Your Step-by-Step Guide to Buying a Home in Virginia

• Virginia uses a settlement agent who is either an attorney or a representative from a title company. This person is used to complete the purchase and prepare all closing documents.
• When buying a home in Virginia, the buyer and seller will finalize the transaction at the same closing table.
• Virginia has specific environmental requirements that impact inspections such as termite and wood-infestation inspections.

Phase 1: Disclosures, Inspections, and the Virginia Title

Once you are in contract with a seller, these are the initial steps that need to be completed. In most cases, you can start the steps in Phase 2 at the same time.

The disclosures, inspections, and title phase usually includes:

1. First an offer must be accepted by the seller and a contract must be signed by all parties and ratified.
2. At the same time, a deposit, also known as earnest money, is paid to an escrow agent, attorney, or broker, but never directly to the seller.
3. A signed contract will need to be sent to an attorney or representative from a title company, who will begin preparation of all work connected to changes of the title and preparing the title commitment.
4. The buyer now receives a mandatory disclosure statement. This essentially states that the seller is making no promises as far as the condition of the property. Therefore, buyers should always get inspections regardless of the age or visual condition of the home.
5. The buyer now elects to perform inspections on the home as he or she sees fit. Assuming these are agreed upon in the contract, the inspections must be completed by a certain date. The types of inspections that you choose to perform will depend on your situation and the condition of the house, but they should generally include a full inspection by a general contractor, as well as inspections for termites. Also known as a “wood-infestation inspection,” these types of inspections are common in Virginia. If more inspections are preferred, you will have to notify the seller and get an extension on the inspection period.
6. If the property uses them, a certification of the well and septic systems will also need to be performed.
7. Depending on the results of the inspection, the buyer may ask the seller for repairs, closing credits, or a reduction in the final sale price. The seller can then respond by agreeing or rejecting the request. The seller has a third option, which is offering a negotiated solution. The buyer can respond in kind and, if they choose, walk away from the deal without penalty. All post-inspection negotiations should be done in writing.
8. The buyer can also negotiate a home warranty with the seller. This will cover some or all of the appliances for a certain period, usually a year.

Phase 2: Securing a Loan for Buying a Home in Virginia

Most buyers in the state of Virginia and other locations will need to borrow money in order to purchase a home. Because so much money is involved in a home purchase, the process can be extensive. But if you prepare properly, you can secure an affordable mortgage for your Virginia home.

In Virginia, the mortgage application process usually goes like this:

1. First, you will submit a loan application to your lender. This can be done directly or through a mortgage broker.
2. You should receive a Good Faith Estimate, of “GFE,” within three days. This is an estimate of the closing costs, although the final number can vary.
3. Before you can make an offer to a lender (assuming you’re using a loan), you have to be pre-approved for the mortgage loan. To do so, you’ll need to bring a wide range of information, including:
   – Several months of statements from all the bank accounts you own.
   – Information from outstanding liens, lines of credit, and other financial liabilities. If you pay rent, include this information as well.
   – Two years of tax returns. Your lender will likely order this information using specific forms through the IRS.
   – Recent pay stubs and contact information from all of your employers. The number of pay stubs that your lender requests will vary, but should include both full- and part-time employment.
   – If you have recent credit inquiries, these will need to be explained.
   – Explanation of any large deposits in your accounts if they are not regular income. A large deposit may look like a personal loan to a lender, so they may request a gift letter. This letter is a basic explanation of the deposit, and should outline that the money given is a gift and not a loan, and therefore will not need to be repaid. The amount that triggers a gift letter will vary depending on your income. For example, a $10,000 gift to someone earning $35,000 a year may require a gift letter, while the same gift to someone earning $200,000 may not. If you think you may need a gift letter, tell the donor as soon as possible.
   – Finally, you may need to verify and substantiate any of the above information. To a lender, anything can happen to someone’s income, so they are as meticulous as possible when it comes to verifying information. The lender may ask for updated pay stubs, rent receipts, bank statements, and other types of financial information. If there is any significant change in these documents, the lender may reassess your loan application.
4. The lender will now give their decisions on your loan. If you are approved, they will issue a loan commitment letter, which states their intent to fund your home purchase once specific conditions are reached. These conditions will include an appraisal so the lender can verify the value of the property. Conditions can also include specifics about material changes to your financial situation or the property.
5. By sending a copy of the loan commitment, the financing contingency will be removed by the buyer. This contingency is defined in the contract. If the borrower is unable to get this approval before the expiration of the financing deadline, the period automatically extends. The buyer may also provide information that they were unable to get the loan and cancel the deal without penalty. The seller can also cancel the deal if they provide written notice. Buyers have three days to respond by providing the loan commitment letter, proof of their ability to buy the property outright, or information that they are walking away from the deal.
6. An appraisal will now be ordered by the lender or mortgage broker through a central directory of appraisers. They can, if they wish, request a different appraiser than the one that was sent, but they cannot request a specific appraiser. If the appraisal comes in lower than expected, the buyer can request a deduction in the sales price before the appraisal contingency date. The seller then has time to respond by either accepting, rejecting, or offering a negotiated solution. If the seller rejects or time expires, the buyer can cancel the deal without penalty.
7. Unless already provided by an HOA or similar organization, homeowners’ insurance will need to be ordered. You’ll need to provide proof of insurance to your lender.

While it is crucial to purchasing a home, the mortgage application process can be long, frustrating, and complicated. It’s best to start early and prepare all your documents ahead of time. If you can’t get the documents, at least research how to get them so you are prepared when the time comes. Also, avoid making changes to your financial and credit profiles during the process. It’s best to not make job changes, lease vehicles, or open new lines of credit until the process is complete.

Phase 3: Closing the Deal in Virginia

When you are buying a home in Virginia, the final closing or settlement will take place at one table, usually at the office of an attorney or title company. During this meeting, the buyer will sign all the documents related to the loan and the transaction. Once the documents are signed and payments have been exchanged, the buyer will take possession of the home!

The details of Phase 3 look like this:

1. Part of the preparation will include a tile search by the attorney or title company. This will help find if there are any liens or assessments on the title. Assuming the title is “clear,” the closing can proceed as planned and the attorney or title company will issue a title commitment. All the paperwork for changing the title should be prepared and a final closing date is scheduled.
2. A final cash figure is calculated. This is the amount the buyer needs to bring to the closing in the form of a cashier’s check, and it’s based on the closing costs, property taxes, and utilities that have been paid to date by the seller.
3. A final walkthrough will usually be performed. This happens before the final closing and is used to verify the condition of the property.
4. At the closing table or settlement table, the buyer and seller sign all the closing documents; the buyer will also sign the final loan documents.
5. The buyer pays the remaining down-payment funds to the attorney or representative from the title company.
6. The representative from the title company or an attorney will now record the transaction and deed with the appropriate municipality, which is generally a city but can also be a county.
7. You will now receive your keys! Unless indicated differently in the contract, you can officially take possession of your Virginia home!

This article should be used as general information only and does not constitute legal, financial, or real-estate advice. Laws are subject to change so always talk with an attorney and/or a lending and real-estate professional before making any decisions.

Downpayment Assistance Programs in Virginia

Homeownership is one of the best investments you can make. It brings numerous benefits, and can be the foundation for a prosperous life and a stronger future.

But for many, a downpayment requirement keeps them from purchasing a home. If you live in the state of Virginia and have struggled to purchase a property, there are options available, including downpayment assistance (DPA) from government agencies and nonprofit organizations.

Virginia Statewide DPA Programs

In Virginia, there are a few organizations that provide statewide support. Here are two examples:

Virginia Housing Development Authority Down Payment Assistance Grant
This organization provides a downpayment grant that does not need to be repaid. The support can be combined with generous loan options to make housing far more affordable.

Virginia Department of Housing and Community Development
The HOMEownership program from the Virginia state government offers support for first-time homebuyers who have moderate or low incomes. This also comes as a grant (meaning no repayment), and eligible buyers can receive as much as 15% of the sales price, plus an additional $2,500 to help with closing costs.

Major Local Programs in Virginia

Piedmont
The Piedmont Housing Alliance provides funding for purchases through loans that can be used for downpayments and closing costs. While it’s a loan, there is no monthly payment and full repayment is only required when you move out, sell the house, or refinance.

Chesapeake
Buyers in Chesapeake can receive support for a downpayment and closing costs. This program is designed to encourage homeownership in the area, and it’s available to families with low or moderate incomes.

Virginia Downpayment Assistance: Common Requirements

Each program is different, but you can expect a variety of requirements, starting with an income restriction. Because these programs are meant for low- and moderate-income buyers, these programs have limits on how much you can earn while maintaining eligibility.

There are also limits on purchase price, and you may need to meet credit requirements.

Some programs are also meant only for first-time buyers. However, if you have not owned in the past three years you may be eligible for assistance. Also, firefighters, police officers, and medical professionals may have this requirement waived.

Programs are always changing. If you need help finding the right program for your specific needs, contact our staff. We’ll make sure you have up-to-date information on the right DPA programs in your area!