So what is really involved in sealing the deal on you next home.
Even though not every guaranteed to be accepted by the seller. Yet once you find your perfect house, it is wise to move fast. Since, someone else is likely to think this same home is a great buy. Often 10% below asking is the place to begin, because it gives you some room to negotiate. Still, do not top what you have predetermined to be the highest price you can afford.
The Earnest Money Deposit
This is a demonstration of good faith and commitment by the buyer to the seller. It is usually 1 percent of the home's purchase price and is usually put towards the down payment. The earnest money deposit is put into a 0% brokerage trust account upon acceptance and is removed at closing. Still, if you decide not to close on a deal once your offer has been accepted for un reasonable circumstances, you may lose your deposit and be sued for damages. Also, if the seller does not accept your offer, your deposit will be returned.
Contingencies are certain requirements specified in a contract that need to be met before the buyer is required to close. These typically include: the buyer's securing of financing and a home inspection. Generally, an inspection contingency covers a 10 to 14 day period from the acceptance of the contract, and financing contingencies run for 30 days on average.
During a home inspection, a professional conducts a thorough examination of the property to assess structural and mechanical issues. The idea here is that a home inspector will be able to catch potential problems that a buyer might not detect.
Upon the acceptance of an offer by the seller, and it becomes a legal and binding obligation on the part of the buyer to purchase the property if any contingencies are met. It outlines the details of the transaction ncluding: a description of the property, the selling price, the date of closing, the possession date and applicable contingencies.
Usually called a closing statement or settlement statement, a document that the Department of Housing and Urban Development (HUD) requires, which accounts for all financial aspects surrounding the sale and purchase of a home. It provides a detailed list of the funds paid at closing. These include real estate commissions and initial escrow amounts. The Real Estate Settlement Procedures Act (RESPA) requires that a copy of the settlement sheet is distributed to both parties around one day prior to settlement.
Before you can close on a house, some paperwork is necessary. This includes a title search which makes sure the title is clear, title insurance to protect the buyer and the lender from any oversight and an application for homeowner's insurance.
Closing costs vary, but generally include: a loan origination fee, an appraisal fee, the cost of a credit report, a lender's inspection fee, the cost of title insurance, a mortgage broker fee, taxes and a fee for document preparation. Your lender is required to give you a good faith estimate which is a notice of fees associated with your loan.
Before the deal is closed and you take possession, you must make arrangements regarding utility service and first mortgage payment.
Settlement invoves payment of the balance of the purchase price the buyer owes on the property, and the transfer of the title. It takes place on the possession date.
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