Earnest money is money put down with an offer to demonstrate your seriousness about the purchase. It must be substantial enough to demonstrate good faith and is usually between 2-5% of the purchase price (though the amount can vary). If your offer is accepted, the deposit/earnest money becomes part of your down payment. If the offer is rejected, your money is returned to you. If you back out of a deal, you may forfeit the entire amount.
Listen to your REALTOR®’s advice, but follow your own instincts on deciding a fair price. Calculating your offer should involve several factors: what homes sell for in the area, the home’s condition, how long it’s been on the market, financing terms, and the seller’s situation. By the time you’re ready to make an offer, with your REALTOR®’s advise, you should have a good idea of what the home is worth and what you can afford. And, be prepared for give-and-take negotiation, which is very common when buying a home. The buyer and seller may often go back and forth until they can agree on a price.
Your REALTOR® will prepare and present an offer on your behalf, which will include the following information:
• Complete legal description of the property
• Price you are offering
• Amount of deposit/earnest money
• Length of time the offer is valid
• Proposed closing date
• Details of the offer, conditions etc.
Remember that a sale commitment depends on negotiating a satisfactory written agreement with the seller, not just making an offer.
It’s highly recommended and a good idea. Following the inspection, the home inspector will be able to answer questions about the report and any problem areas. This is also an opportunity to hear an objective opinion on the home you’d like to purchase and it is a good time to ask general, maintenance questions.
An inspector checks the safety of your potential new home. Home Inspectors focus especially on the structure, construction, and mechanical systems of the house and will make you aware of only repairs that are needed.
The Inspector does not evaluate whether or not you’re getting good value for your money. Generally, an inspector checks on: the electrical system, plumbing, the water heater, insulation and Ventilation, the HVAC system, the potential presence of pests, the foundation, doors, windows, ceilings, walls, floors, and roof. Be sure to hire a home inspector that is qualified and experienced.
It’s a good idea to have an inspection as part of the condition of purchase, once the deal is closed, you’ve bought the house “as is.” An inspection clause gives you an “out” on buying the house if serious problems are found or gives you the ability to renegotiate the purchase price if repairs are needed. An inspection clause can also specify that the seller must fix the problem(s) before you take possession of the house.
There isn’t a set number of houses you should see before you decide. Visit as many as it takes to find the one you want and, you may find the first one is exactly what you want. On average, home buyers see 5 to 8 houses before choosing one. Just be sure to communicate often with your REALTOR® about everything you’re looking for. It will help avoid wasting your time.
In addition to comparing the home to your minimum requirement and wish lists, you may want to consider the following:
TaTake your time and think carefully about each house you see. Ask your REALTOR® to point out the pros and cons of each home from a professional standpoint.
The lender considers your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses plus your stress test for long term affordability. Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support. The lender also considers cash available for down payment and closing costs, credit history, etc. when determining your maximum mortgage amount.
The two don’t really compare at all. The one advantage of renting is being generally free of most maintenance responsibilities and long term commitments. But by renting, you lose the chance to build equity and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for housing.
Owning a home has many benefits. When you make a mortgage payment, you are building equity and that’s an investment in your future. Further, it provides you freedom, stability, and your family security, they are worth it.
You can find out by asking yourself some questions:
If you can answer “yes” to these questions, you are probably ready to buy your own home.
Let’s take a look at renting appliances such as a water heater, a water softener, a furnace and an A/C.