The Buying Process

January 19, 2018July 18, 2023

Buying a home will likely be one of the largest financial transactions you will ever make. At times it may seem overwhelming and confusing. Working with a knowledgeable and professional real estate agent can help make the process much less stressful and much more enjoyable.

HOW MUCH CAN I AFFORD?

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THE PURCHASE AND SALE AGREEMENT:

A legal contract between the buyer and the seller that outlines the agreement between them.

Contract typically includes:

Earnest money deposit
Financing terms
Inspection terms
Seller’s Disclosure Form
Comprehensive Rider
Various addendums
Disclosures: Lead paint, HOA, Condo, etc.
Closing instruction

CONTRACTS

CONTRACT FOR SALE AND PURCHASE
AS-IS CONTRACT

THE NEGOTIATIONS:

Ever-changing market conditions demand that you obtain the services of a qualified agent, skilled in the art of negotiations.

Items considered in the negotiation phase often include:

Market value of the house
Condition of the house
Financing terms
Circumstances surrounding the sale
Loan pre-approval at the time of the offer
Earnest money
Closing date
Once your offer has been presented to the sellers, they will either accept it, counter it, or reject it. Often times, sellers accept portions of the agreement but counter other portions. Once the contract is mutually accepted by both buyer and seller, the rest of the purchase process begins.

Inspections & Approval:

After your new home has been put under contract, certain contingencies will come into play:

Inspection period – This will vary depending on the type of contract agreed upon. An As-Is contract will typically have a 10-day as-is period whereas a typical Contract for Sale will have a 20-day period
Remaining escrow deposits
Financing Contingencies – Typically 30 days
HOA and Membership Approvals
Insurance
Walk-through

TITLE INSURANCE/CLOSING PROCESS:

The closing agent:

Requests a title report and policy
Drafts the deed and/or other necessary documents
Arranges to pay off existing loans when necessary
Prorates taxes and insurance between buyer and seller
Computes interest in loans
Records the appropriate documents
Disburses the documents and monies to each party involved

FINANCING

Determining how much you can afford before your home search will save you valuable time in choosing the right home in the right neighborhood.

There are many different ways to finance a home. This table describes some of the options you should discuss with your real estate sales professional and the lender you select.

HOW IT WORKS	BENEFITS	DISADVANTAGES	WHEN TO CONSIDER
Fixed-Rate Mortgage Borrower and lender agree upon an interest rate and corresponding principal and interest payment. They remain constant throughout the life of the loan.	Stable and predictable Makes budgeting for the future easy Protects borrower from rising interest rates	Interest rates are higher than initial interest rates for other types of loans Doesn’t benefit you when interest rates fall	You prefer not to take risks You plan to stay in your home for more than 5-7 years
Adjustable-Rate Mortgage (ARM) Borrower and lender agree on an initial interest rate that will change periodically, usually in relation to a specific index. Payments rise and fall accordingly.	Interest rates are generally lower than fixed-rate mortgages at the beginning of the loan If interest rates fall, your payments go down	Borrower takes the risk on the rise and fall of interest rates Future payments are unpredictable	Interest rates are high You plan to keep the home for a short time You expect an increase to your income
Balloon Mortgage Starts out as a typical fixed-rate mortgage but has a shorter mortgage term, usually 5-7 years, and requires borrower to pay off the balance at the end of the term.	Interest rates and monthly payments are lower than for traditional fixed-rate mortgages Predictable payments for term of loan	May require refinancing at whatever rates are available at the end of the loan term, if borrower chooses to keep the home Unpredictable situation after loan ends	You plan to keep the home for a short time
Government Loans Through various lenders, the Federal Housing Administration (FHA) and Veterans Administration (VA) offer opportunities for many Americans.	Often allows for a lower down payment than traditional bank loans Insured by the government	Limited to properties designated as approved for government loans	You are a veteran – VA Loan You are buying a lower-priced home with a small down payment
Convertible ARM Starts out as a typical ARM but provides an option to lock in a fixed rate without refinancing. The option is made available after a set time.	Initial Interest rate is generally lower than fixed-rate mortgages Locked-in, predictable payments after conversion	Borrower takes the risk on the rise and fall of interest rates for at least the initial period of time	Interest rates are high

WE CAN HELP YOU BUY ANY HOME

By working with the Echo Fine Properties Team, you will have access to information on all homes currently listed for sale in our area.

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