Writing the Offer - Financial Considerations

It is standard practice to make a purchase offer contingent upon obtaining a mortgage. Because of this contingency, the seller will want the details of your financing plan included in the offer.

Down Payment
In the purchase offer, we will include the down payment amount you will apply toward the purchase. This will give the seller further evidence of your qualifications to secure a mortgage.

Interest Rate
Within the purchase offer, we will provide a safeguard against any dramatic change in interest rates between when the offer is made and when the loan is closed. Communication with your lender is key to assuring the rate can be secured once your offer is executed and becomes a contract. 

Due Diligence Fees and Earnest Money

With the changes made to our contracts in the last several years, your offer is no longer considered to be a contingent offer - on you getting a mortgage.  The Due Diligence Period allows time for you to obtain any inspection you desire, review any information/documentation regarding the home, as well as the appraisal being received and negotiate any repairs with the sellers.  It is extremely important to allow ample time in your Due Diligence period requested in your offer to receive the appraisal as it is generally needed by the lender to confirm they are not loaning more than the value of the home.  Providing you have been able to determine the satisfactory condition of the home through your inspections, the market value of the home meets or exceeds the purchase price by means of the appraisal, and reviewed any other pertinent information regarding the home, you will have completed your due diligence.  The Due Diligence Expiration Period  is generally at 5:00 PM on the date you specify in the contract.  If your decision is to terminate the contract, you will need to do so prior to that 5:00 deadline in order to not forfeit any earnest money - if any was put with the contract.  Due diligence Fees are non-refundable under normal circumstances.  There are a few exceptions to this and would need further evaluating to determine on a case by case basis.  Consulting legal counsel is generally recommended if there is a question as to whether a seller or their agent has not disclosed material fact which led to you asking for the return of your Due Diligence Fee and any other expenses you incurred.  

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Seller Assistance
If the house you select is at the top-end of your budget range, we may want to include a request for seller assistance to pay a portion of the closing costs traditionally paid by the buyer or to help "buy-down" your interest rate. Other seller assistance may include having the seller "carry back" a second mortgage to cover your down payment or even 100% seller financing.  Very few sellers have interest in financing the home for you or carrying a second mortgage.

With any of these seller assistance options, you can expect to pay a higher purchase price than if you had handled the financing through a traditional mortgage lender.

Including Your Pre-Qualification Letter With Your Offer

Your pre-qualification letter is generally attached to your offer and submitted to the sellers' agent for review and presenting to the sellers.  This indicates to the seller that you are a serious buyer and have taken the necessary steps to securing a mortgage to purchase their home.  Without this, the seller has no idea as to your ability to buy and if you are fronted with multiple offers, your offer will not be as strong as a buyer that included one.