Minnesota Valley Credit Union

My First House (page 5 of 5)

Look for Hidden Fees

When buying or refinancing be sure to review the Good Faith Estimate.  The good faith estimate (GFE) is a written list of the estimated closing costs involved in a mortgage transaction, including the lender's charges as well as the local closing agent's charges and fees.

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Saving to Buy

 
 

Making an Offer

After you’ve looked at houses and found the one for you, the next step is to make a written offer.  The offer has to be in writing because oral promises are not legally enforceable when it comes to the sale of real estate.

This starts with your written proposal to the seller. This proposal not only specifies price, but all the terms and conditions of the purchase. For example, if the sellers said they'd help with $2,000 toward your closing costs, be sure that's included in your written offer and in the final completed contract, or you won't have grounds for collecting it later.

Your realtor will have these forms available to you.  Realtors also cover questions and laws that need to be followed are covered correctly during the sale.  If you are not working with a realtor keep in mind that you must draw up a purchase offer or contract that conforms to state and local laws and that incorporates all of the key items. After the offer is drawn up and signed, it will usually be presented to the seller by your realtor.

Remember, everything is negotiable - the price, the terms, the occupancy date, what personal property is included, everything. You can ask for what you want. You may not get it, but you can ask. Unless you are in a very competitive seller's market, don't offer your best price first. Leave room for negotiating."

What’s Included in an Offer

Once mutually agreed upon, the purchase agreement will become a binding sales contract or purchase agreement.  It's important that it contains all the items that will serve as the blueprint for final sale.  The PA often includes such things such as:

  • Address and legal description of the property
  • Sale price
  • Terms -- for example, all cash or subject to your obtaining a mortgage for a given amount
  • Target date for closing and time limit after which the offer will expire.
  • Provisions about who will pay for title insurance, survey, termite inspections and the like
  • A provision that the buyer may make a last-minute walk-through inspection of the property just before the closing
  • Contingencies

Contingencies

If your offer says "this offer is contingent upon a certain event," you're saying that you will only go through with the purchase if that event occurs. The two most common contingencies in a purchase agreement are financing and home inspection.  Contingent on financing means if you can’t get the loan, the buyer won’t be bound to the contract.  Contingent on home inspection means you will have a licensed home inspector inspect the property and determine if there are any issues.  The inspector will provide you with a copy of the report.  If there are issues found in the inspection they should be addressed prior to moving forward with the purchase.  CLICK HERE for a list of Home Inspectors in the Mankato area. 

Negotiating tips

You're in a strong bargaining position if you’re an all cash buyer, if you’re all ready pre-approved for financing and if you don’t have to sell the house you’re currently living in before you buy.  This can provide you with power to negotiate a discount from the listed price.

It's very helpful to find out why the house is being sold and whether the seller is under pressure. Keep in mind that every month a vacant house remains unsold represents considerable extra expense for the seller. 

Earnest money

This is a deposit that you give when making an offer on a house. A seller is understandably suspicious of a written offer that is not accompanied by a cash deposit to show "good faith." A realtor usually holds the deposit, the amount of which varies from community to community. This will become part of your down payment.

Final Walkthrough

It's move in day and you're so excited you could hardly sleep last night!  Here is an outline and tips of what to expect on moving day and at loan closing.  A few hours before closing you'll want to visit your soon to be house, typically you set this up with realtor.  Inspect everything to assure that the seller upheld their side of the bargain.  Things to look for are furniture that may have been removed (or not removed if you don't want it).  If there were any pending items following the home inspection make sure they've been addressed.  The house should be relatively clean, be sure to double check the basement.

If you find that agreed upon conditions have not been met, you have the right to bring this up at closing.  You can either ask for more money to take care of the items or postpone closing until the issues are resolved.  Once you sign the paperwork the repairs or other issues that still need to be resolved become your problem.

 

What to expect at Closing

At mortgage closing you will spend a long time reading and signing paperwork.  This can take as long as an hour or more depending on the details of the transaction.  Showing up ready and enthusiastic will help you process the information presented to you.  A mortgage is a binding contract, you may want to discuss the details prior to closing date so that you can be better prepared to sign.  Ask your MVFCU loan officer or real estate agent about this. 

TIP:  Drink a cup of coffee and eat an energy bar.  There is alot of information thrown around at closing and you want to be maintain your awareness.

Be sure to bring your driver's license or other valid photo ID to the closing! The closing agent will need to verify that you are the same person whose name is on the loan documents.

Look over all the closing documents and make sure the interest rate and terms of the loan are the same as what was quoted to you at application. Also note any fees that are being charged. You should not see any additional fees added onto the final documents.

TIP:  Bring your initial Good Faith Estimate signed with the RESPA package to your closing and compare your costs on the GFE to the HUD statement. This will ensure there are no added or "hidden" fees.

Then What?

Congratulations on becoming a home owner!  This long adventure does finally come to an end.  Before leaving loan closing you will want to be sure you know when your first payment is due and how it will be paid.  If you escrow it's good to know the breakdown of your payment as well, what part is principal & interest, what part is for taxes and what part is for insurance.  If you have questions on this contact MVFCU and we would be happy to assist you.

 

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