appraised value.
You can make your offer contingent on a satisfactory home inspection. If serious damage is found, the deal may be renegotiated or canceled—especially if the home is deemed structurally unsound or unsafe. For financing, the offer is made contingent on the buyer receiving a sufficient mortgage loan from a lender, or for current homeowners, contingent upon the sale of their home. Having a strong pre-approval or a Mortgage TBD commitment (Property is To Be Determined) is the way to avoid having lack of financing sink your deal. Appraisals below the purchase price can jeopardize a deal. The appraised value affects the loan-to-value (LTV) ratio. For example, if you agreed to buy a home for $600,000 with a 20% down payment ($120,000), your loan would be $480,000. But if the home appraises at $580,000, the lender will only finance 80% of $580,000 which is $464,000. You’ll either need to renegotiate the price or cover the $16,000 shortfall yourself.
STEP 10: PUT MONEY IN ESCR Y IN ESCROW
Part of the home-buying process involves putting money into escrow; the buyer is expected to put an initial deposit (also known as "earnest" money) into escrow in order to make the contract binding. Essentially escrow refers to a time period, not a place. Escrow is the period between 1) the time an offer of purchase is made on a property; and 2) the time when that property’s title is officially transferred from seller to the new owner. The escrow process is essential in cases in which the ownership of title will change.
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