First-time homebuyer? You’ve done everything right so far – evaluated your finances, researched locations with potential, listed your demands, and found a great realtor. But why stop there? Let us explain a few terms you should know.
Home buying 101
While sales contracts and their terminology will vary from state to state, home buying is a universally confusing process. You may be able to muddle through the jargon, but there are some important concepts you should know so you don’t get lost in the purchasing agreement maze. Trematerra Custom Homes is a luxury home builder in Florida that wants to help make the home buying process easier for you!
These five terms will help navigate your home buying proceedings. Learn them to help protect yourself during this big purchase decision.
1. Buyer Cost Sheet
The buyer cost sheet, sometimes referred to as “cash to close,” is not included in your actual purchasing contract, but is something you need to be familiar with.
This sheet will explain to you everything you are responsible for paying once you buy a home. A few of the following may be outlined:
- Inspection fees
- Appraisal fees
- Transfer fees
- Down payment
- Closing costs
- Prepaid items such as prorated property taxes, homeowner’s insurance and homeowner association dues
Some of these costs could end up being paid by the seller, but you are entitled to know all possible costs and their sources
This clause sets certain conditions that could allow your purchasing contract to be voided, usually relating to home financing, home inspections, and homeowner association document reviews. Traditional timelines for these processes do exist, but vary across the country.
Remember, contingencies are negotiable. If you believe you need more time or want different terms, make sure to ask for them!
This form will explain to you what a seller knows about his or her property, and those facts that affect its value and desirability. Points to look for could include:
- The area is prone to fires
- The property is in an earthquake fault zone
- The property is within hearing of an airport
- The area is associated with a flood hazard
In certain states, only sellers who live in the property must disclose knowledge of the property, and estate sales and investors may not be required to do so.
Escrow means all financial portions of the purchase transaction, including your deposit and sometimes prepaid amounts for insurance and taxes. This portion of your purchasing agreement is handled by a title company, an escrow company, an attorney or a real-estate broker.
An escrow company will pay off any lien, (a form of security interest granted over an item of property to secure the payment of a debt) on the property after settlement, and will record the transaction at your local county office.
5. Good-Faith Estimate
Like the buyer cost sheet, the good-faith estimate is not represented in your actual sales contract.
It provides you, the buyer, with a statement of your estimated total closing costs, including your down payment and prepaid items. You need to get comfortable with this estimate as it will tell you how much money you’ll need at closing, as well as give you a reference to hold your lenders to your promised amount.
Best of luck in searching for your dream home! The experts at Trematerra are here to help – our model center is open daily. Come on out to see what Gainesville’s newest luxury homebuilder has to offer.