Well, as this story shows, theres more to an offer than the price tag. Factors you should consider: Is this offer at, near or above my asking price? Are there clauses and additions in their offer that change the terms and final price substantially? How long since I had another offer, or expect another offer? Can I wait? Remember every month you are probably still paying mortgage, taxes and insurance. If you have several offers... remember that an offer isnt a completed sale. Compare the risk and likelihood of a completed sale for each buyer including things like contingencies, where your sale depends on their sale. and whether theyre pre-approved for the offer theyre making. Remember you have three options for an offer - accept it reject it or prepare a counter-offer that improves the terms for you in some way.

The S crow is kind of a mascot here, because there is no such bird. You wont hear the word "escrow" for years, and then youll hear it all the time if youre buying a home. Heres what the word means. Some of the charges connected to a home: Real estate taxes Mortgage insurance Homeowners insurance are applied annually. The escrow account is a bucket where part of monthly mortgage payments accumulate to pay these costs. Escrow account costs may — and usuallydo — change each year, because these charges change. Its useful to understand that the lender is responsible for making those payments on time, from the escrow account. If somethings late, make sure you are not fined or punished.

Heres a short explainer video to help you compare mortgage loan options from different lenders. Most of us arent involved in mortgages every day, so the terminology and decision factors can be intimidating. Creating a simple, structured process to compare your loan options can make it a bit easier. Devise your own "checklist", and keep the same details for each lender and loan program as you shop. Your checklist should include company-level details: How big is the lender? (Offices, personnel, number of loans per year, or something other measurable factor.) Do they have local representation? Who is the key contact, and how can you reach them? For each loan, youll want to track consistent details. Some recommended items: Type of mortgage — fixed (15? 30?), ARM, balloon and so on. Minimum down payment required Current interest rate Points options and terms, if applicable. Closing costs Prepayment terms If the lender provides information on loan-processing timelines, that may be helpful to know. Because interest rates can change rapidly — even daily — accumulating this information gradually may not be effective. If you can arrange to call the lenders on your list on the same day, youll have a better basis for comparison. If you are already working with a real estate agent, they may have a list of lenders to help you get started.

The terms "pre-qualify" and "pre-approve" sound similar, but they fit at opposite ends of the journey to a loan application. Pre-qualification should be done early. Its an informal estimate, without any commitment from a lender, to assess how much you might be able to borrow. Pre-approval is "just about ready to apply", typically when you have everything except a purchase contract. It involves completing a loan application, which lets the lender begin verifying your information. Successful pre-approval gives you a "pre-approval letter" that confirms the lenders offer to lend a specific amount. This letter may be helpful in shopping and negotiating the actual purchase.

Many people have been through this decision in the past few years. Its pretty simple; if interest rates drop significantly below the rate of an existing mortgage, refinancing may make sense. Advice from HUD (US Dept of Housing & Urban Development) experts is "2% and 18 months." If you plan to remain in the home for at least a year and a half, and if you can qualify for a rate thats 2% lower than your current rate, refinancing is worth a look. Keep in mind that refinancing is not free. The refi process involves many of the same inquiries, validation and fees as the original financing. "Rolling the costs into the new loan" can mask the long-term financial impact. Compare the math carefully.

The interest rate on a mortgage has a large impact on payments and costs. Available rates change all the time, based on government policies, financial conditions and more. In the weeks-to-months required for a home purchase, rates could go up (or down). So most lenders offer mortgage customers options for a guaranteed rate — the common term is rate lock. The availability of rate locks, and the factors that are involved in a lock, also vary with market conditions. Of course, the buyers financial profile will affect availability as well: What is your credit score? How solid is your credit history? What is the LTV ratio of the offer on the property? Where is the property located? Rate locks are usually available for: An accepted offer, on a specific property, For a given combination of interest rate and points, For a set period of time, Whether market rates go UP or DOWN. The last point is key. Accepting a rate lock could mean slightly higher-than-market costs if rates go down after you have locked. At some point in the home-buying process, you may be offered the option of a rate lock. Are mortgage rates changing rapidly? Trending up, or down? Are there factors about the transaction, or construction schedules, that might matter? Deciding whether to lock or to stick with market conditions and "float" is a judgement call. Get advice, read and research, and then make the best decision for your situation.

A builder can help make the home-purchase process easier and faster by making arrangements to have a lender on-hand who is already familiar with the project and/or models. The question the home buyer must answer for themselves is, is this "preferred lender" the best choice for them. The most effective way to do this is probably to obtain loan terms from other lenders. With multiple Loan Estimate forms in hand, you can easily compare apples-to-apples and see what advantages the preferred lender has to offer. In addition, you should be aware of current market conditions for transactions like yours. Compare all terms carefully; if in doubt, or if some aspect of a builders offer are only available with the preferred lender, ask for clarification in writing. Should you feel pressured toward one particular lender, ask for written confirmation that no parties are receiving monetary benefits from any other parties. That is illegal under RESPA (Real Estate Settlement Procedures Act) regulations! The desire to close quickly is natural, but make sure your long-term financial interest and home choices are not compromised for short-term speed. .

One of the more common incentives in new-home purchases is the "decorating allowance." This is an offer to upgrade some aspect of the home before closing, such as carpeting, flooring, or appliances. Since builders are buying such things "at scale" for multiple homes, the perceived value of the incentive may be higher than their actual cost. If you are considering a decorating allowance, ask these questions about the allowance offer: Is the allowance credited at closing, and can it be applied to your closing costs? What purchase terms must your accepted offer meet to qualify for the allowance? Check with the lender you have selected to make sure the terms the buyer is offering are allowed in your loan arrangement. At closing, make sure the allowance addendum is included on loan disclosures. And make the allowance/upgrade is valuable enough to you to tip the balance in such an important decision.

The final walk-through is usually the last chance to see the house that you are intending to purchase in an open and empty state. This is an excellent opportunity to look over the property without obstructions. Use it to focus on potential problems and costs. Its a particularly good chance to assess the state of floors, walls, windows and ceilings without distraction. Examine them thoroughly for any indications of structural defects or painted-over problems. If any problems that were already flagged have not yet been addressed, this should be raised prior to closing. It is generally the sellers responsibility to fix them. Remember, once the deal has closed, you own the home and its problems.

Youre ready to buy a house; how do you "Make an offer"? There is a formal process, and the real estate agent(s) will assist you. The offer will involve: Price: how much are you offering? Under what conditions? Time: when do you want to close? Move in? Financial Terms: How much are you offering in down payment? What financing details might affect the offer? Contingencies. Does the offer depend on any other events, such as the sale of your existing home? Earnest Money: what amount are you committing to show that you are in earnest about the purchase? Deadlines: how long is the offer valid? An offer will include the complete legal description of the property, and a few other formal details. Keep in mind, it is "an offer, not a deal." Buyers will frequently provide a counter-offer that changes some of the terms to meet their desired outcome.