
All of these documents provide details about your source of income and will also tell the lender where you will source your down payment.
Proof of employment
It is a must for every lender to assess your capacity to pay the loan mortgage and ensure that you do this with consistency. Your proof of employment will serve as your guarantor, and depending on what it states, this will also be the basis of your loanable amount.
Your credit report is a vital tool in gaining access to important information about your debts, payments, and collections. It contains information on how well you’ve handled past debts and payments, which will be used by lenders to determine if they want to offer you more loans in the future or not. The three major bureaus that produce these reports use the information in them to generate scores, which measure how well-liked you are as an individual or company when it comes down to financial decisions based on riskiness associated with loans granted through banks/credit unions etc. The higher your credit score, the higher chance for you to be approved for a loan.
After the lender evaluates your income, debts, credit reports, assets, and payment capacity, they will provide you with a pre-approval letter stating how much you are allowed to borrow. Without the pre-approval letter, you might be able to better understand what type and how much financing your mortgage payment will allow. If you have a pre-approval letter prepared, potential sellers are more likely to assume that you are a serious buyer.
This letter is what you give to the seller to present your interest in buying the property. This provides your reason for buying the property, so a more personalized offer letter can sway the sellers to your favor. Ideally, you will need to include some of your personal information, such as your personal interests and why you love to buy the house. This is your best attempt to make a connection with the seller.
The purchase agreement is a formal, binding agreement between you and the seller that defines all aspects of your relationship. When signing this document, you commit yourself to these terms and conditions.
The purchase agreement contains the following information.
- Identification details of the buyer and the seller
- Description and condition of the property
- Purchase price
- All conditions and contingencies
- Obligations and rights of the buyer and seller
- Items included in the sale (appliances, furniture, etc.)
- Amount of earnest money deposit
- Closing costs
- Closing date
- Terms of possession
- Signatures of both parties involved
Home inspection details
The seller provides the home inspection report, which discloses any known issues about the house. This also sums up the condition of the house and can include the following details.
- Cracks, gaps, and crumbling on the foundation
- Siding, gutters, downspouts, and grading of the exterior
- Fixtures in the bathroom
- Estimated age and condition of the roof
- Plumbing system
- HVAC system
- Gas and electrical systems
- Included appliances in the sale
The home inspection contingency is a common term in purchase agreements. If the home inspector finds problems with your new house, you can negotiate to have them fixed or even get credits at closing for any repairs that are needed.
The title review of the home provides a summary of the legal information and right of ownership of the property. This can identify any issues related to the home’s land. The title review will guarantee the correct information about the chain of ownership and ensure that it has no liens, judgments, or pending lawsuits.
If you’re buying a property, it’s important to have an official survey performed so that the boundaries of your land will be correctly recorded. This way, there are no surprises when building or remodeling projects need permits and licenses from city governments.
Proof of identification
This may sound overrated but always keep in mind that any legal transaction requires government-issued identification. This can be in the form of a passport, driver’s license, or any other proof of identification issued by the government. So never forget to bring this to any transaction you will undergo.
We all know that buying a home is an overwhelming process, but there are some things you can do to make the journey less stressful. One way would be by hiring an expert to handle and guide you with each transaction.
If you are thinking of buying an Illinois home, we are here to help. Contact us today at Midwest Farm and Land Co. for assistance.