FINDING A HOME
MAKING AN OFFER Once you’ve found the home you love, it’s time to make an offer. The offer, or purchase agreement, is a legal document that outlines the terms and conditions of the sale. This may include but is not limited to:
WHAT IS EARNEST MONEY? Earnest money is a deposit you put down when making an offer. It’s a sign of good faith to show you’re serious about the transaction. The amount varies, but it could be between 1% and 3% of the purchase price. The money gets held in an escrow account until the transaction is finalized, at which point it will go toward your down payment. CONFUSED ABOUT ESCROW? An escrow account is a third party account used to hold money for two parties during a transaction. The term escrow account was mentioned earlier when we talked about the taxes and insurance that your lender collects as part of your monthly mortgage payment. This is just one example of escrow. The earnest money you put down when you make an offer on a home is another scenario where escrow is involved.
• Address and legal property description • Purchase price • Down payment amount • Earnest money that must be paid • Expiration date for the offer • A commitment by the seller to provide a clear title to the property
• Target closing date • Target move-in date
• Any contingencies the agreement is subject to, such as the buyer’s need to obtain a mortgage or get a home inspection In some states, your real estate agent will prepare this document, or the state may require an attorney to draft it. Be prepared for the seller to come back with a counter offer before fully signing off on the deal.
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