But First, Paperwork: 11 Key Documents You’ll Need to Buy a House

The amount of paperwork it takes to buy a house is staggering. It’s a stack at least an inch or two thick of documents that’ll look like a long-dead Latin language to anyone unfamiliar with the forms.

The thought of keeping track of all that documentation — not to mention the potential for expensive, deal-killing mistakes within those hundreds of pages — well, that’s more than a little intimidating.

Thankfully, if you’re working with a top local agent, you’ve got an advocate on your side who’ll do most of the heavy lifting for you.

Minneapolis-based agent Becky O’Brien, whom HomeLight ranks as one of the top 1% of agents in Minnesota for successfully helping sellers and buyers accomplish their real estate goals, explains:

“The good news is that buyers don’t need to handle very many documents, especially after they sign the purchase agreement and their house is under contract, because their agent will handle most of it. However, they will occasionally have to sign some documents.”

While you don’t need to worry about most of the forms in that Russian-novel-length stack, here are 11 key documents in particular that you should be aware of and pay close attention to.

Documents needed to buy a house.
Source: (Sharon McCutcheon / Unsplash)

1. Preapproval letter

The preapproval letter is a document from your chosen lender that spells out the mortgage amount you’ve been preapproved to borrow.

This is one of the first documents you need before you start your house hunt because it shows that you’re a serious buyer with the financial ability to purchase a house. While preapproval and prequalification are used interchangeably by some, they aren’t the same thing.

To get prequalified, you provide the lender with an estimated overview of your financial picture, including your credit score, income, debts, and assets. Typically, you can do this online, and get a prequalification letter in just a few minutes. The catch with a prequalification is that the lender doesn’t verify your information.

A preapproval letter generally says that your lender has confirmed at least some of your credit or financial information. This can be as little as a soft credit pull or as much as a full financial underwrite with full verification of your financials (with evidence like your W2s and bank statements). Depending on the strength of the review, preapprovals typically carry more weight with sellers and their agents.

Going one step beyond the traditional, non-verified preapproval, HomeLight Home Loans conducts a full financial underwrite for borrowers upfront. In other words, we look at every puzzle piece that makes up your financial picture within 24 hours of application. We can tell you within a day exactly how much home you qualify for.

However, to be clear: any preapproval letter — whether it’s a prequalification, preapproval, or full upfront financial underwrite, is not considered a commitment to lend. There are several scenarios where your mortgage can fall through, even after receiving a fully-underwritten preapproval. For example, if you take on further debt during the lending process, you could put your mortgage at risk. Similarly, if you quit your job, that could also cause your lender to refuse you financing.

But it’s a key document in your homebuying journey, nonetheless.

2. Loan Estimate

This form — which your lender is required by law to send to you within three business days of receiving your complete loan application — is a brief but complete financial picture of the applied-for loan.

Consider it a cheat sheet that shows you everything you’re committing to if you accept the loan terms, including:

  • Estimated interest rate
  • Monthly mortgage payment
  • Estimated tax and insurance costs
  • Scheduled rate or payment changes
  • Estimated closing costs
  • Potential penalties (including prepayment penalties)

The Loan Estimate is not an indication of your loan status. At the point it’s sent out, the lender may not have made any decisions about approving or denying your loan application.

The three-page document is simply a snapshot of your proposed loan terms — which is especially helpful if you’re submitting mortgage applications to multiple lenders or for multiple loan types, so you can compare and contrast the loans before deciding which one fits best.

3. Offer letter (your love letter to the sellers)

This optional document has the potential to be the piece of paper that gets you the house you want to buy — or not.

When a buyer writes an offer letter, it’s essentially a short love letter to the sellers explaining why they want to buy the property.

Ideally, this letter will include a little personal information about who you are and why you love the house — it’s your best attempt to make a personal connection with the seller.

Keep your eyes peeled during your showings for any common interests you share with the seller to mention in your offer letter.

Maybe it’s a compliment on their lovely garden and your interest in maintaining it. Or perhaps you can express your interest and admiration for their collection of antique kitchenware.

Your real purpose is to bond with the seller through this document so that they choose your offer over any others they may get.

It’s also your opportunity to explain any finer details of your offer — such as your reason for requesting contingencies, or why they should consider your less-than-asking-price offer.

Documents needed to buy a house.
Source: (Liam Truong / Unsplash)

4. Purchase agreement

This is the document that, when signed by both the buyer and the seller, formalizes the purchase and commits both parties to the terms of the contract.

Typically created by the seller’s agent, the purchase agreement spells out all of the financial nitty gritty, including:

  • Identification details for both buyer and seller
  • Property description and condition
  • All contingencies and conditions
  • The rights and obligations of both parties
  • All items included in the sale, including appliances
  • Earnest money deposit amount
  • Closing costs (itemized according to who’s paying for what)
  • Closing date
  • Terms of possession (in other words, when you’ll get the keys to the place)
  • Signatures of both buyer and seller

While you won’t actually have a hand in creating this document, it is the heart of your home sale. The purchase agreement is vital to keeping on top of everything that you’ve agreed to do.

5. Home inspection report

The home inspection report is a detailed list of the condition of — and any visible damage to — practically every facet of your new home, including, but not limited to:

  • The foundation
  • The exterior
  • The bathroom fixtures
  • The appliances
  • The roof
  • The plumbing
  • The HVAC
  • The electrical systems

Obtaining a home inspection is one of the most frequent contingencies written into purchase agreements — because it allows the buyer an out if the home’s condition isn’t up to par.

It gives you, the buyer, leverage to renegotiate the purchase agreement to request repairs to problems found in the home inspection report — or to walk away from the sale.

6. The home appraisal 

While the inspection report focuses on your future home’s condition, the home appraisal is all about the property’s value in the current real estate market.

This document is vital to your mortgage approval — which is why it’s typically the lender who arranges the appraisal.

Before a mortgage lender will sign off on your home loan for the amount agreed upon by you and the seller, it first needs verification that the property is actually worth the amount you’ve agreed to pay.

If the appraisal finds that the property is valued significantly less than you’ve agreed to pay, you’ll use this document to negotiate a lower sales price.

Adding up for the documents you need to buy a house.
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7. Title search

No one likes to get ripped off — especially on a purchase with a price tag for several hundred grand.

The title search is the part of the home sale process designed to protect buyers from fraudulent sales, or worse.

A title search sifts through public records to verify that the seller has the legal right to sell the property.

It also checks for any pending legal issues with the property, such as unpaid property taxes, liens on the property, or judgments against the seller that list the home as an asset.

Title searches are required by mortgage lenders, which also secure their own title insurance on the home to protect their interests. Buyers don’t have to get title insurance, but don’t bypass a title search even if you don’t happen to need a loan to buy the property, and seriously consider purchasing your own insurance policy. It’s worth the $175 to $300 in title search fees to ensure that the home sale is on the up and up.

8. Cashier’s check 

The cashier’s check is perhaps the most important document you need to have with you at the closing of the home sale. Without this piece of paper, the deal won’t close.

“The main ‘document’ that the buyer needs to provide for the closing is a cashier’s check to the title company once they know what the final closing costs amount will be,” says O’Brien.

A cashier’s check is required because it guarantees funds — unlike a personal check that you could write for any amount, whether or not you have the cash available in the bank.

The amount of this check needs to cover: Closing costs, prepaid interest, taxes, and insurance.

It might or might not also include the down payment, depending on whether your lender has bundled your closing costs and down payment into “cash due at closing.” If not, you’ll have to provide another check for the down payment, or follow your agent’s instructions for a wire transfer.

Documents needed to buy a house.
Source: (Kelly Sikkema / Unsplash)

9. Closing Disclosure

The Closing Disclosure is a five-page form from your mortgage lender detailing the terms of the loan. It includes a more detailed version of the same information in the Loan Estimate:

  • Estimated interest rate
  • Monthly mortgage payment
  • Estimated tax and insurance costs
  • Scheduled rate or payment changes
  • Estimated closing costs
  • Potential penalties (including prepayment penalties)

The key difference between the Loan Estimate and the Closing Disclosure is that the Closing Disclosure gives you concrete figures, rather than estimates.

It should be in your hands at least three business days prior to closing on the house to give you time to review the terms of the mortgage.

This document is vital when obtaining your cashier’s check, as it will also provide the exact amount you’ll need to cover with the check.

10. Homeowners insurance declaration page

The homeowners insurance declaration page is simply a summary of your homeowners’ insurance coverage.

Most mortgage lenders won’t grant you a mortgage without this proof of homeowners insurance. Why? Because until your mortgage is fully paid off, the bank has a stake in your home’s condition.

Your lender is agreeing to loan you the funds to buy the house with the understanding that the property reverts to the bank if you default on your loan. So, it just makes sense that they’d want the property insured at the proper valuation before signing off on the mortgage in case something happens to it before the loan is paid off.

11. Property survey 

While not required, a property survey is a wise idea to provide you with legal proof of exactly what you’re buying — primarily, to determine the legal boundaries of your property.

This document is especially important if you’re purchasing property that may contain disputed assets, such as a road, a body of water, or a beach.

Getting your docs in a row

Buying a home is overwhelming, especially when you consider the endless pages of documents required to complete the process. Luckily, you’ll be able to stay on top of all those vital docs with the help of a great agent and this definitive list.

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