House hunting? Don’t let paperwork filled with confusing language keep you from the home of your dreams.
In the latest edition of our 4 Your Home real estate coverage, Ashleigh Wehmeyer, a realtor with Compass, helps break down the fine print with four key phrases that every prospective homebuyer needs to know.
Pre-Offer Walk and Talk
If you’re in a competitive situation, up against multiple offers and contemplating waiving a home inspection, a pre-offer walk and talk can help. This process is basically a modified inspection with you acting as the notetaker.
You can look at the roof, foundation and appliances and check out major systems in about an hour. It can cost between $250 and $350 and can give you a bit of assurance.
PMI: Private Mortage Insurance
PMI is what you’re going to pay on a conventional loan if you don’t put 20% down.
Even when you’re going to be paying PMI in your monthly payment, pay attention to when you get up to 20% of that loan value. Then you can call your lender and have them drop it for you.
EMD: Earnest Money Deposit
An EMD is the money that you put down when you put your offer in. Bigger is better here. In traditional markets, it’s about 1 to 1.5% of the sales price, but in competitive markets, it can go up to 5%, 6% or even 10%.
An escalation clause works a bit like an eBay auction. Set the max limit for your bid and you will beat any other buyer by that amount. Wehmeyer’s tip: Have the number end in a zero.
If there’s something you don’t understand, stop and ask. Buying a home will likely be the biggest investment of your life.