The process of buying a home can feel very overwhelming, especially when you are a first-time buyer. However, understanding all of the steps involved can help you feel confident in your decision to invest in residential real estate.
In Massachusetts, laws are in place that outlines the process for buying and selling homes. There are numerous contracts involved, and you must complete them all legally and lawfully for your purchase to be binding.
Offer to Purchase
You use an Offer to Purchase contract when you want to let the seller know that you are serious about purchasing his or her home. It involves providing earnest money, which is a good faith deposit that goes toward your down payment should the seller accept your offer.
Purchase and Sale Agreement
If the seller accepts your offer, you will then have to sign a Purchase and Sale Agreement. This document contains all contingencies and verbal agreements made between the buyer and seller, including the agreed-upon sale price, the amount of down payment, a mortgage contingency and more. Before you sign the Purchase and Sale Agreement, it is important to complete an inspection of the property. This will give you the chance to add any additional contingencies to the contract before closing, such as repairs that the seller should make.
In addition to the Purchase and Sale Agreement, you have to sign several documents at closing based on state and federal law. Some of these include a HUD-1 Settlement Statement, a Truth-in-Lending Disclosure Statement and numerous affidavits and disclosures.
The purchase of residential real estate does not have to be intimidating. Knowing that you will have many contracts to sign, prepare yourself to read through the information and get legal counsel if anything does not seem correct.