Advice for first-time home buyers often focuses on all the steps involved in buying a home. To simplify things, let’s look at the people involved, not the steps.
If you’re a people person, focusing on the people might help you visualize the whole home buying process better than trying to remember the details.
Okay, besides you and the home seller, about six other people will be involved when you buy a home. Some of them will be involved from beginning to end, others will pop in and out, and still others will be optional.
Please be aware that each state has its own unique legal requirements for transferring the ownership of homes. Below is a simplified overview.
1. Mortgage Loan Officer—Almost Always
I’ve never heard of a first-time home buyer paying all cash for a home so let’s assume you have to borrow money to buy the place.
Your mortgage loan officer will be involved from beginning to end. From your first phone call to see how much home you can afford to buy, until the transfer of the ownership of the home to you, your loan officer will be involved.
2. Real Estate Agent—Usually
Home buyers, especially first-time home buyers, usually use a real estate agent to help them buy their homes. Your agent is involved from the beginning to the very end.
They’ll help you find the home, draft up your written offer and give you advice on how to negotiate price and terms with the seller. After you have a written, signed agreement to buy the place, they’ll help you navigate through the inspections and closing process.
3. Real Estate Attorney—Maybe
Some states in the Northeast and Southeast require licensed real estate attorneys be involved in the transfer of home ownership. As mentioned above, every state has its own unique laws on how to transfer the legal ownership of homes.
4. Closing Agent / Settlement Agent—Always
A closing agent—also called a settlement agent—will always be involved from the time you reach a signed written agreement with the seller until ownership of the home is transferred to you. A closing agent will be involved during the last 30 to 45 days or so before you take ownership of the home.
Closing agents are the ones who make sure the buyer and seller do what they promised to do in the written contract. At the end, closing agents are the ones who do the paperwork to transfer ownership of the home to you.
I like to say the boss of the closing agent isn’t the buyer or seller, the boss of the closing agent is the written contract the buyer and seller signed.
In the Northeast and Southeast, the closing agent is probably a closing attorney. In the rest of the country, the closing agent is probably either an escrow officer or title agent.
Generically, they’re all called closing agents or settlement agents.
5. Home Inspector—Hopefully
Home inspectors are often involved but not for long. They pop in, do a home inspection in less than half a day, write a report the same day and they’re gone. You’ll probably never hear from your home inspector again.
You may also have other inspections done, such as a termite inspection. Different areas of the country have different customary inspections.
To make sure they aren’t lending you more money than the home is worth, your mortgage lender will hire an appraiser to estimate the market value of the home you’re buying. The appraiser works for your lender, not you, even if your lender charges you for the appraisal.
Appraisers pop-in, do their thing and are gone. They check out the house in person, do more research back at their offices, and within a few days they’ll send their official report with the appraised value of the home. You’ll probably never meet or talk to the appraiser.