Making the Purchase
Access helpful resources to help you navigate the purchasing process. We’ll help you identify the questions to ask, how to compare homes, and more.
Some questions you should ask
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Along with guidance from your real estate professional, it’s often advantageous to know how much the sellers paid for the home and when the home was purchased. Here are additional helpful questions:
- Why is the home on the market?
- How long has the home been listed?
- How would you rate the condition of the home?
- Might other offers be competing with yours?
Comparables are homes with similar square footage that have recently sold in the area. These numbers are very important because real estate professionals often use them to help owners set asking prices, and the bank appraiser will use them to determine the home’s value for the mortgage loan.
Hire a Qualified Home Inspector
Most savvy homebuyers conduct a home inspection before closing and many buyers have the inspection performed before making an offer. Some prudent sellers may have already included a home inspection on their property, which gives potential buyers additional peace of mind. Talk to your real estate professional about arranging a home inspection, and remember to choose a qualified, experienced home inspection company like AmeriSpec®.
An AmeriSpec home inspection can help reduce the likelihood of unfortunate and costly discoveries about the property prior to the offer and the sale. An AmeriSpec inspection can also help educate you about the condition of your home’s system components at the time of the inspection, information that can be particularly helpful to first-time buyers. Different from a home appraisal, an AmeriSpec inspection includes a 400-plus point evaluation of the home by a trained and certified home inspector. The inspection will help reveal any necessary repairs and investments needed in the property before you buy that can be detected through a visual and operational examination. You’ll receive a comprehensive AmeriSpec Report binder, which includes the Inspection Report, a Home Maintenance Manual, as well as a Seasonal Maintenance Checklist. What is most important, you’ll also receive valuable information that can help give you peace of mind about the condition of the home.
Make the Offer
Discuss with your Realtor the offer amount you have in mind, based on the research you have done on comparables, the condition of the home and its components based on the inspection, and what items may or may not be included in the sale. Your real estate professional will help you fill out the paperwork to make the offer official. Your agent will present the offer to the seller’s agent, who will take it to the seller. The owner can accept the offer as is, reject the offer or make a counter offer. A counter offer amends either the price or the contract stipulations, such as inclusions, earnest money amount, contingencies, or time schedules such as closing dates, possession dates, etc. Any change to the original contract proffered by the buyer is considered a counter offer. Once you are dealing with a counter offer, you are in the negotiation process. You can now accept, reject or amend the seller’s counter offer. It is not unusual for offers to go back and forth between the buyer and seller several times before compromises are made or the deal fails.
The offer does not become a contract until all items and stipulations are agreed upon and both parties sign.Contingencies are conditions that must be met for the contract to be executed. In real estate, contingencies may address appraisals, loan approval, and home inspections for termites, radon, lead-based paints along with many other possibilities. Contingencies sometimes include the sale of the buyer’s current home as well, which won’t apply to you as a first-time home buyer.
Go Shopping for a Mortgage
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If you skipped the pre-approval process, now is the time to start shopping for the loan on your new home. Most home loans are made in 30-year and 15-year increments. The principal part of your loan is the amount you actually borrow. Interest is the payment you make to the lender for the money you borrow. Most home loans also include homeowner insurance and property taxes.
Prepare for the Closing
This is a great time to ask for an American Home Shield® Home Protection Plan. Learn More
The closing is the final meeting, usually with your real estate agent, sellers (although the sellers may complete paperwork separately), the closing agent or attorney and sometimes a mortgage representative. This is where you sign the necessary final paperwork including settlement, make the monetary transactions and take possession of the house immediately or in a designated time period shortly thereafter. At closing, the property is officially transferred from the seller to the buyer. You will be asked to sign and initial numerous papers, including the final financial settlement amounts.
Prior to closing, buyers usually have an opportunity for a final walk-through of the property to inspect its condition and to ensure that any contractual repairs were made. At closing, you will receive the title to the property and your purchase will become public record for tax purposes.
Typical closing costs include fees: some paid by the seller and some by you, the buyer:
- the appraisal fee
- attorney or closing agent’s fee
- survey fee
- any loan discount fee (points)
- inspection fees
- title fees
- title insurance and closing fees
- proof of homeowner’s insurance with the mortgage company as designated beneficiaries
Your real estate professional, lender and/or attorney can help you estimate the amount of closing fees you will incur well in advance so you can have the correct amount of money on hand. Note that you will most likely need several checks payable to different entities.
Know What Your Home Insurance Policy Covers
Be sure to understand the difference between homeowner’s insurance and a home protection plan.
Almost all lenders will require you to maintain adequate home insurance coverage over the life of the loan to protect the lender’s investment in the property, also known as collateral. Depending on where you live, some lenders may also require you to carry additional flood or earthquake coverage. Although premiums are usually included in the mortgage payments, you can shop for homeowner insurance on your own. Homeowner insurance gives you coverage and financial protection for damage to your property caused by disasters and calamities (except for floods and earthquakes, which generally require separate policies or riders), and liability for injuries and damage you or your pets cause to other people. Policies usually do not cover routine wear and tear to the home, its necessary components or appliances.
Personal belongings, like furniture and clothes, are generally included in the coverage if they are destroyed by an insured event or stolen. High-value items, like jewelry, usually have coverage limits. You can purchase additional coverage, called riders, for such items. Umbrella policies provide additional liability coverage.
Your insurance agent will help you with the details, limitations and amounts needed, but here are some guidelines to consider. It’s usually advisable to insure your home for the total amount that it would take to rebuild it. When you shop for homeowner insurance, make sure you consider and compare different coverage types, limits and deductibles. In case you ever need to make a claim, it’s a good idea to take an inventory of all the items in your home. Make a written list of your possessions, including any sales receipts or appraisals that you have. Record the serial numbers of appliances and electronic equipment. Take photos and/or videotape of the rooms, garage, closets, storage spaces, drawers and cabinets. Keep the inventory records in a separate location, such as a safe deposit box, for safe keeping. Be sure to update the list when you make new purchases.
Benefits of a Home Protection Plan
Just as homeowner’s insurance covers the property against damage or repair based on your designated deductible, a home protection plan helps protect your home system components and appliances against costly repairs or replacements. A home protection plan is a renewable service contract that covers many of the most frequently occurring breakdowns of home system components and appliances that are not usually covered by homeowner insurance. Home protection plans offer coverage of many of the critical major system components and appliances in a home that generally are of a high cost to repair or replace due to normal wear and tear.
Breakdowns are inevitable and always seem to happen at the worst possible time for your wallet and for your schedule. An American Home Shield® (AHS) Home Protection Plan can offer you quick relief, sensible protection and affordable coverage that could save you up to hundreds of dollars and hours of frustration. First-time homebuyers often stretch themselves financially to afford the down payment and monthly mortgage costs. Being hit with the high costs of an appliance or home system component breakdown, repair and replacement soon after moving in can be financially overwhelming.
Protecting Your Home
American Home Shield® Home Protection Plans
You’ve taken those important first steps to ensure the purchase of your first home goes as smoothly as possible. Now is the time to consider the added benefit of an AHS® Home Protection Plan. Built to cover the repair or replacement of many major home system components and appliances, a home protection plan is simple and stress free.
Our FlexPlan® Combo provides the most complete coverage and best value for protecting your budget in the event of a breakdown. From heating, A/C, ductwork, plumbing, dishwashers, ovens and much more, with the AHS FlexPlan Combo, you’re covered. Letting us know when a covered item breaks down is simple. Just give us a call or visit ahs.com 24 hours a day. We’ll then notify one of our certified independent contractors to visit your home and diagnose the problem. Just like a deductible on a homeowner’s insurance claim, an AHS Home Protection Plan includes a flexible Trade Service Call Fee, a nominal amount you pay for a repair to our huge network of experienced and professional contractors.
Getting back up and running is that easy! Get a free quote at ahshome.com or speak with your real estate professional for more information.