After viewing several properties you will probably find one that you may have an interest in making an offer to purchase. While there may be some apprehension, your Realtor should be able to help calm your nerves.

If you have taken the right steps, such as working with the right Realtor and getting pre-approved by the right Lender for your VA home loan, the only thing left is getting an accepted purchase offer and doing the proper inspections.

WRITING A PURCHASE OFFER

Before or when you are about to write an offer to purchase a home you should make sure that both your Realtor and Lender talk about your offer. If your Realtor does not know how your Lender structured your VA home loan financing, it could end up costing your more or cause you to have to renegotiate your purchase offer at the last minute.

One of the items that is specific to VA is that there are some charges that are not allowed to be paid by the buyer. These are called NON-ALLOWABLES. Generally in the purchase offer the seller is asked to pay for these items. Your Realtor must know what these charges are in order to ask the seller to pay them. If your seller does not pay them, your Lender may pay them, but this may result in a higher interest rate on your loan.

The other item that the seller may pay is any of your other closing costs. This could be such items as origination or discount points, title charges, pre-paid items, or other closing costs. While this is not required of the seller, having the seller pay some of the buyer’s closing costs can reduce the buyer’s amount of cash needed to close. This is a very effective strategy for first time buyers who have very little cash to work with at this time. If you are asking the seller to pay some of your closing costs associated with your VA loan, you are now becoming a terms buyer and will probably pay slightly more for the home than a person with cash for their closing costs. Sellers generally have a “bottom line” net sales price and will not go below that number to pay for buyers closing costs.

An example of this would be a home that is listed for $100,000

In this example the seller’s “bottom line net" was $97,000. The seller will net approximately same amount under either scenario. However, the buyer in Example #2 will reduce his closing cost by approximately $2,500. Since his purchase price is slightly higher, the buyer will have a slightly higher mortgage payment of approximately $18 per month. This can sometimes be a better strategy for a Buyer that is tight on funds to close their loan. Again this is why your Realtor and Lender should work as a team in helping you with your purchase.

Other than the final purchase offer price there are several other items that you should review. The date of closing, time allowed for inspections, review of any homeowners associations bylaws, date of possession, amount of earnest money deposit, proration of taxes and assessments, and a few others. Ask your Realtor to give you a copy of a blank purchase contract so you can review it prior to actually writing your offer. You want to be familiar with the purchase contract prior to finding that perfect home. One of the things about writing an offer that makes people nervous is that they are not familiar with the contract and things can seem overwhelming the day you find the “perfect home”.

One of the clauses that you should have in your contract is a clause stating that the property must appraise for the purchase price.  While this should probably be used on every transaction it commonly overlooked.  This clause gives the buyer the right to cancel the offer if the property does not appraise at least as much as the purchase price. This seemingly unimportant clause can save a buyer thousands of dollars. Most contracts make no mention that the property has to appraise for the purchase price. Without this clause, the buyer would have to come up in cash any extra amount need. The Lender will only lend off of the appraised value or the purchase price, WHICHEVER IS LESS.