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Common Contingencies and Why You Need Them

by The Pilgrim Team

When you’re buying a home, you make investments along the way – everything from earnest money to appraisals, inspections, title searches and the costs to market your existing home. You may think you have all the bases covered in negotiating the terms of your contract, but deals do fall apart – some at the last minute. Protect yourself from additional loss with appropriate contingencies. Accepted contingencies give you the right to walk away from the contract with no penalty (other than some of the incidental costs mentioned above).

Most sellers avoid contingency contracts and may pressure you to move quickly and drop contingencies. But what if the property fails to appraise at the right value, or your lender fails to fund your loan? Know what you can include in your contract as a contingency and be prepared to stand firm!

The home inspection provides the opportunity to help you decide if you should walk from a tempting deal. Even properties that look well maintained and in good condition can have hidden flaws. In addition to the basic home inspection, there may be other inspections (for lead, termites, sewer and others) or areas that need to be addressed in your contract. Make sure you know what you are getting into!

The types of contingencies vary from state to state. Here are the top 10 most common contingencies and what be aware of as you make your offer>

Common Purchase Contract Contingencies

  • Appraisal. Beware of the possibility that the appraisal may come in low.
  • Loan Contingency. Your lender may fail to find your loan as requested, even if pre-approved.
  • Home Inspection. One of the top indicators of flaws in the home.
  • Lead-based Paint. Federal laws gives all buyers 10 days to inspect for lead-based paint.
  • Wood Destroying Pest Inspection. The contract should specify who pays for termite inspection and correction.
  • Roof Inspection. Make sure the roof is part of the home inspection, and if not specify a third party inspection for the roof.
  • Sewer Inspection. This can be especially important for an older home or home on a septic system.
  • Preliminary Title Report. Make sure the seller can transfer a clean title, with no unpaid liens against the property.
  • Seller Statutory Disclosures. Some states require sellers to disclose all know material facts about the history of the property.
  • Contingent on selling Existing Home. This is one of the most common contingencies, and sellers usually specify a number of days to perform.

When negotiating your offer and contract, make sure you protect your rights as a buyer and understand your state laws and other requirements necessary to close on your new home!

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Common Expenses When Selling Your Home

by The Pilgrim Team

If you are planning on selling your home there are different expenes that will come up related to the sale. It is important to know what differnt costs be required as well as what exactly they are. Below is a list of some of the most common costs that come with selling your home.

Closing Costs: Although most of the closing costs are the responsibility of the buyer, the seller is expected to pay the property taxes and insurance up to the date of the closing, even if they're not due yet. In addition, some buyers will ask the seller for help with other closing costs as part of the negotiations.

Realtor Commission: Typically there's a 4 percent to 7 percent commission on the sale price of the house if you opt to go with an agent. Usually this rate is between 5 percent and 6 percent, so be sure to account for this cost when pricing your home and figuring up your expenses that come with selling your home.

Home Inspections: Although the buyer pays for the home and 
pest inspections, it's a good idea to get your own inspection before putting your house on the market. This way you're aware of any hidden problems before selling.

Legal expenses: Even if you are using a real estate professional and not selling your home yourself, you still may want an attorney to examine the sales contract and assist with closing, which can be complicated.

Prepayment penalty: Many Home Loans have prepayment penalties if you pay off the Home Financing early. Be sure to examine your mortgage agreement and read the fine print.

Other Fees Negotiated by the Buyer: Buyer negotiated fees are becoming more common in the current real estate market. Some of the most commonly seen buyer negotiated fees might include a home warranty paid for by the seller, the cost of repairs needed to make the sale, and the cost for a home inspection. Keep in mind that nost all parts of the real estate contract is negotiable.


Many homeowners are not aware of the costs involved with selling a home but there are some perks as well. With any home sale you are eligible for a tax write off of up to $250,000 gained in the sale of your home for a single owner, and $500,000 for married couples. This applies for most state taxes as well; check with a tax professional to get all the details of any Tax Credit that may be available to you and your situation. 

 

 

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Fixed Rate Mortgages

by The Pilgrim Team

When looking for financing on your new home purchase, you will be given many different options.  One of the most common is the fixed rate Home Loans, typically with a 15 year or 30 year term.  These traditional mortgages are amortizing, which means that you pay off the entire loan amount by the end of the term of the loan. This type of loan is very common but there are both advantages and drawbacks to these mortgages.  Depending on your financial situation, and the prospects of changes in your financial future, a fixed rate Home Financing may or may not be the best product for you.

Below are some of the pro's and con's of fixed rate Home Loans:

PROS

  • Interest rate on your Home Financing cannot be increased for the life of your loan
  • Monthly payment will remain the same for the life of the loan
  • Loan will be completely paid off by the end of the term

CONS

  • Fixed monthly payment amount may be difficult to make at the start of the loan
  • Large percentage of payment goes to interest payment in first years of the loan
  • Usually has a higher interest rate than a variable rate loan initiated at the same time
  • Interest rate cannot be reduced as in some variable rate programs
  • Maybe harder to qualify for, as higher income may be required

Depending on your financial situation, a fixed rate Home Financing may be the best solution for you.  If you can afford the monthly payment required to obtain the loan, then the fact that your interest rate and monthly payments will stay the same for the life of the loan while give you peace of mind and make monthly budgeting easier.

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Real Estate Attorneys

by The Pilgrim Team

If the purchase of a new home is in your future, you will have many decisions to make. Many home buyers may consider using the services of a real estate attorney for assistance with complicated documents and legal advise during the sale. Using a real estate attorney is a good idea, because the process of buying a house is complex, and most people find it's easiest to get through with a professional by their side.

Laws vary from state to state and some states require an attorney to create the purchase agreement and do the title search. There may be legal issues arise that your real estate agent can't answer, then you'll need an attorney's help. An attorney is also beneficial if there is any confusion or if you have questions about the documents then it is important to have an attorney look the documents over. Below are some other reasons you might want to consider using a real estate lawyer.

  • They can help protect your interests by examining all the legal documents before you sign them and can ensure that you’re not signing something that isn’t in your best interest. Always make sure you consult with a real estate attorney before you sign any legally binding documents to avoid signing a contract that can be damaging..
  • A real estate attorney is also better equipped to negotiate with the seller’s attorney; something that most buyers can’t do successfully because they’re too emotionally involved in the purchase.
  • If funds are being held in escrow as part of the sale, a real estate attorney has the authority to administer escrow. They can disburse funds as appropriate according to the terms of the escrow.

The cost of an attorney can vary, but typically the legal fees are higher when you buy than sell because the role of the buyer’s lawyer is more extensive. Most fees range from $500 to $1,500 for an average home whether you’re the buyer or the seller. You may find an attorney that will charge a flat fee for specific services and others bill by the hour. Usually, a lawyer can easily estimate costs related to a real estate transaction.

 

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HAFA Decoded

by The Pilgrim Team

Check out this video bhy clicking here to get a quick explanation of the new HAFA Program. Here

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The Pilgrim Team
Professional Realty Associates
2002 S Queen St, Suite 3
York PA 17403
Office: 717-757-5955
717-755-2683
Fax: 717-757-2887