Buying and Closing
At some point of your search, you’ll know. You’ll know when you find the home that best fits you and your needs. When you find a great match, you’ll want to take those next steps that can make that home yours.
Extending an Offer
Purchasing a home is one of the few transactions that involves heavy negotiations. A REALTOR is a valuable resource to have on your side as you determine the appropriate initial offer to extend. During this portion of the process, you’ll want to consider the following:
- To demonstrate the strong financial backing and genuineness of your offer, you’ll want to have the preapproval letter from your PrimeLending Loan Officer ready. An offer with financial security obviously is preferred by sellers.
- Facilitate all your negotiations in writing. This will provide a record of deals and decisions made as well as help clarify any misunderstandings.
- To demonstrate the seriousness of your offer, you’ll want to have money ready to use as an earnest money (or “good faith”) deposit. While the amount varies depending on your location, all of it will be placed into an escrow account until the purchase transaction is complete.
As you come to the closing stage, you’ve entered the final stretch. At this point, you’ll want to be sure to you cover a few things:
- Go over the loan commitment with your PrimeLending Loan Officer and be sure you understand your loan’s rate* terms and the additionally established requirements and details.
- Obtain homeowners’ insurance and, if required flood insurance.
- Using your loan commitment and purchase agreement as guides, set a closing date and time.
- Verify with the closing agent or attorney that a property survey was ordered.
- Prepare to move
- Do a final inspection of the home** you are about to purchase.
- Confirm that you have met all the guidelines and conditions in the purchase agreement established by the seller.
- Bring the total you owe in closing costs in the form of a certified or cashiers’ check to your closing appointment. Typically, personal checks and/or cash are not accepted.
The Purchase Agreement
A legally binding contract between the buyer and the seller of the property, the purchase agreement outlines all terms and features of the final transaction. This can include:
- The property address and legal description
- The sales price, the loan amount, the down payment and deposit
- The names of all parties involved including the buyer, the seller, the buyer’s agent, the seller’s agent, the mortgage broker/banker and any attorneys
- Time limits that might apply to the transaction
- Any contingencies that must be addressed prior to the deal being complete and finalized (such as the sale of the buyer’s present home, issues from the home inspection that might need to be repaired, etc…)
Because of special and unique features of every home transaction and the varying needs of each home buyer and home seller, purchase contracts are not exactly the same. A REALTOR, a title company or an attorney may assist in the negotiations and execution of a purchase contract; this is dependent on the state in which the transaction is being conducted.
The closer you get to the appointment, the more you will want to know what to expect at closing.
* Lock-In Rate
Prior to your closing date, you’ll want to consult with your PrimeLending Loan Officer about the rate you want your loan fixed on. Generally, this “locked in” rate can be set 30, 60 to 90 days prior to the time of your closing. This option allows you to land on a rate earlier on in the home purchase process and protects you from changes in the market that would lead you towards a higher interest rate. The flipside of this benefit is that you are locked in with that particular rate, even if lower rates prevail in the market before your closing date.
Something to note is that even the most experienced loan professional has a challenging time predicting the market and how the rates will move. Waiting to see if rates get any lower may not be a gamble worth taking. You may miss the rate that provides you a better loan scenario.
** Home Inspection
After the seller has accepted the purchase offer and before the closing meeting, it’s best to have a professional home inspector evaluate your home. The resulting comprehensive report will inform you of the current condition of the property, reflecting any hidden problems that might exist.
These discovered issues possibly can be addressed in the purchase agreement as conditions the seller needs to fix prior to the sale of the home or reasons for a reduction in the sells price. Should the discoveries be too problematic, it might be best for you to withdraw the purchase offer completely and look for another home option.