When Your Dream Home Catches Your Eye: Be Prepared to Seal the Deal
October 10, 2023 | Posted by: Prime Mortgage Inc.
The thrill of finding your dream home is unmatched and can be very exciting. Once you stumble upon the perfect home within your budget, it's time to step up and make a proposition. But before you do, consider these financial steps to ensure you're ready.
Upon Offer Approval: Place an Earnest Money Deposit
Once your proposition catches the seller's attention and gets a nod of approval, it's time to put forth some earnest money. Think of this as a token of your genuine interest in purchasing the home. The earnest money deposit usually ranges from 1% to 2% of the total home value and can be paid via personal checks, certified checks, or electronic transfers. When the deal closes, this amount usually converges into the down payment or other closing expenses. Should you back out with a valid reason stipulated in the contract, you stand a chance to reclaim this deposit. However, if your change of heart doesn't align with the agreement's terms, you might lose this sum.
Post Offer Acceptance: Arrange for a Home Examination
A detailed inspection of the house you're aiming to purchase provides a clear picture of its condition. This procedure highlights potential issues, be it an aging roof or an HVAC system on its last legs. With the inspection report in hand, you can negotiate terms with the seller-either they can address the issues, or you might get a reduced price. Should the problems be to much, you have the option to walk away. Typically, inspections can set you back by $300 to $500, influenced by the home's location and size.
Once Inspection Wraps Up: Organize a Property Appraisal
To determine the property's rightful market value, an appraisal is essential. This step assures lenders that the property's worth aligns with the amount you're aiming to borrow. The appraisal report is usually handed over to the loan provider within a week. Remember, this is an out-of-pocket expense you need to cover before finalizing the deal, which generally falls within the $300 to $400 bracket.
Prior to Finalizing the Deal: Ensure You Have Homeowners Insurance
The cost of homeowners insurance can vary based on where you're located. On average, anticipate an annual cost of about $950 in the U.S. Before you sign the dotted line, lenders will want confirmation that you've got this insurance in place. You can either settle the first year's premium in advance or incorporate it into your mortgage amount.
If you have any questions at all in regards to mortgages and the mortgage process, we would love to assist you.
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