The VA offers veterans many benefits that help them throughout their lifetime. One of those valuable benefits is the VA Home Loan Guarantee Program. Through this program veterans can purchase a home with no money down and have an easier time getting a loan because a portion of the mortgage is guaranteed by the VA. For veterans who are considering using the VA Home Loan Guarantee Program to purchase a home it is important to understand the details involved with agreeing to purchase a home.
When you agree to purchase a home you sign a Contract of Sale or Purchase Agreement. At the time a buyer signs these forms they usually put earnest money or a deposit down on the home to show that they are entering into this agreement in good faith, and do intend to purchase the home. If you put a deposit down on the home make sure that the paperwork says that your deposit is refundable in the case that there is a problem with your financing or the seller or builder does not live up to their end of your agreement.
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The Purchase Agreement or Contract of Sale is an offer by the buyer to purchase the home for a certain price which the seller accepts. The buyer and seller may negotiate on the price, and once a final price is decided on then the Purchase Agreement is signed and the earnest money is put down as a deposit. The Purchase Agreement is an official legal document and usually includes items like:
The purchase price of the home. Make sure the contract specifically states that the price can not be changed. In the case you are building a home, some building contractors will want the contract to state that prices can increase with cost. This means that if the building materials or services prices increase then the builder can increase the purchase price of the home. In cases like these make sure to get legal advice before signing the Purchase Agreement.
Who is responsible for what closing costs. There are many closing costs involved in purchasing a home. Be certain that there is a break down in the Purchase Agreement that stipulates exactly who will pay which closing costs so that there is no future dispute on this issue.
In the case you are building a new home the contract should state the date the home will be completed and that the home will be built according to the specified plans.
A statement saying how much your down payment is and how you will finance the remaining balance of the purchase price. This includes the manner in which you will obtain financing for the mortgage and the time limit you will get this financing by. If you plan to finance your down payment this information will also go into the contract.
A specific date by which the seller must transfer the property to the new owner. In most cases the transfer of money and title is handled by a certified title agency, but the approximate date of title transfer is still listed in the contract.
Stating who is responsible for the property from the point when the contract is signed until the seller has vacated and the new owner occupies the property. Usually the seller or builder is responsible for the property until the title is transferred, but make sure it states who the responsible party is in the contract.
If you are building a house then the contract should list any builder's warranty information and time limits.
Any additional items that are not part of the structure or property. Many buyers not only want to purchase the home but also want all the appliances, light fixtures, and other items that are not a part of the permanent structure of the home. Any items that can be removed from the property that are to be included in the sale of the home should be specified in the Purchase Agreement.
If there is a clause in the contract that says that the seller or builder can back out if they want, make sure that there is the same clause for the buyer. If they get the choice of backing out you should get this choice as well. Otherwise it gives one party the upper hand in the sale.
Make sure you have a signed copy of the building plans and specifications if you are building a new home. These plans are part of the Purchase Agreement and you need to be sure that they are exactly what you agreed upon before signing.
When you purchase a home there are many things you must look for in order to make sure the sale goes smoothly and you protect your own interests. For more information on Purchase Agreements or Contracts of Sale contact us at 800-405-6682.
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