Budget And Contract Insight To Help You Buy Your Next House

Posted on: 11 February 2020

Preparing for the home-buying process is a good way to make sure you have an easy process and avoid having unexpected surprises and set-backs. The more you know can help you understand more fully your contract details and how much you can realistically afford in a home. Here is some insight regarding these topics to help you during your next home purchase process.

Understand Contract Deadlines

When you find a home you want to buy, a big part of the purchase is going to include a purchase contract. For this reason, you will need to understand your contract and its specific details including any deadlines and time frames included within it. Your real estate agent will be a big part of your contract negotiations, so be sure you understand all the sections included in the purchase contract. 

For example, you will offer to purchase a property at a specific price and the seller will need to respond by a certain date to either accept or counteroffer. After your contract has been submitted, make sure you take care of the home inspections by the specified deadline date on the contract, otherwise, you will forego the chance to renegotiate the terms based on any findings from the inspection.

You will also need to be aware of and meet the deadline to have the financing approved and finalized, then the date at which you close on the property. However, if you need to extend any of these deadlines, your real estate agent can help you write a contract addendum and submit it for approval to the seller.

Set Up a Spending Budget

Another important part of the process is to set up a budget and spending limit for your home purchase. Your mortgage broker will help you start this step and look at your income and credit qualifications. Once your mortgage broker advises you on your pre-approval limit, you can use this to calculate a potential mortgage payment. Ask your mortgage broker for an approximate interest rate for your mortgage, as you will need it to amortize the mortgage and calculate the payment's interest and principle. 

Next, calculate an approximate monthly amount for property tax and homeowners insurance, which your real estate agent and your insurance agent can help you with. As a final consideration with your budget, look at your household expenses to make sure your income will cover them in addition to your proposed mortgage payment and still give you a monthly financial cushion for surprises.

Whether you're looking for luxury residential homes or a starter home, these tips can help.