Before you manke an offer on a house, make sure you fully understand what will happen.
You’ve been looking at homes for a while now. You know the type of home you want and the areas you wish to live. Now is the time to get serious. You need to have your ducks in a row.
This is the point in the game where some buyers begin to reconsider their original budget. Perhaps you haven’t found that dream property for the amount you were hoping for. However, if you could just add another $10,000 to $15,000 to the budget, you could find that home. That might sound great, but will it work?
Before you decide to increase your budget, make sure you speak with your lender. He or she will make sure that your qualification amount will cover your new budget. You will also want to make sure you know how an increase in your budget will affect your monthly payment. It may end up shifting the mortgage insurance and tax amounts enough that it won’t be feasible.
You can keep touring homes slightly above your budget if they’ve been on the market for a while. Hopefully, a worn-down seller might be willing to accept a lower offer. Remember, though, that in this market, many homes are receiving offers at full list value.
All negotiations between buyer and seller must be completed before a final contract is prepared. It’s common to ask the sellers to cover closing costs and a one-year warranty. This is the time to ask for issues that popped up during inspection to be addressed. If you are not sure what to include in the contract, make sure you ask your realtor. He or she will advise you about what is appropriate, based upon the severity of the problems.
The deal isn’t complete until a contract is signed by both parties, but there’s one more step for buyers: providing “earnest money. Depositing earnest money shows that you’re a committed buyer. Typically, the amount is between $500 and $1,000. Without earnest money, buyers could place a “hold” on several properties and skew the market.
If your offer is accepted, your earnest money will be applied to your down payment. If you find something wrong with the property later, you can usually get most of your deposit back. Double-check the purchase agreement to see how this situation would be handled.
Check out all of our posts in our home buying and selling series!
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The blog and its opinions are expressly that of its author and does not convey the opinions or strategies of the Credit Union and should not be considered financial advice. CommunityAmerica’s Mortgage offers are subject to credit approval and terms may vary based on conditions.