Buying your first home can be an exciting event, but it can also be confusing. One of the main steps in this process involves making an offer. Understanding your responsibilities and requirements during this particular phase of the home-buying process will help you stay patient during the process and help speed things up. Here are three things you should understand about the process of making an offer.
Offers Are Binding
The first thing you should understand is that any offer you make is binding. In other words, you should not make an offer on a house unless you are absolutely certain that it is the house you want to buy. You should also make sure that the amount you offer is the amount you are willing to pay.
The only way you will be able to get out of the deal once you sign a purchase agreement is if there is some type of problem with the house or your ability to get a loan. Your purchase agreement will contain contingencies, which are statements that allow you to break the deal. The contingencies (also called conditions) listed might include the following statements:
- The deal is subject to your ability to get a loan.
- The deal is off if the house does not pass a home inspection.
- The deal is off if the seller will not agree to perform certain services to the house.
Making An Offer Is Not Free
It's also important to understand that making an offer will cost you money. This money is called earnest money, and it is typically equal to 1% to 2% of the total amount of the offer. When you make an offer, the earnest money shows that you are serious about it. You will lose this money if you decide to take your offer back, and you may also lose it if you cannot get a loan to buy the house.
If there is something wrong with the house and you decide not to purchase it because of that, you will most likely be able to get the earnest money back.
Preapprovals Are Helpful
Finally, you should make sure you are qualified to buy a house before you begin looking. This is called getting preapproved, and it will require filling out an application with a mortgage lender. If you are preapproved, the seller might be more encouraged to accept your offer, and it will also help speed up the process of buying a house.
If you have more questions about buying a home, the best thing you can do is contact a real estate agent for help.