Financing

The contract should be subject to your getting satisfactory mortgage financing—satisfactory to you. Make your offer contingent on getting a written loan commitment within a specified time and at terms agreeable to you. State the maximum interest rate and number of discount points you would be willing to pay. Put that way, should you fail to get the desired financing, you will be released from the contract and your deposit will be returned.

Set out how discount points, appraisal fee and other expenses involved with financing your purchase are to be apportioned between you and the seller. These are typically negotiated through counteroffers and counter-counteroffers.

If you're told it's customary for buyers to pay all points (one point equals 1% of the mortgage), don't assume that's so. In many areas and in certain market climates it's just as customary for sellers to help the buyer by paying a point or so. The point is, what do you want to pay? What can you afford? What could the seller offer that would make it worthwhile for you to back down and pay the point?

Making the contract contingent on financing is important from another perspective, too. Once an offer with this type of clause is accepted, the owner must take the property off the market to give you time to shop for a mortgage.

If you went through a preapproval process, you know what size loan and interest rate you are eligible for. Don't put down unrealistic numbers— a below-market interest rate or a loan bigger than you could get. Such tactics justifiably raise suspicions and make your offer unattractive.

f you're told it's customary for buyers to pay all points (one point equals 1% of the mortgage), don't assume that's so.

The contract should state that property taxes will be prorated to the closing date.

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