Make a Package/Offer
Once you’ve found the home of your dreams, it’s time to make the offer. Before you do, know the (walk away number) price where you’ll walk away from negotiations because it’s too high. When crafting your offer, consider adding contingencies like having busted appliances repaired at the seller’s expenditure. You can even ask the seller throw in a piece of furniture. Everything and anything is negotiable!
Things that can help you get a “yes” from the seller include being pre-approved for a mortgage and being flexible for the closing date. When you make an offer, the possible answers are yes, no, or counteroffer. Don’t expect to get a “yes” on your very first offer. Unless you’ve put a severely high offer, the customer will likely return with a counteroffer. You may either accept it or provide another counter offer. If the seller then decides to end negotiations with you, lick the wounds and move on to the next house.
Once you have the Purchase Contract
Once you get a verbal “yes” from a seller, the next step is writing up a purchase commitment. The purchase contract essentially sets everything you negotiated verbally in to writing. The typical clauses in a purchase contract are the following:
- Legal description of the property (Including Zoning Information)
- Price and Terms of the sale
- Down Payment (to be held in escrow, and upcoming payment structure)
- Closing date (when the deed can change hands)
- Any items in the sale (such as appliances and also furniture)
- Disclosure of Lead Paints (lead-based paint disclosure form for buildings built before 1978) Other Defects (Includes deaths for the last 3 years)
- Home warranties (along with warranties on appliances)
- Income (if any)
Your purchase contract will probably have contingencies that could void anything if they’re not met. Typical contingencies include passing the home inspection, the appraisal meeting the actual selling price, loan approval, and also the title being free and clear. Buying your First Home has never been so easy.
Getting Inspections and Appraisal
Soon after you’ve signed the purchase contract, the next move is to get the home inspected and appraised. As the buyer, you’re responsible for these costs, so have the checkbook at the ready. If you have a Realtor, he or she will usually manage setting up the inspections along with appraisal for you.
I always suggest a pair of inspections done on your property. The first a pest examination to ensure that you don’t have a colony of unwanted pests. The second inspection is a general inspection performed by a professional home inspector. This is a pretty comprehensive inspection. He’ll check the condition of the house’s heating and cooling systems, electrical techniques, plumbing, as well as the structural the different parts of the home like the foundation, wall space, and roof.
He’ll then produce a detailed report that includes items you should be concerned about. It’s good to show up at the house during the inspection in order to follow the inspector around and ask questions that you might have. In the event the inspector finds any severe faults with the home, you’ll need to decide whether to re-negotiate with the owner or just walk away.
The large financial company will select a approved appraiser to evaluate the value of the home. Your real estate agent will always want to make sure that the home is in fact worth what they’re lending for your requirements. If the appraiser reports how the value of the home is less than the particular contracted price, your financial institution will not give you the loan. Lenders don’t want to fund something that’s worth less than the amount of the loan. The actual appraisal contingency will allow you to either renegotiate with the owner for a lower price or move on to the next one.
Shop for Homeowner’s Insurance
If the inspection and evaluation came out fine, the next thing you’ll need to do is shop around for homeowner’s insurance coverage. Your mortgage broker requires that before they’ll finalize your loan approval. Buying homeowners insurance isn’t hard. The cost of homeowner’s insurance coverage (as well as property taxes) is can be rolled into your mortgage payment. The mortgage lender then puts that money in an escrow account and pays the homeowner’s insurance themselves.
Finalize Mortgage Approval
A few weeks before the closing date, your lender will be underwriting your mortgage application. The underwriter may ask for more documents or ask some questions about the documents you’ve already provided. For the self employed the underwriter will have a lot more questions. Just roll with the punches and hang in there.
Closing the Loan
After weeks or maybe months of work, the big day has arrived (Closing Day). Closings come about with a title company sending you a notary with the documentation provided by the lender. Based on the complexity of the sale, finalization usually takes about an hour and a half. Due to the fact you’re a buyer, you’re going to have a huge collection of papers to initial and sign. To ensure the closing goes without a hitch, make sure to carry each of the following items:
- A certified cashier’s check: Federal law necessitates that you be told the exact amount of the check you need to provide to close at least one day before settlement. You will have to pay the down payment, as well as the closing costs, usually 3%-5% of your home purchase price minus your earnest money. The closing agent will explain whether you need to make one check out or two and to whom they should be made payable. (Do not deliver cash or personal checks.)
- Proof of insurance: Your closing agent needs to see proof you have the homeowners insurance in effect on closing day. Your loan provider likely has a copy of your respective proof of insurance, but deliver an extra copy just in case.
- Photo ID: The closing realtor needs to know you are who you say you are. A driver’s license(s) or current passport(s) is going to do the trick. (For the Notary Public)
- Purchase: Just in case you need to double check all details against closing costs.
Once you’ve authorized the last document (then documents are recorded with the county recorder) and your closing agent will drop the keys in your hand, you’re technically a homeowner at this point. Congratulations!