House buying how to's

Submit Earnest Money.  Earnest Money is a deposit that is made directly to the chosen title company and is put in escrow.  Here it will remain until the deal closes or you determine that you no longer want the property as a result of inspection or financing.    This must be done within three days of executing the contract. 

Deliver option fee to the seller.  The option fee allows you a period of agreed upon days to get an inspection, rethink your decision, and dig a little deeper into financing.    At any time during this option period, you can terminate the contract without reason.    Inspections must be done and renegotiated within this time period. 

Hire an inspector.  Your realtor can offer some suggestions, or check out the google.  The inspector should be thorough and check every aspect of the house.  It is highly recommended that you attend the inspection.  This is a fantastic opportunity for you to really see the house and investigate every nook and cranny.   Costs will vary between $400-$800 depending on size of home.  Once the inspector is done, he will deliver a report to you based on his findings.  The report will be anywhere from 20-120 pages. Do not be afraid.  These are important details and your realtor can help you drudge through it.  Keep in mind, unless you are buying a new home, there will be many items that are not up to current code or simply have normal wear and tear.    This is completely normal and you should take this into consideration when requesting repairs.

Request repairs or sellers concessions.  Once you have determined what you wish the seller to fix, your realtor will prepare and amendment requesting said repairs.  You can ask for the moon, and hope that you land on the stars.  It is unlikely that the seller will fix everything on that report, but you can certainly ask for major repairs such as your structural or mechanical items; roof, a/c, furnace, water heater, major plumbing and electrical.    Be sure that you request that a LICENSED contractor complete the repairs.  This is already included in the TREC contract, but it’s nice to give that friendly reminder.  The seller, at this point, can agree to entire request, partial request, or flat out deny the request.  That’s when you must decide if you wish to move forward with the purchase. Alternatively, the seller may prefer to lower the price OR give you a concession on the contract.   The seller may not be able to make the repairs – perhaps they have already moved and left the state, or it’s an estate home, or they just don’t want to deal with coordinating the repairs.  So, they give you a reduction in price in lieu of repairs.  Or a concession, which will allow you to bring less money to closing.

Lending and full financial exposure.  Inspections and negotiations are complete and now you are really in the thick of it in buying a house.  At this point, any backing out of the contract will subject you to being liable to fulfillment of the contract and you will lose your earnest money.  UNLESS, you are not approved for lending.  When you submit the contract offer, you will also submit a financing addendum.  This protects you from losing your earnest money in the event that you are not ultimately approved for lending, or if the interest rate is significantly different from what you originally signed up for, or the property doesn’t appraise (case basis), or the loan fees are considerably higher than was initially presented to you.j   Now you and your lender will start having a very intimate relationship.  They will request tax returns, bank statements, pay stubs, credit report, debts.  It is very important that deposits in your bank statement are explained. For example, if you have a large deposit with no explanation as to where it came from, the lender may not approve your loan.    Sometimes parents may “gift” monies to their children for the purchase of a new home.  Be sure to ask your lender how to handle that money.  It could subject your gifter to providing their bank statements as well. REMEMBER:  There is an on or before close date on the contract.  Do not be the reason for any delay.  If you do not close by the stated closing date, you could be in risk of losing the contract and being liable for non performance.    You must respond to the lender and provide necessary documents on a timely basis.  No exception.