A Beginner's Guide To Buying Your First Home

Are you ready to take the plunge into home ownership, but don't know where to begin? Do the thoughts of down payments and closing costs make your head spin? If so, you are in luck. This beginner's guide for first time home buyers will help you navigate the waters of home ownership.

Real Estate Contract

After you have found the piece of property that you want to purchase, you will need to write a legal binding contract. This is the form you will take to your lender when you apply for a home loan. There are several important things that must be included in a real estate contract.

You will need to include the sellers' names, the property address and your name at the top of the contract. You will also need to include a brief description of the property. If items are to be included in the sale, you will need to list them in the contract. For example, if the seller agrees to leave the appliances, you will need to notate each appliance that is to remain with the property.

In addition to the information above, you will need to disclose the amount of earnest money that is given to the seller or the seller's real estate agent. Earnest money is simply money that is used to secure the property until your loan is approved.

Finally, you will need to make the contract contingent on several factors. A contingency clause allows you to recover your earnest money if you cannot get approved for a home loan or if the house does not pass the inspections agreed upon.

Down Payments

The amount of money needed for a down payment depends on several factors. If you have bad credit or no credit, you may need to put down a larger down payment. If you have good credit or the house appraises for more than the contract price, you may be allowed to use some of the equity as a portion of your down payment.

Inspections

There are several inspections that should be done before the home loan closes. One such inspection is a termite inspection. A certified pest control company will come and inspect the property for termite damage. If any damage is found, the contract can be renegotiated or you can get your earnest money back. Other inspections may need to be done before the loan is approved. This can include a survey, an appraisal, an insulation inspection and a heating and cooling inspection.

Closing Costs

The amount of closing costs will vary from lender to lender. Things that are included in your closing costs are appraisals, surveys, inspections and lender fees. Some of these fees will be paid by the seller, others will be paid by the buyer. You will receive a settlement statement showing what each party will be responsible for at the time of closing.

Are you ready to dive into the real estate market after reading this article? You should now know everything you need to know about down payments, home inspections and closing costs. Refer back to this guide if you have questions during your search for the perfect first home.