Jim Curry - Home Buyers Guide V2 Book

roof repair. If the seller is going to solve the problem, con fir m that a qua lifi ed and licensed contractor is doing the work, so the seller doesn’t do a low-cost patch-up job that gives you problems the minute the paperwork is signed.” 2. Th e Home Appraises for Les s Th an Your O ff er While a home inspection reveals the condition of the home, a home appraisal determines the value of the home. In some cases, an appraisal will show that the house is worth less than what you o ff ered. If you continue with the deal, this means two things: 1) you’ll be overpaying; and 2) you’ll have to come up with a larger down payment. For example, “the bank will typically only lend you 80% of the value of the home, unless you want to pay for private mortgage insurance. So, if you’re buying a $200,000 home, you’ll need to come up with a $40,000 down payment, and the bank will lend you the remaining $160,000,” explains Bieber. “But if that home then appraises for $175,000, then your loan-to-value ratio will be 91% ($160,000/$175,000). In order to satisfy your lender, you’ll need to raise your down payment to $60,000.” In the end, it might be better to walk away, unless the seller is willing to drop the price to the lower appraised value. You should never buy a home that’s worth less than you’re paying for it.

3. Th e Title Search Reveals Unexpected Claims or Issues

A title search is required for any and all real estate deals just to make sure there are no unexpected claims on the property. Before you go through the process of purchasing a property, you want a “clear title” — which means that the seller transferring the property is the rightful owner, and there are no other claims on the property. 139

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