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1. First time
buyers are often unsure of how much they can really afford, how much
cash they will need for down payment, what kind of loans are available,
etc... Click here to learn financing 101
2. How do we know that there is nothing wrong with
the house we want to buy?
After your offer to purchase a home is accepted you will have a time
period in which to have the home inspected. If you find something wrong
with the home you can negotiate it's repair with the seller or terminate
the contract.
3. How do we know if we are paying too much?
Your agent should prepare a list of comparable sales to assist you in
calculating your offering price. Once under contract, your lender will have the
home appraised
(at your cost) to be sure of the value.
4. How much cash will we need other than our down payment and the
amount of our loan?
You will need to pay for several items at or before closing. You
will need to pay a home inspector, roughly from $125 up to $250
depending on the specific services you choose. If the home you are
buying is on a water well and or septic system, you will need to test
the water quality and quantity and inspect the septic system. This can
cost from $150 to $300. You will need to pay several fees at the closing
as well; your loan origination fee (usually 1% of the loan amount), a
loan closing fee, interest on your new loan from the closing date until
the first payment date, several other administrative fees for recording
documents, etc... The amount of cash needed varies greatly due to
several factors, but as a general rule, plan on having 2%-4% of the sale
price as cash to cover these costs.
5. Do we need to submit a deposit with our offer?
As a general rule-yes. Homes listed in the MLS (multiple listing
service) will state an amount required to be submitted with any offer to
purchase, although the amount does vary, figure 1%-3% of the asking
price. The term for this deposit is "earnest money". The
amount can be submitted in the form of a personal check, and will be
submitted with the offer. In certain occasions you may want to submit a
promissory note instead of a check.
6. Is our money refundable if something happens to our contract?
Your earnest money check will not be cashed if the offer is not
accepted. If accepted, the earnest money will be held in an account
stated in your offer, usually the listing or title companies' trust
account. Under several conditions stated in the contract, your money
will be refunded if the contract fails, but there are circumstances that
can cause your earnest money to be forfeited. This is where a good agent
is important.
7. There are two months left on our lease, when should we start the
process?
Now is the time to contact a lender and a real estate professional.
You will find out specifically what you can afford and what is currently
available in your desired area and correct price range. If you find the
perfect home, you can make an offer with a closing date that fits your
schedule.
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