Content Overview Buying a Home...1,2,3 Home Page Should You Buy a Home? Are You Ready to Buy a Home? How Does the Home Buying Process Work? Understanding Credit Borrowing Basics Choosing the Right Mortgage Finding a Home Overview Choosing a Real Estate Agent Making the Purchase Overview The Closing Process Additional Homebuying Resources Glossary of Homeownership Terms

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Buying a Home...1, 2, 3: What's Involved in Making the Purchase?

The more you know about the process and the better you plan for each step, the more likely you are to have a good home buying experience.

Making an Offer

When you find a house that you want to purchase, you will prepare to make the seller an offer by filling out a Real Estate Sales Agreement, with the assistance of your real estate agent, and providing the necessary amount of earnest money.

What is earnest money?

This is a deposit that you give when making an offer on a house, which shows the seller that you are making a serious offer. A real estate agent usually holds the deposit, the amount of which varies from community to community. This will become part of your down payment.

What does the Sales Agreement contain?

The offer you submit in the form of a Real Estate Sales Agreement—if it is accepted by the seller without changes - will become a binding sales contract. Therefore, it is important that it contains all the items that will serve as a "blueprint for the final sale."

These purchase offer items include such things as:

• Address and sometimes a legal description of the property
• Sale price
• Terms
• Seller's promise to provide clear title (ownership)
• Target date for closing (the actual sale)
• Amount of earnest money deposit accompanying the offer; and whether it is a check, cash or promissory note; and how it is to be returned to you if the offer is rejected, or kept as damages if you later back out for no good reason
• Method by which real estate taxes, rents, fuel, water bills and utilities are to be adjusted (prorated) between buyer and seller
• Provisions about who will pay for title insurance, survey, termite inspections etc.
• Type of deed to be given
• Other requirements specific to your state, which might include a chance for attorney review of the contract, disclosure of specific environmental hazards or other state-specific clauses
• A provision that the buyer may make a last-minute walk-through inspection of the property just before the closing
• A time limit (preferably short) after which the offer will expire
• Contingencies*

*Note on Contingencies

If your offer says "this offer is contingent upon (or subject to) a certain event," you are saying that you will only go through with the purchase if that event occurs. The following are two common contingencies contained in a purchase order:

• The buyer obtaining specific financing from a lending institution. If the loan cannot be found, the buyer will not be bound by the contract.
• A satisfactory report by a home inspector "within 10 days (for example) after acceptance of the offer." The seller must wait 10 days to see if the inspector submits a report that satisfies you. If not, the contract would become void.

Accepted Offer

You will have a binding contract if the seller, upon receiving your written offer, signs an acceptance unconditionally. The offer becomes a firm contract as soon as you are notified of acceptance. If the offer is rejected, the seller could not later change his/her mind and hold you to it.

Counter Offer

If the seller likes your offer but with some changes, you may receive a written counteroffer with the changes the seller prefers. You are then free to accept or reject it or to even make your own counteroffer. Each time either party makes any change in the terms, the other side is free to accept or reject it, or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side's proposal.

Withdrawing your Offer

Can you take back an offer? In most cases the answer is yes, right up until the moment it is accepted, or even in some cases, if you haven't yet been notified of acceptance. If you do want to revoke your offer, be sure to do so only after consulting a lawyer who is experienced in real estate matters. You don't want to lose your earnest money deposit, or find yourself being sued for damages the seller may have suffered by relying on your actions.

Choosing a Home Inspector

Having a general home inspection has become an essential part of the home buying process for those wise buyers who want to be sure they know what they are buying. When you are purchasing any home, whether existing or custom built home, you should get an inspection report from a certified home inspector.

What is a home inspection?

A general home inspection is a thorough, in-depth visual examination of the major structure and operating components of a home. A inspector will point out areas of concern during the inspection as well as educate you the buyer as to proper maintenance procedures. The information will assist you in making an unemotional intelligent and informed decision.

Unusual items, such as swimming pools, wells and security systems, along with environmental concerns, like radon gas, asbestos or pest infestation require specialty inspections.

The home inspection is not the same as the appraisal. The appraisal is an evaluation of the monetary value of the property, the price that can be expected in the current market.

Why do I need an inspection?

With an “Inspection Contingency” in your purchase offer, your obligation to purchase is limited until you are satisfied by a professional home inspection that the physical condition of the property is acceptable to you.

Choosing the right home inspector

Your home inspector should be certified by the State of Oregon and inspections done according to any professional standards (American Society of Home Inspectors, National Association of Home Inspectors, etc.).

Getting Homeowner's Insurance

Homeowner’s insurance combines dwelling, property, and liability coverage needed by homeowners. Before finalizing your loan, the lender will require evidence that you have arranged for a homeowner’s policy.

Most lenders require that the homeowner’s dwelling coverage amount is at least as large as the loan amount. However, you should think about what amount would be needed to replace the home if it was destroyed. A policy in the amount of the anticipated replacement cost of the home would be an excellent choice.

Depending on your insurance package, homeowner’s insurance usually covers:

• The dwelling — damage resulting from fire, theft, and some weather-related hazards
  
  
• Other structures — damage to garages, storage sheds, barns, and other out buildings
  
  
• Personal property — your furniture, appliances, clothing, and other personal property
  
  
• Loss of use — reimbursement for living expenses if your home becomes uninhabitable
  
  
• Personal liability — in case you re sued by someone injured on your property or insured by a member of your family. Person liability coverage may also include no fault medical and no-fault property damage protection. These pay for medical treatment of visitors injured on your property and property losses suffered by visitors wile on your property regardless of who was at fault.

Be sure to know exactly what is covered by your policy and to have additional insurance policies as appropriate. For example, many homeowner’s insurance policies do not include coverage for damage caused by an earthquake, and this may be coverage you want.

Note: If your home is in a flood zone, lender will require you to obtain flood insurance in addition to your homeowner’s insurance.

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