Everyone dreams of owning their own home, but for a first time home-owner the task may seem overwhelming. While transactions do vary, there are some general guidelines, however, that will help you through the process from viewing to completion.
The first step is to choose a mortgage institution and get pre-qualified, which simply means providing information on your income and outgoings and the institution will calculate the level of borrowing that you can service monthly. This is a critical step as it allows you to determine how much you can afford to pay for your new home, and therefore what price range you give to the Agent you are working with.
Once you have established a budget figure, ensure that you have the necessary cash to make the 10% deposit you will be required to pay to secure the property that you have chosen. This needs to be readily available because an offer and acceptance usually takes only 3-4 days and then you will have to sign the Sale Agreement and make the deposit. Delays at this stage are not advisable since the property is still on the open market until the contract is signed and deposit paid.
As a prudent buyer you should also establish up-front the extras that will be payable on closing such as stamp duty and legal fees in order to avoid “surprises” at the closing of the transaction. You need to clarify whether you are expected to pay closing charges yourself or whether the lending institution is prepared to cover them in the loan payment.
Choosing a home is a very personal thing and everyone has their needs or preferences. You must consider the size of the property you want, the type of neighbourhood, services, security, and proximity to amenities. And of course, be mindful of your budget.
Once you are ready to view properties, you should contact a reputable real estate Agent who is well equipped to know the ins and outs of the properties and the neighbourhoods. They can easily direct you towards a selection of homes within your budget, possibly one you may have overlooked if you search on your own.
Before committing to a particular property make sure and examine the houses carefully. As a Buyer you must consider the electrical wiring, plumbing, condition of the woodwork, roofing, masonry work, cupboards and even the land on which the property sits. As a potential Buyer, beware! The real cost of the house includes all renovations and repairs.
If you are borrowing to make your purchase, you will be required by the lending institution to have a valuation done of the selected property to determine current market value. This is to ensure that the value is not less than the amount of the loan. They will also expect you to choose a Valuer from their panel of recognized Valuers and their report belongs to you.
Once you are comfortable with your choice of property, the next step is to request a copy of the Title Deed and give it to your Attorney with instructions to handle the conveyancing of title for you. Your Attorney will prepare a Purchase Agreement, which is signed by both the Vendor and the Buyer on payment of the 10% deposit. It is critical that you review the agreement and approve its contents as you are legally bound by all the clauses. Once signed, the Attorney will search title and look for any charges registered against it before advising you that title is clear and you can complete the purchase.
Typically 90 days are given to finalise the mortgage contract, which is the same term allowed on the Purchase Agreement for completion of the purchase. You will be required to fill out Know Your Customer forms for your real estate Agent, the lending institution and your Attorney so be prepared as it is a legal requirement of anti-money laundering legislation.
Once the Purchase Agreement is signed your Attorney will require the Vendor to provide a copy of the most recent Land and Building taxes, WASA receipt, WASA clearance certificate (only valid for 90 days), Town and Country Approval and a Completion Certificate. Your Agent will assist in this part of the process.
In the case where the Vendor has a mortgage on the property your Attorney will need the Vendor to obtain –
- Release/s of outstanding mortgage/s duly executed by the Mortgagor and Mortgagee in escrow
- Mortgagee’s statement of the amount required to release the existing mortgage/s (the redemption statement)
- and the invoice of the legal fees and disbursement in the matter of each Deed of Release and evidence that same has been paid (e.g. Receipt from Attorney who prepared the Release)
When your loan payment is ready, the lending institution will invite you to sign their Deed of Mortgage, and the loan draft will be made available to you, made payable to the Vendor. You will then meet with your Attorney (and the Vendor perhaps) and sign the Deed of Conveyance (or Memorandum of Transfer in the case of RPA land, or Deed of Assignment in the case of leasehold property) and all payments to Vendor and Attorney will be finalized at this point.
The executed Deed is then sent to the Land Registry for registration of the Buyer’s title, and in time you will receive a certified copy of this registered Deed. You will also get a Return of Ownership form which you take – along with the last Land and Building Tax receipt from the previous owner – to your local district revenue office to register yourself as the new owner. Once this is done, apply for a Certificate of Assessment to take to the water authority along with a copy of your deed and previous WASA clearance to change the account into your name.
After all these steps that you purposefully made to acquire your own home, you should try your best to make your monthly mortgage payments on time to avoid unnecessary interest charges or foreclosure, should that become necessary. Ownership is a responsibility that cannot be taken lightly, but it is also an amazing benefit that should be enjoyed.
Association of Real Estate Agents (AREA) www.areatt.com