Month: June 2013

While every home buyer should have a real estate attorney working with them during their purchase transaction, they should also have a basic understanding themselves of what a real estate contract does and how it works.

Contract protects both parties

A real estate contract details such information as the price, the date of closing, and other factors involved in the transaction.

It should allow you sufficient time for your attorney to review it and to have a home inspection conducted if you so choose.

Be aware that you have a right to negotiate anything that arises from a home inspection or an attorney review.

Insist on an attorney review

If you haven’t yet selected a real estate attorney (and remember you’re looking for one with special expertise in real estate), don’t ever sign a contract without an option for an attorney review.

You could be setting yourself up to be taken as far as price, or other terms are concerned, or you could find yourself saddled with issues that arise after closing.

The contract will include what is called a commitment date; this is the date by which you can prove to the seller that you able to obtain financing.

A prequalification letter given to the lender at the beginning of the process is based on basic information, including credit, but full approval comes only after the appraisal, title and other such factors are reviewed by the lender.

It pays to ask about seller credits

Always ask about seller credits.

If the seller is willing, he or she may be able to assist with some of your closing costs; this needs to be in the contract as well.

Depending on the financing, you may be able to get 3-6 percent of the purchase price refunded to you.

For more information on contracts talk to your mortgage professional.

There are several different fees that buyers incur in financing their new homes; some of these go directly to the lender, others go to third parties involved in the transaction.

First-time buyers, in particular, may not be aware of these additional costs. Be prepared: Here are some fees you should know about before beginning your home search.

Origination Fees: These are fees paid directly to the lender and include mortgage origination fees, processing fees, and admin fees, among others.

Third Party Fees: This is where a lot of additional costs arise. They include fees to appraisers, attorneys, home inspectors, and title companies.

In dealing with title companies, it’s customary for the seller side of the purchase transaction to decide which title company to use. This means the seller effectively decides what those fees will be. When you as a buyer are given a “Good Faith Estimate” at the beginning of the loan process, it may not include title costs. Often your lender will overestimate these; it’s better to overestimate initially than risk suffering sticker shock at closing.

In addition to title insurance, title costs may include the costs of the closing, document delivery from the lender, and other fees.

Recording Fees: Depending on where you live, there may be state, county, and sometimes municipal recording and transfer taxes to pay. These fees allow the title company to forward the proper documents to the appropriate recording body.

Be aware of these costs and consult your mortgage professional to help navigate the financing process successfully.