First Time Home Buyer Checklist Summerville SC: Part 2
In yesterday’s post, I started a first time home buyer checklist Summerville SC. This walks you through the home buying process and offers tips to help you along the way. Here is the rest of the checklist:
8) What Is Earnest Money?
While it is not required, an offer with earnest money will fare better than one without.
Earnest Money is held in an escrow account until closing. This money can be used for the down payment or closing costs, but often it can be refunded (partially or in full) at closing.
So basically, it can be a refundable deposit.
There is no rule of thumb for how much Earnest Money is required, but typically for a first time buyer you are looking at $1,000.
If the seller does not want to do repairs, then they have to reduce the price accordingly. If they choose to do neither, then the buyer can be released from the contract and have their Earnest Money returned.
But this doesn’t happen too often–usually sellers are willing to make reasonable repairs.
The lender will order an appraisal, but the buyer will have to pay for it. (On a side note–when the appraisal and home inspection are done they need to be paid right then). The appraisal will determine what the “fair market value” of the house is.
If the value comes back lower than the contract price, then the seller will need to reduce the price. If not, then they simply won’t be able to sell their home.
If the value comes back more than contract price, then this is good news for the buyer–the contract is in place, so this means they are buying a home and starting out with instant equity.
11) Closing Process
While all of this is going on, the lender is working on getting the loan final approval and on to closing. The attorney is performing title work to ensure that the title is “clear”–no liens or issues that will keep it from transferring.
12) Termite Inspection
This will be performed in the latter stages of the process because a Termite Letter (also known as a CL-100) is only good for 30 days. The inspector will look to see if there is any current or past signs of termites. They will also check to see if there is any wood damage from water rot.
If there are issues, then the seller will need to address them. Without a clear CL-100 no bank will loan on a house–so basically it is repair any issues or don’t sell.
13) What About Closing Costs?
Closing costs are the fees it takes to close a deal. These include attorney fees, lender fees as well as taxes, hoa fees, deed stamps, etc. They are generally 3%-4% of the purchase price and are due at closing.
It is not uncommon for sellers to pay these for first time buyers. You agent just needs to negotiate this when you first make an offer.
14) Home Warranty
A home warranty is a good idea if the home you are buying is not brand new (new homes usually come with a builder’s warranty). A home warranty will cover the major systems of a home (plumbing, electrical, heating/air, etc.) as well as appliances for the first year you own your home.
If something goes wrong, then all you have to pay is a service fee, typically $50-$100. One note–warranties do not cover pre-existing issues. However, that is why you have a home inspection.
Often, you can negotiate to have a seller pay for your home warranty. But even if they don’t, it is not a bad idea to have one. They typically run $300-$500.
15) Closing Day!!
Keep in mind that there are several people involved with closing your first home–both realtors, the loan officer, and the attorney. The loan officer is dealing with their Underwriter.
It is the underwriter’s job to make sure all documentation is in the file, that everything “adds up” and is responsible for final loan approval. Without it, the deal won’t close. Remember the Golden Rule: He who has the gold, makes the rules!
Once the bank signs off, you are set to close. The closing date is the target for all parties involved. However, there are potential issues and delays that come up along the way, so plan to be flexible around the closing date.
Sometimes the closing will not happen on the scheduled day and could be delayed a day or two, maybe a week in some circumstances. The key is to remain patient, and to have good communication.
This is where your Realtor can earn their keep–if they can keep you in the loop so you know what to expect, then that will make the process much less stressful and frustrating.
All people involved with helping you buy your first house want to see the closing day–if it doesn’t close, no one gets paid.
I hope this checklist was helpful. If you are thinking of buying your first home, then bee sure to check out my website for more information about buying a home.
I will bee happy to help you. In addition to this first time home buyer checklist Summerville SC, you can download my “First Time Home Buyer’s Survival Guide“, and you can also get a copy of my “Fall 2014 Buyer’s Guide” below!
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