You have finally found the home you want to buy and you have been pre-qualified by your lender. The next step in the process is submitting your offer to the seller. This is done with a Real Estate Purchase Agreement (REPC).
Many times and in most housing markets you are not going to place a bid on a home for the price that the sellers are asking for a home. However, if you are looking to buy a home in a very hot market, in an area where homes are selling extremely quickly, or if you find a home that is listed well below market value you may want to bid the asking price to have a good chance at getting the home before you are outbid. Placing a bid on a home and signing the purchase agreement does not guarantee that you have bought the house or that the sellers have to sell you the home. The property sellers have to accept your bid for the contact to be legally binding. Once the purchase price has been agreed upon and the real estate purchase contract has been signed by all parties you will normally have 5-7 days to submit a mortgage application to a mortgage professional. However, since most Realtors will require a pre-approval letter before you can place a bid on a home most of the you will already have a mortgage application submitted before you have submitted your purchase offer. Submitting your loan application to a mortgage lender will generally begin the mortgage process and the financing of your new home.
Depending on your situation you may be able to have your purchase agreement contingent on certain factors that are important to you. For example if you are selling your current home, you may want to make the purchase of the new house contingent on the sale of your existing home. While this does protect you as the buyer in the event your home does not sell, the sellers may be willing to accept a lower priced offer that does not have any contingencies. A qualified Realtor will be able to give you advice about how best to handle your situation.
Do you have little cash on hand for a down payment or closing costs? If so you should be sure to consider using a seller concession to reduce your out of pocket closing costs. Many lenders allow the seller to contribute 3% - 6% of the purchase price to closing costs. If a seller concession is important to you make sure both your real estate agent and your loan officer are aware of your goals.
Also, a personal letter of intent may be helpful in having your offer stand out above other purchase offers the sellers may receive.
Consider getting a pre-approval/pre-qualification certificate from a mortgage broker to accompany the offer. Or at the very least attach a copy of your credit report to the purchase offer to show that you have good credit history and the capability to acquire a home loan. When presented with similar offers, sellers look favorably upon the buyer who can demonstrate that the transaction is unlikely to fall through due to the buyer's inability to secure home financing.
Before submitting a purchase offer, a buyer should get pre-approved for a home loan. The purchase offer should reflect the terms of his mortgage accounting for seller concessions needed, lender inspections required, and time lender/broker needs to complete transaction.