2torial #0935:
Learn2 Buy a Home (continued)

Close the deal

Once you and the seller have agreed on a price, there's still work to be done. Again, a good realtor will help you navigate the waters, but you must be involved in the process, too.

Escrow. When buyer and seller settle on a price, the house goes into escrow. Essentially, this means you're making a down payment (1 to 3 percent of the sale price), though in fact the money goes into an independent account that neither buyer nor seller controls.

Escrow guarantees you the chance to buy, but before you make a final commitment, you and your lender must ensure the home actually belongs to the seller, that there are no outstanding liens, and that it's in good condition. This process, which requires a lot of time and paperwork, is commonly known as "contingencies," meaning the final sale is contingent on your findings.

During this time, have the home inspected for any structural problems--including termite or other pest damage, roof and foundation solidity, and soundness of the electrical, plumbing, and ventilation systems--to ensure you don't get stuck with huge repair bills after you move in. Your realtor should provide a list of independent inpectors to choose from, or read 2torial #0506: Hire a Contractor to find your own. It's your responsibility to pay for these inspections; you can do so at the time of inspection, or charges can be added to the fees you pay to finalize the home's sale.

At this point, you can still pull out of the deal or renegotiate if you find problems. But if the home receives a clean bill of health (or if you and the seller can agree to an adjusted price to allow for any problems detected), contingencies are lifted, and the sale moves forward.

Note: Pulling out of a home purchase after contingencies have been removed will result in forfeiture of all deposits made. You'll be responsible for repaying your lending agency any amount they've advanced on your behalf.

Closing. If there's nothing terribly wrong with the house and you're sure you still want it, one-time closing costs will be assessed at this point (for convenience, they can be added to your loan amount if you want). Closing costs include:

• Your first month's mortgage payment

• Pro-rated property taxes for the upcoming year

• Your first year's home owner's insurance premium

• Fees owed for all property and personal inspections (including your credit report and the home's title investigation)

Again, realtors and your lending institution should take care of the lion's share of the work, but you still have plenty of decisions to make, and you'll need to provide your signature several times as you finalize your mortgage, transfer the funds to the seller, receive the deed, and so on. Finally, the place is yours. Just arrange a time to pick up the keys!

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