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Whether you’re buying your first or next house, the home buying process can be an exciting process. It’s fun to look at different houses and think about how you would make it your own. However, when it’s time to make an offer, things can get serious quickly. In this article, we share our best tips for homebuyers to help you get from accepted offer to closing!

Get Your Financials in Order

Before you start looking at houses and find one you want to make an offer on, it’s a good idea to get your financial ducks in a row. Here’s what to review and organize.

Have a Good Credit Score

Your credit score affects your ability to obtain a mortgage and also determines whether you get the best possible mortgage rate or not. Interest rates are based on a variety of factors, but having a good credit score can help you qualify for the current best rate.

There’s more than one credit scoring model, but scores typically range from 300-850, with 670-739 generally considered a good score. Anything higher than that would be considered excellent.

There are a few ways to check your credit score:

• Free access to your credit score may be a benefit of your credit card account.
• You can purchase a credit score report from FICO or any of the credit reporting agencies.
• Sign up for free credit monitoring apps like Credit Karma or Credit Sesame to view an average of your credit score from different scoring models.

Different types of mortgage loans may require different minimum credit scores to qualify. Have questions about your credit score and mortgage loan options? Contact one of our mortgage experts in Northeastern PA to discuss your specific situation.

Get Your Paperwork in Order

If you gather your paperwork before making an offer on a house, you’ll have a head start on the loan process. If some of the information seems redundant, that’s because lenders need to verify your income, assets, and other self-reported information through more than source. Here’s what you can expect to be asked to provide to your lender during the mortgage application process:

• Driver’s license or State ID
• Recent mortgage statement (if you currently own a home)
• W-2 forms from the past 1-2 years
• Pay Stubs from the past month or so
• Tax Returns from the past 2 years
• Alimony or Child Support proof of income (if applicable)
• Most recent 2 months of Bank and other financial statements to show proof of assets and debts
• Gift letter if using gift funds from a relative for the down payment

Self-employed homebuyers may find the documentation process a little more complicated, but that doesn’t mean you can’t get a mortgage. There are a variety of ways to document your income as a business owner, freelancer, or independent contractor. Contact one of our mortgage experts in Northeastern PA if you have questions about a buying a home as a self-employed worker.

Have Your Down Payment Available

You’ve been saving for a long time and doing your best not to touch your down payment. While the traditional amount is 20%, there are also loan options available for homebuyers who want or need to put less down. However much of a down payment you plan on making, you’ll want to be sure it’s easily accessible in a liquid bank account before you make your offer. There’s usually a good faith deposit required once your offer is accepted and you go under contract on your new house. You may also have to cover closing costs and other fees associated with the home buying process.

Decide How Much to Offer

When you find your dream home and you’re ready to make an offer, your real estate agent can help with the negotiation process. They will look at recent sales in the area, known as “comps,” to determine a fair offer based on the condition and features of your potential home.

Whether you offer above or below the asking price will depend on a variety of factors, including current market conditions. If the local real estate market is competitive, for example, you may want to offer above asking. If the market is slow or you think the house is priced too high based on its condition, you can consider bidding below asking. However, if you’re buying new construction, a foreclosure or a short sale, you may not have much wiggle room to offer below asking.

Once you submit your offer, the seller can either accept it or come back with a counteroffer. If you have a home inspection done, you can also use anything that comes up from that to negotiate on price. For example, if the need for a big repair is discovered, you could ask the seller to fix it before closing or you could take the cost of the work off the sales price.

Determine Contingencies

When your real estate agent works on the sales contract, you can decide on the contingencies you want to include. Contingencies are certain conditions that must be met or you can walk away from the contract without giving up your good faith deposit (aka earnest money). The most common contingencies include:

• Appraisal: If the lender’s appraisal of the home is lower than your offer, you can terminate the contract or the seller may have to reduce the price with this contingency.
• Inspection: With this contingency, you can walk away from the house if major issues arise in the home inspection.
• Loan: If any problems arise that make you unable to get a mortgage loan, you can back out.
• Home Sale: If you’re selling your current house while trying to buy a new one, you can add a contingency that lets you out of the sales contract if your own house doesn’t sell within a certain timeframe.

Prepare Your Earnest Deposit

Also known as a Good Faith Deposit, earnest money is a portion of your down payment submitted after the seller accepts your offer. This is typically 1-3% of the home price, so not an insignificant sum. That’s why you want your down payment savings to be accessible when you need it. Your earnest deposit is held in escrow until closing, when it’s credited as part of your down payment. If the seller backs out of the contract, or you terminate it for an included contingency, you can get your earnest deposit back. If you walk away for another reason, the seller gets to keep your good faith deposit.

Write Your Offer Letter

When you’ve determined your offer price, good faith deposit, and contingencies, the final step is to writer the offer letter for the home. Your real estate agent will usually write the purchase offer for you, but you may also want to add a personal story. Overall, a real estate offer letter should include the following:

• Property address
• Purchase price
• Earnest money amount
• Offer deadline (from hours to 1 or 2 days)
• Fixtures included with home sale (such as appliances)
• Escrow company information
• Title stipulation
• Contingencies
• Seller disclosures
• Projected closing date
• Closing costs
• Agent commissions and who pays
• Walk-through inspection
• Deadline for possession

Negotiate Final Terms

Last but not least, the process could play out in several different ways. Your offer may be accepted, rejected, or you may receive a counteroffer.

If your offer is accepted, you’ll move on to the formal mortgage application process, appraisal, inspection, home insurance, and eventually closing.

If your offer is countered, you’ll need to decide whether or not you want to negotiate. If the counteroffer is outside of your price range, you can walk away for that or another reason. You don’t have to negotiate.

If you do negotiate, you have the right to ask for adjusted contingencies. Perhaps the seller wants you to pay more than you offered. Consider asking for a seller assist for closing, for example, or for certain things to be repaired or replaced depending on the results of the inspection.

If your offer is rejected, it’s back to house hunting, but fret not–the process should be smoother the next time around once you know what to expect.

Citizens Savings Bank Can Help with Your Home Buying Questions

No matter where you are in your home buying journey, Citizens Savings Bank is here to help. Our mortgage experts in Northeastern PA are ready to guide you every step of the way to closing! We are always available to answer any questions you may have during the process. If you’re looking to purchase your first or next home, contact us for help with your mortgage loan. We offer flexible terms customized to meet your needs and budget. Use our financial calculators to test different scenarios.

To get started with the mortgage application process, you can apply online or visit any of our branch locations in Clarks Summit, Scranton, Taylor, Honesdale, or Mount Pocono, PA. For branch locations and hours, visit our website. We also have a Customer Support Team ready to answer any questions you may have. Call us today at 1.800.692.6279 or email [email protected]. Member FDIC. Equal Housing Lender.