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8 Aspects of a Strong Home Purchase Contract

By U.S. News & World Report

Now that you have found the perfect house, it’s time to write the offer. When you sit down with your agent to prepare the necessary documentation, you may feel overwhelmed by seemingly countless pages of contract and addenda.

In an effort to make you feel more in the loop, let’s take a look at the key aspects involved in making an offer.

Sale price. This is the big one — how much do you want to offer for the house? After reviewing the comparable sales with your agent and finding out as much as you can about the house and the seller’s situation, you will determine an offer price.

Factors such as other offers on the home, how long it has been on the market and how willing you feel the sellers may be to negotiate will lead you to your price. In many cases, you’ll likely come in lower with a possibility of negotiating, or in others be forced to bring your highest and best offer to edge out competition.

[See: The Best Apps for House Hunting.]

Seller credit. At settlement, you will have charges broken down into two categories — settlement charges (which include closing costs, prepaid interest, etc.) and down payment. Depending on your market, you will find it commonplace for sellers to pay a percentage of the sale price to help cover your settlement charges. Typically, this amount will vary between 1 and 3 percent, but can be more or less.

Remember, before asking or agreeing to accept any seller credit, you need to discuss with your lender how much you are able to be given by the seller. Each loan program will have different restrictions on how much you are able to receive.

Settlement date. Before choosing a settlement date, have your agent discuss any preferences with the listing agent to find out if this is an area you may be able to sweeten the deal for them, especially if you are hitting them harder on the price or if you’re in a competitive situation.

You will also need to discuss the settlement date with your lender to confirm you will be able to obtain full financing approval within the time frame.

Deposit. With your offer, you will need to specify an amount you will deposit. In essence, this is you putting your money where your mouth is. Once the contract is agreed to and ratified, the check will be placed in a holding account with either the settlement company or buyer’s brokerage, where it will remain and be used toward closing costs. Should you break the contract for any reason not allowed by the provisions of the contract, you may be subject to forfeiture of the money to the sellers.

Depending on local requirements, you may be obligated to provide a copy of the check with the offer as proof it exists. This will be held by your agent until the offer is accepted, and then it will be deposited.

[See: 10 Ways Millennials Are Changing Homebuying.]

Preapproval letter. Prior to starting your home search, you went through the preapproval process with a lender to find out how much you can afford. Now that you are presenting an offer, you will want a letter specific to the property and amount you are offering.

The letter should be specific, because even though you may be preapproved for higher than the price you are offering, you do not want to let the seller know just how high you can go.

Do not expect a lender letter to be bogged down with all kinds of specific information. What it should show is the extent to which your lender has gone with the preapproval — what documents they’ve obtained and whether or not your credit history is satisfactory. A strong lender letter can make a world of difference by showing the sellers you’ve already lined up your ducks and are a qualified candidate for the loan.

Disclosures. The term “disclosures” can be used to describe any number of addenda attached to the offer. The most common types of disclosures are those made about the condition of the property and the neighborhood. Those concerning the property will discuss the age of the roof, water heater and other parts of the house, mention any known problems, and specify what types of utilities are hooked up.

Many states and local jurisdictions have their own sets of disclosures discussing any upcoming projects, factors causing noise or foul smells (airports or farms), zoning ordinances and other things that may affect your desire to live there.

Inspections. You will have an a la carte menu of inspections to choose from, depending on personal preference and application to the house — the most common of which is simply known as the home inspection. This is a top-to-bottom examination of all aspects of the house and will give you a solid understanding of not only what items are and will need to be fixed, but how the house operates.

Other inspections you may opt for include radon, well and septic, lead paint, mold and pest. While some of these may be optional, others may be required by your lender, so remember to check before drafting the offer.

[See: The 20 Best Places to Live in the U.S. for Quality of Life.]

Personal letter. A personal letter is a great way to separate your offer from others when you find yourself in a competitive situation. It’s okay to get your nose a little brown and point out specific aspects of the house you really love.

Do not be generic, and do be genuine. Not only should you point out what the seller has done to the home that you love, but try to show how you can really see yourself making it your home and continuing to love it.

Do not include a picture. National and state fair housing laws are very clear that sellers do not have the right to select a buyer based on race, color, national origin, religion, sex, disability or family status. You don’t want to put the sellers in the awkward position of loving your offer, but feeling they shouldn’t pick you to protect themselves from possible repercussions.

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8 Aspects of a Strong Home Purchase Contract originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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