Buying a home is a major commitment. Not only will you spend decades paying off the mortgage on the property, but you will incur thousands of dollars in closing costs.
The benefits of purchasing a place to live are obvious. You can accrue equity by making monthly payments instead of losing the money that you send to your landlord for rent. You will have more personal privacy and the freedom to do what you want with the space where you live.
Of course, there are risks involved not just with home ownership but with the process of buying a property. How can you protect yourself from some of the biggest financial concerns when looking to become a homeowner?
Put together an offer that protects your interests
The market has started to slow and soften, which means that buyers no longer have to compete aggressively with one another for properties. You no longer have to worry about losing a bid on a property just because you include basic protections, like contingencies.
The contingencies you include in your offer protect your earnest money. If the property fails to pass inspection, the appraisal comes in too low or if you are unable to secure financing, contingencies ensure that you can keep your earnest money despite canceling the closing.
Review closing documents and counter-offers carefully
Real estate agents and those selling property often include terms in their contracts that are highly unfavorable for buyers.
For example, the seller might counter your initial offer by suggesting a sale price just $5,000 over what you offered. While the price seems acceptable, you might overlook changes that they made to the terms of the sale if all you check is the price. You also want to look over all of your closing documents, including your settlement statement, for sneaky clauses and inappropriate charges.
It can be difficult for someone to draft a contract with the right protections or review a real estate contract thoroughly on their own behalf, which is why many people retain real estate lawyers to protect themselves legally and financially while buying a home. Understanding when you are most vulnerable during a residential real estate transaction can help you take the appropriate steps to protect yourself.