Contracts, Home Warranties, And The Closing
Drawing up contracts, having the final walkthrough, and going to the closing are the last steps you will have to take when buying your first home. This is the time when you must rely on the expertise of a real estate agent.
Contracts
You will sign many contracts through your home buying experience, including:
* Purchase offer
* Contingencies
* Builder contracts
* Mortgage contracts
* Closing agreements
These contracts may vary in length depending on the information included in each.
Purchase Offer
Your purchase offer is the first contract you will sign when you find a home you want to purchase. Refer to this contract during the closing period to make sure that your rights are covered and that you are getting everything you pay for. By writing a solid purchase offer that outlines what you expect from the homeowners, you will be protected in case of disagreements or other issues before closing.
Contingencies
Real estate contingencies can be added onto an existing contract or created as a separate contract. Contingencies can include a wide range of items, including:
* Home inspections and pest inspections
* Home appraisals
* Financing
* Septic system tests
* Appliances that will stay in the home
* Property surveys
* Window coverings
Contingencies can make or break a sale, so you should be sure to use the correct forms when filing contingencies, and be sure to word them correctly.
Include a resolution for repairs that may need to be done before you can move into the home. If it is agreed upon in writing that the homeowners will take care of all or some repairs that may be found during a home inspection, this will save time later.
You should also include ways to get out of the deal that include loan denial, repairs that cannot be fixed, or lead, mold, or radon that is found in the home.
If you are buying a home that is for sale by owner, find an attorney or real estate agent that is willing to help you create a contingency list and edit it where necessary. Do not rely on the seller’s agent because they are looking out for their client’s best interests and not yours.
Builder Contracts
If you are buying a new home from a builder, you will have to sign a contract with the builder that states you have the financial means to pay for a new home, that you have decided on a location for your new home, and that you are ready to build.
You should hire an attorney at this point to go over the contract to see if there are any problems that will have to be ironed out before you begin building the home.
Mortgage Contracts
Unless you are paying cash, you will need to be approved for a mortgage by a lender and you will be required to sign a contract in which you agree to an interest rate, monthly payment schedule, rate plan, down payment, and other fees.
These contracts are standard loan contracts that will explain the consequences of not paying your mortgage. You should read this paperwork carefully before signing anything.
Home Warranties
If you are buying a home that was built ten or more years ago, you may want to purchase a home warranty that will cover repairs needed during your first year of ownership.
While a home inspection will catch any immediate repairs, no one can foresee an oven falling apart or a dryer burning out. Since you may not have a lot of extra money left over after paying for closing costs, down payment, and mortgage payments, having extra insurance will allow you to make the repairs you will need.
Most policies will cost between three hundred and five hundred dollars. Coverage will begin the day of your closing and will last for one year. You will have the option of renewing the policy if you would like at that time. If you need to have an appliance repaired, you may have to pay small co-pay at the time of the repair.
Not all policies are the same, so you do your research to find the best deal. Compare the types of repairs that are covered under the policies and choose the one that fits your home.
Closing
When you finally arrive at the closing, you should expect to:
* Sign contracts
* Do a final walkthrough
* Pay closing costs
* Get your keys
The closing can take an hour or two, but usually moves quickly. At the closing, you may meet the homeowners. This is a good time to ask if there is anything about the home you will need to know.
Sign Contracts
When you sign the contracts, read them carefully to make sure that everything that has been discussed is in the contract. Ask questions that you may have at this time.
Final Walk Through
The final walkthrough of the home will take place before or during the closing. This is the final chance for you to see the home before it becomes yours. Make sure the items on your contingency are in place so that you can sign the contracts.
Paying Closing Costs
Typically, the buyer will have to pay the closing costs associated with buying a home. But in a buyer’s market, you may be able to add a contingency that states the seller will be responsible for all costs. This may appeal to sellers who want to sell their home quickly.
When deciding who should pay the closing costs, you should research laws that may be in place that dictate who pays for what. Many times, buyers and sellers will agree to split costs including closing, home inspection, pest inspection, and home appraisal costs. You will have to negotiate with the sellers to see which you will be responsible for.
Get Your Keys
After signing the contracts, you will receive the keys to your new home. This is an exciting feeling and one that will be with you for a long time.