Well, you have reached the stage to make a home offer! It really is a great job to have come up to this point in your home buying venture. You might have crossed several important phases like taxing mortgage loan applying and grueling home searching. Finally you had selected the home to buy and the next you have to do is to make an offer for the home you intend to buy

An important aspect of the offer you make is that it should be in writing and hence you should know what information you need to include in the home offer and what not in it.

The following tips will help you to make right home offer and make home offer rightly!

• Once you make a home offer, please do not continue to shop around for more choices. People think that they are at liberty to make as many home offers as they wish even when one of their home offer is pending on the table. This is quite true but, it would be in the best interest of you to stop making more offers when one is pending.

But do you know that the home offer you make is a legally binding contract? If the seller agrees to your offer you have to close the deal. Imagine the situation where two of your home offers are accepted! So, the rule is not to make one more home offer when one is pending on the table.
• You have found a home to your liking and made an offer to the seller and continue to shop around. What if you find another home you think you like more? And situation is worse if the seller agrees to your home offer. As your home offer is legally binding you have to make that purchase and you will regret your decision as long as you live there. So, it is good to think million times before deciding on the home and making an offer and once you made the home offer, it is better not to shop around until the seller’s decision.
• Once you make a home offer, the seller can either accept it, or make a counter offer or reject it completely. If the offer is not accepted you can continue home searching and shop around.
• You home offer should include the selling price. You need not comply to the seller’s asking price. But keep in mind to state a selling price that fits the amount that you can afford to pay.
• In your offer you should include information on any concessions that you may expect from the seller. For example you may wish that the seller pays a portion of the closing costs. It is important that you include this information clearly in your home offer.
• You can make your home offer a conditional one. You can state that you will adhere to the offer if your mortgage loan is approved and funds are released. After all you can make the purchase only if your get favorable mortgage terms and it is wise to include this information in your home offer.
• Include home inspection contingences in your home offer. If not you will end up owning a home that needs a lot of renovation and repairing. It is good to include terms like ‘subject to an agreeable whole house inspection report’.
• When making an home offer state clearly what are all you expect to come along with the house to you like stoves, refrigerators and such appliances.
• In your home offer, you must specify the amount earnest money deposit that you will make.

If the seller accepts your home offer, that document turns in to a sales contract binding you. So include all information you require in your home offer that would be warranted by a sales contract.

Homeowner’s Insurance

What is Mortgage?

We think we know it. But yet we don’t, at least not completely. Mortgage is one such often used home buying term.

To be exact the term mortgage specifically refers to the document in which the home buyer expresses his compliance to the fact that the lender will hold a lien on the property (home) until a certain agreed amount of money is paid by the buyer.

There is also another meaning for the term mortgage. It is the loan that is used to secure the property. This is the most commonly referred meaning of mortgage.

The Mortgage Process
Mortgage can be easily termed the most tedious process of the entire home buying transaction. Once you have decided which home to buy, you make an application to a lender for a mortgage loan. Now it is up to the lender whether to approve or disapprove your mortgage loan application. The home buying lender then considers several factors like your credit history, employment history, income, debt etc. to decide whether to approve your mortgage loan.

Lenders are wise and in business to make money. So they don’t give you mortgage loans just for free. They charge you an interest for the home loan they give to you. The interest rate that you (buyer) pay depends largely on your credit history and the credit risk you pose.

The total cost of your mortgage loan is usually expressed as a percentage termed APR-Annual Percentage Rate. The APR expressed by the lender refers to the cost of your loan per year.

Getting the Pre-Approval

Before finally approving your mortgage loan and releasing the funds you may ask the lender to pre-approve your mortgage loan. Getting pre-approval will give you an idea on how much home loan you can borrow from your lender. This will help you with a price range of the homes for which you can shop around. Pre qualification is yet another process that normally precedes the pre-approval done by the lender to decide on your mortgage loan.

Pre-qualification is different from pre-approval. Pre-qualification is an estimate of the amount of mortgage loan that you can afford. The lender makes this estimate based on your income and debt information. Pre-qualification is just an estimate. It need not necessitate a final approval. Pre-qualification is just an estimate and is subject to pre-approval.

Only on pre-approval by the lender, the buyer can get an idea of the exact amount he may get as mortgage loan. This will help your home shopping process. At the pre-approval stage, the lender completes the appraisal and title search as well. In effect he completes all works of an approval including employment verification and credit checks.

But neither pre-qualification nor pre-approval guarantees you a final approval and releasing of funds from your lender.

Mortgage Loan Approval
The lender requires certain documents including W-2’s, pay stubs, income tax returns, bank statements of all your accounts, child support or alimony and a copy of your credit report to decide on whether to approve you a mortgage loan. It is advisable on your part to start collecting these documents just as soon as you decided to apply for mortgage loan.

Down Payment
The down payment you have to pay depends on the lender and the type of your mortgage loan. The down payment is completely different from the final agreed sale price of the home and the approved mortgage loan amount. If the down payment is less than 20% of the home price then you have to pay private mortgage insurance, PMI. This will protect your lender in case you default on your mortgage loan.

PMI can be cancelled once you acquire 20% equity in the home.