You will interact with a number of different people throughout your home buying journey. Below is a brief explanation of the main actors involved in the process and their roles.
Pre-Purchase Housing Counselor
You may choose to work with a pre-purchase housing counselor at a HUD-approved housing counseling agency before actively starting the homebuying process. Counselors can provide you with neutral guidance about the homebuying process, help you determine if you’re ready for homeownership, what you can afford, and what loan products may be available for you. Many will have direct access to affordable lending products that they can refer you to. Although HUD-certified counselors can charge for pre-purchase counseling, many organizations can waive the fee based on need or may hold free workshops that you can attend. Find a counselor here or by calling our Homeowner Hub at 646-786-0888. Read more about working with a pre-purchase housing counselor here.
Real Estate Agent
Your real estate agent, or realtor, is who you will probably interact with while purchasing a home. Agents are business professionals whose job is to help you buy a home by showing you homes, negotiating a price, and navigating paperwork. Your agent should represent your interests, while a listing, or selling agent, will represent the interests of the seller. In New York, the same agent may represent both the buyer and seller (called dual agency), as long as there is written consent from both parties. Real estate agents must be licensed — you can verify their credentials here. Agents are paid a percentage of the final purchase price of the home, or a commission. You’ll be spending a lot of time with your agent, so make sure you shop around and feel comfortable with the person you select. Get recommendations from people you trust. Don’t be afraid to ask your realtor questions, negotiate the fee on your behalf, and confirm they have experience in your target market.
Real Estate Attorney
A real estate attorney drafts and reviews all legal documents, addresses legal and title issues hindering the closing, and represents you throughout the buying process as needed. You should hire a real estate attorney to work on your behalf before you sign a contract of sale; the seller will also likely have their own attorney. If you do not know of a real estate attorney you trust, one way to find one is to ask someone you trust who has recently purchased a home if he or she can recommend their attorney. Your realtor may also have a contact. If you don’t have any recommendations, you can obtain a referral from your local bar association.
The mortgage lender is the entity that lends you money to buy a home. They could be a commercial bank, savings and loan institution, credit union, or other type of financial institution. The lender earns money through collecting interest on your loan.
Loan officers are individuals who work on behalf of the mortgage lender and determine if you qualify for a mortgage loan. They are responsible for ensuring that you will be able to repay your mortgage. For a fee, loan officers can give you written pre-approval for a mortgage, which can be beneficial and indicate to agents and sellers that you are serious about buying a home. (Pre-approval is different from pre-qualification, which is only a cursory check to estimate how much you may be able to borrow from a lender and does not require any documentation.) You will need to fill out a loan application and share personal financial information.
Mortgage brokers are individuals who connect mortgage lenders and borrowers (you). While loan officers represent specific mortgage lenders, mortgage brokers represent several lenders. Brokers earn a fee when they successfully match a lender with a qualified broker. Note that realtors can sometimes be called brokers, which is different from a mortgage broker.
Your loan servicer may or may not be your original mortgage lender, but is the entity that you pay each month. Legally, anytime after the initial loan is made, loan servicing may be contracted to different loan servicers. Your loan terms, however, cannot be changed, and and your old and new servicer are required to notify you in the case of a change. If your property taxes and homeowners insurance payments are included in your monthly mortgage payment, your servicer will set up escrow accounts and pay the taxes and insurance from this account. Changes in property tax and insurance rates may cause the monthly amount collected for escrow to change and thereby affect your monthly payments.
An inspector, sometimes also known as an assessor, examines the physical condition of the house. As the buyer, you hire the inspector and they work for you. It’s a good idea to be present during the inspection so you can ask questions and get detailed explanations. Make sure to get a comprehensive report in writing with pictures. As with the other professionals who work in your interest, you should shop around and consult with more than one before making a decision on who to hire.
Appraisers are hired by your lender to determine the market value of the home compared to similar homes recently sold in the neighborhood, the value of the land and physical structure, and potential rental income. The cost of the appraiser is usually included in closing costs. You can ask for a copy of their report.
The title insurer examines the property title and history to ensure rights to the property can be legally transferred. You will probably meet the title insurer at closing.