Whether you’re buying your first home or your next home, there are several disclosures you might see during the home purchase process. These vary from state to state and depend on the type of property you’re purchasing, but in general, expect to see the following disclosures during the process of closing on your property.
Truth-in-Lending (TILA) Disclosure
While many of the disclosures on this list are specific to the home you’re buying, this one will come from your loan officer. After the last financial crisis, a law was passed that requires that all borrowers receive a set of written disclosures that contain all the important terms of their loan before they sign their loan contract. If you have any questions about the contents of this disclosure or your loan, please let your loan processor know!
Want to know more? Click here to see what the Consumer Financial Protection Bureau (CFPB) has to say about this disclosure.
Known Issues and Repairs
These disclosures can be called different things and take different forms depending on the state, but they ultimately fulfill the same purpose: to disclose the material facts of what you’re buying. Has the house had any repairs, changes, or improvements completed since it was built? Was the work completed by a licensed inspector or contractor? Are there any known outstanding issues and is the seller planning to repair them before escrow closes? Remember, the seller does not need to take care of every problem or issue before the property changes hands. Consult with your real estate agent about the terms of your contract and talk to your lender about what your loan requires.
Termites, natural hazards, asbestos, radon, lead paint…these are all some disclosures you may see during the purchase process. Don’t be afraid as these disclosures don’t necessarily mean the home you’re thinking of buying actually has these problems. In most cases, it’s a disclosure of the possibility of a potential problem or issue. Property inspections are intended to help reveal the existence of known issues, but some things, like natural hazards, may occur in the future. Talk to your agent if you have any specific concerns.
Property Use Limitations
Every property will have some sort of zoning or usage guidelines. These can range from highly restrictive to very flexible depending on the property and location. If the home you wish to purchase is in an HOA, you’ll receive a copy of the HOA guidelines and bylaws. Be sure to review these carefully. In some cases, the property you want to buy may not be approved for the loan type you intend to use. A good example of this is a condo community not being FHA-approved. Usually, you’ll know this information before you get to the offer and acceptance stage, but surprises can always pop up. You might also discover some limitations about the use of your property either in the HOA docs or other disclosures that will become a dealbreaker for you.
As you move through the home purchase process, know that we at the Potempa Team are here to help! Alongside your real estate agent, our goal is to help you move as swiftly and easily through the process as possible so you can close on your new home. Please reach out to your dedicated loan processor at any time with questions.
Want to know more about what you can expect during the purchase process? Click here to check out our 14-Step Guide!