Before making an offer on a house, a homebuyer should take his or her entire situation into account. The buyer must consider whether he or she is ready to buy a home, how much he or she can afford, and what terms to offer, among many other things. Negotiating and reviewing the documents for a home purchase can be daunting. An attorney with experience in residential real estate transactions can advise a buyer about his or her rights and negotiate the terms of the contracts involved in purchasing real estate.

Preparing an Offer

In determining an initial offer, a buyer should consider many factors, including the advertised price of the house, the amount affordable as a down payment and for monthly payments, the current real estate market conditions, and the seller's needs and desire to sell, among other concerns. The buyer must also consider which contingencies, such as the sale of a current home, should be included. An experienced residential real estate attorney can offer essential advice in determining which contingencies are appropriate.

Amount of Money Needed

The amount of money a buyer needs to purchase a house depends on a number of factors, in addition to the cost of the house and the type of mortgage. In general, a buyer must also pay the earnest money (the deposit a buyer makes when submitting the offer), the down payment (the percentage of the cost that the buyer must pay at closing), the closing costs (points and other costs associated with processing the paperwork), and other expenses such as insurance and tax payments. The larger the down payment, the lower the mortgage payments will be. Some types of loans require a down payment of 10-20% of the purchase price, but some FHA loans require less than three percent down. Closing costs, which average three to four percent of the home price, cover lender fees and other expenses. The lender must give the borrower an estimate of the closing costs. When a buyer makes an offer, the broker will put the earnest money into an escrow account. If the offer is accepted, the earnest money will be applied to the down payment or closing costs. If the offer is not accepted, the earnest money will be returned to the buyer. If the buyer backs out of the deal for reasons not provided in the contract, the buyer may lose the earnest money.

Condominiums

A condominium is a real property unit where the owner owns the apartment unit and is part of a tenancy in common with other tenants in the common areas. Common areas are managed, repaired, and maintained by the homeowners' association. Most states have adopted statutes to cover special issues involving development, construction, management, and taxation of condominium projects.

Mortgages

Many entities offer home loans. Lenders and terms change frequently, and a borrower should compare the loans and fees for several lenders. A loan broker may help a borrower locate an appropriate loan, normally collecting a fee from the lender. A borrower should also look into whether he or she qualifies for government insured mortgages, including VA and FHA loans, which have no or low down payment plans. If appropriate, "first-time buyer" programs can offer favorable terms to low- and moderate-income buyers. A buyer may also be able to locate private money, possibly even from the property seller, or withdraw up to $10,000, penalty free, from an individual retirement account for a down payment to purchase a principal residence. A mortgage can be either fixed rate (the principal and interest payment is constant month to month), or adjustable (the interest rate, and therefore the payment amount, changes depending on the economy and prevailing interest rates). Initial interest rates of adjustable rate mortgages are typically offered at a discounted interest rate that is lower than the rate for fixed rate mortgages.

Conclusion

Buying a home can be complex, and negotiating favorable terms can make a significant difference in a buyer's long-term financial well being. If you are considering purchasing a home, contact an experienced residential real estate attorney to ensure that your rights are protected and that you obtain the best terms possible under your circumstances.

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