If the buyer’s purchase depends on a mortgage, it is advisable to take advice from a reputable lender before starting a house hunt. In addition to setting the boundaries for them, the loan amount will also filter the home search since they will now know their budgets and affordability. Upon completing a thorough income and expense analysis and submitting all required documentation, a lender will provide a “preliminary” approval letter. Pre Approval must be current (issued within 30 days) when an offer is made. A financial qualification letter is submitted as part of an offer package to assure the seller that the buyer is financially qualified.

Remember to get mortgage offer letters from at least 3 different lenders. This will allow you to compare interest rates, payment tenure, regulations, and terms & conditions. Through this comparison, you can determine the best loan opportunity that suits you and your pocket.

The offer is prepared by the buyer or buyer’s agent and it includes the main terms and conditions related to the property such as price, deposit amounts, performance dates, additional provisions, and contingencies. The seller’s agent receives an offer electronically from the buyer’s agent, which can be accepted, rejected, or countered. As soon as both parties agree to the offer and sign it, the offer is signed and abided by.

There are events where a seller receives more than one written offer to purchase their property at the same time. In cases where several offers are anticipated, the seller’s agent usually sets an “offer deadline” – which means all offers must be submitted by a certain date and time. A seller’s agent cannot reveal the price and terms of other offers to other bidders without the seller’s permission. In most cases, sellers accept the offer with the best price and terms after reviewing all offers, selecting one, and negotiating to reach an agreement or asking each bidder for their “highest and Best” to see if any buyers will sweeten their offers. They should make their best offer by the offer deadline since most sellers accept one of the offers without negotiating.

Payment Amounts & Deposit Dates

Usually, a first deposit is due when a buyer makes an offer to purchase, and as per common norms it’s around $1000 and it’s submitted via the copy of the check attached with the electronic offer made by the buyer’s agent. The second deposit is due with the execution of the Purchase and Sales agreement. The second deposit is typically 3-5 % of the purchase price. Upon execution of the offer by both parties, the deposit must be delivered to the listing brokerage. The agent will verify arrangements with you regarding deposits, whether personal checks, electronic deposits, or certified checks. Unless otherwise specified, the deposits are usually held by the Listing Brokerage in an escrow account. In the event that a buyer utilizes a contingency or fails to fulfill an obligation outlined in the offer, a mutually acceptable release must be signed by all parties before any funds can be released.

Upon agreement between the buyer and seller, both parties sign the offer, and acceptance is conveyed. This creates binding and enforceable obligations between the parties. Upon accepting the offer, the buyer must comply with all the agreement terms and conditions. If the buyer fails to comply, the seller can sue the buyer for damages & forfeit their deposits.

An offer to purchase will specify the deadline for inspections and the type(s) of inspections to be conducted within seven to ten days of the offer acceptance. Inspections should be scheduled immediately to ensure enough time to perform and review. An inspector evaluates the major features, structures, systems, and appliances of a property in order to determine whether there are any defects, faults, code violations, or potential problems before purchasing. You can use these reports to negotiate more for damages or repairs or close the deal if they are clean.

It’s crucial that the buyer has an attorney who specializes in real estate conveyance, someone who can protect their rights and interests throughout the whole thing, and one whose sole focus is real estate conveyance. As well as ensuring that the title is clear, an attorney for real estate will make sure there are no liens, easements, covenants, or liens on the property. In addition to being well-versed in the current real estate contract language, they have also acquired a thorough understanding of TRID’s “Know Before You Owe” guidelines (TILA-RESPA Integrated Disclosure).

It is a legally binding contract drafted by a real estate attorney that binds buyers and sellers together. A purchase and sale agreement outlines what each party must do before and during the closing process to ensure that the sale proceeds. It reflects the terms of the original offer unless an agreement has been reached to modify the terms. Both the buyer and the seller are protected by clauses in a P&S. An experienced real estate attorney can help buyers protect their interests best. It is advisable to sign the P&S before the due date unless an extension has been agreed upon. The second deposit funds must also be available for delivery on the execution date of the P&S.

A mortgage application begins when the buyer applies for pre-approval, which allows the lender to determine the borrower’s purchasing power based on a comprehensive analysis of his or her income, assets, and creditworthiness. Essentially, a mortgage is a financial package based on the borrower’s income, assets, and creditworthiness. A lender will make clear the items that they require from a buyer at the outset of the process. Providing the lender with timely and accurate information is, without a doubt, in the best interest of the buyer.

The appraiser shall be appointed to do the value evaluation of the house on behalf of the mortgage company. This is part of the mortgage company’s appraisal program. Usually, the home appraisal procedure takes place to determine the interest of the lender to ensure that the property has sufficient value to qualify for a mortgage and is always carried out by an independent third party. Home appraisals are always done independently and follow specific guidelines and terms. The cost or appraisal process cannot be manipulated by any party to the contract. In the event the appraisal comes in lower than the purchase price, there are options available to the buyer that the buyer’s agent will explain.

As it is the deadline by which the lender must commit to providing financing to the buyer, the mortgage commitment date is a crucial date to track during the transaction. It is essential to monitor this date carefully and never let it pass without a commitment, extension, or termination notice.

In such a case if the buyer needs a time extension to get the mortgage, Buyers may request an extension from the seller prior to the mortgage contingency date if they need additional time to obtain their mortgage. If they are unable to get a mortgage, they must notify the seller prior to the commitment date in order to have their deposit returned. If the buyers are denied a mortgage after this date the seller is usually entitled to keep the deposit. Please remember that the deposit release guidelines have been mutually agreed upon.

The final walk-through with the agent and the checklist below are required before closing the deal: 

• Any unseen repairs or damages that were not evident during the inspection. 
• The seller has taken all his belongings mentioned earlier. 
• They have not completed all repairs as agreed.
• Your home’s amenities or appliances are missing or replaced without your knowledge. 
• Work, repairs, or removals are done without your consent.

Buyers take ownership on closing day when the deed is executed and transferred to them. Generally, the closing date and time are set by the buyer’s attorney and the buyer. It’s usually a firm date that cannot be changed. Closings can get delayed due to mortgage delays and title delays. When funds are disbursed and the property is recorded with the Registry of Deeds, the buyer is officially entitled to the property. In the event of a delay, an extension or a new date will be allotted to complete the transaction.

Congratulations on your new home!