Only one detail...in the 31st year, your payments will change..to zero.
Then again, you might get lucky (as I did) and pay it off several years early.

 

I used an inspector my "money" guy recommended. The inspector was a retired IBM engineer who was a very meticulous person.

 

I'm reading between the lines here -- and keep in mind that real estate procedures and forms are a state-by-state issue and they do vary significantly from one state to another -- but is sounds like what you have at this point is merely an Offer Letter and NOT a Contract to Purchase Real Property. You basically made an offer and the modification they put on there was most likely part of a counter offer. Since they didn't accept your offer as-is, your signature no longer binds you to purchase the property. If you accept their counter offer, then their signature does bind them to sell it to you. But if you make any changes and send it back to them signed then you have released them from having to sell it to you by you are rebinding yourself to buy it provided they accept it with no further revisions. Basically, once both of you have signed the same version of the Offer Letter, you are both bound to enter into a Contract, which is a separate and much more detailed document.

The Contract in most states is a tightly regulated document that consists mostly of boilerplate and fill-in the blank sections with allowances for customization. There will be a number of things that have to happen, both on your part and on the seller's part. There will be escape clauses for both of you (mostly for you) and each one will have a very specific deadline. For instance, you will have so many days to have a home inspection completed and, if you don't, you waive the right to back out of the contract due to objections that the home inspection would have found (now, you can do your own "inspection" and make your own list of objections if you want). If you make any objections then there will be so many days for you and the seller to resolve them. If the seller does not commit (in writing as an amendment to the Contract) to remedy the objections to your satisfaction before the resolution deadline, then you have the right to cancel the contract and get your earnest money back. But if you let the deadline pass without coming to an agreement, then you are stuck and the seller doesn't have to remedy anything and if you back out you lose your earnest money. But this can work to your advantage to. We were trying to buy a house and the seller got a second offer after he had accepted ours and so he was trying to do everything to break the contract. He refused to fix any of the objections, so we either had to accept that or back out. We chose to accept it because we wanted the house and that meant that he was still legally bound to honor the Contract.

Above all else, do something that so few people do. READ THE CONTRACT! Make sure that you understand ALL of the fine print. In most states it actually isn't that hard to parse what it means, but don't just skim it. Analyze it! This is a MAJOR decision involving a LOT of money. If you are buying a $250k house on a 30 year loan at 3.5%, then that house is going to cost you over $400,000 if you pay it off on schedule. Every home I have bought I spent an entire weekend analyzing the contract, something like 20 hours, and each time I had detailed questions for the realtor that I expected to be answered to my satisfaction before I would sign.

Also, don't use an agent because they are your sister's friend. This is a MAJOR decision involving a LOT of money. That agent is probably going to get somewhere between one and two months of your gross pay to handle this transaction. You are paying (and don't fall for that baloney that the seller is paying the realtor fees) serious money and have a right to demand a highly skilled professional. You are hiring this person for a job for which you are going to pay them $5k to $10k or more. Make them prove to you that they are worth it before you hire them.

As for mineral rights (and I know that Texas is very different than many states and that they take mineral rights law very seriously), in many parts of the country the mineral rights have long since been divorced from the surface rights. Around here Union Pacific owns almost all of them and the law is such that if they decided that they needed to sink a shaft in the middle of your living room then they have the right to do so because mineral rights are senior to surface rights and you cannot prevent them from exercising them -- and they don't have to pay you for loss of ability to use the surface rights. In practice, you would sue them and probably force them to devise a plan that minimized their impact on you, but that's about the best you can hope for. Now, that's here in Colorado.

 

what you have at this point is merely an Offer Letter and NOT a Contract to Purchase Real Property. You basically made an offer and the modification they put on there was most likely part of a counter offer. Since they didn't accept your offer as-is, your signature no longer binds you to purchase the property.

I agree. And your signature was dated, as was theirs, which documents that fact the modifications were added after you signed.

 

I agree. And your signature was dated, as was theirs, which documents that fact the modifications were added after you signed.

And another thing to consider -- make a copy of every version of everything you sign. There's going to be a lot of papers and a lot of versions of some of them, but remember that this is a BIG decision involving a LOT of money.

 

I understand all the precautions, but I've purchased five homes, and have never had an issue with any of these contracts. Still, there's that one chance in a hundred, I guess...

 

I understand all the precautions, but I've purchased five homes, and have never had an issue with any of these contracts. Still, there's that one chance in a hundred, I guess...

I've bought 2 homes, and on the second one, the mortgage interest rate went up 1/2% and $800 in "costs" were unexpectedly presented for me to pay at the, "closing". WTF? If you look around the room and don't spot the sucker, the sucker is you.

 

I assume you reacted at the time?

 

I understand all the precautions, but I've purchased five homes, and have never had an issue with any of these contracts. Still, there's that one chance in a hundred, I guess...

All but one of my transactions (four total) have gone very smoothly -- including my second one which was a FSBO and at no point did either of us involve an agent or a lawyer. The last one -- which fell through -- could have been a royal disaster because the seller (who was the developer) turned out to have the ethics of an eel (and that's being generous). He made promises that he had no intention of keeping and he agreed to things in the contract that he later flatly refused to honor. The only thing that saved us was that I knew more about the contract than he did (and also more about it than either one of our agents).

So, yep, most transaction will go smoothly, but with the kind of money in play, it's best to treat it as what it is -- a very serious big stakes transaction that has the potential to enhance or ruin your life for decades to come.

 

I've bought 2 homes, and on the second one, the mortgage interest rate went up 1/2% and $800 in "costs" were unexpectedly presented for me to pay at the, "closing". WTF? If you look around the room and don't spot the sucker, the sucker is you.

Every closing I have gone two (three as buyer, two as seller, and two for refinance) I made a point of reviewing the math on every document line by line and, at every single one of them, I found errors (only one of which was in my favor) -- though in all but two cases I caught the errors in reviewing the docs sent to me before closing. But at closing I always bring the docs I reviewed and compare them page-by-page to the live docs on the table. Fortunately that doesn't take too long.

I went to a refi closing and they hadn't given me the documents for review ahead of time like they are required by state law. They were annoyed that I refused to just sign the papers and, instead, insisted on being left alone in the room for over two hours while I worked through them. I'm glad I did because I found a ~$1300 error in the computation of the settlement costs (which I'm pretty sure was just a sloppy mistake and not intentional fraud).

About two weeks after I bought my first single-family home I got a call telling me about an error in the closing docs and that I needed to send them an additional $2400 to clear it up. I didn't know if the call was legit or a scam (I suspect the latter and that they had just gotten info from the county recording information), but I just said, "I reviewed the documents that YOU prepared and we BOTH agreed to them and signed them. This transaction is final and BOTH of us have to life with it." I never heard from them again.

 

I assume you reacted at the time?

Yes. IIRC, my words were, "I brought the funds you agreed to, and no more. If the terms change today, this deal isn't going to happen."
In essence, I called their bluff.
About 20 minutes later, somebody arrived to inform me that the "minor details" had been corrected.

 

Yes. IIRC, my words were, "I brought the funds you agreed to, and no more. If the terms change today, this deal isn't going to happen."
In essence, I called their bluff.
About 20 minutes later, somebody arrived to inform me that the "minor details" had been corrected.

Good for you.

I can't help but imagine how often this crap is pulled on "normal" people who just shrug and weep and knuckle under because "we can't let the deal fall apart now and have to start all over."

 

At that moment, I was sitting on half the price of the house, in cash, and had more cash flow than necessary to pay for my present domicile...but the seller and the agents didn't know that.

You can't stampede a person in that position.

 

At that moment, I was sitting on half the price of the house, in cash, and had more cash flow than necessary to pay for my present domicile...but the seller and the agents didn't know that.

You can't stampede a person in that position.

It's a great position to be in. I'm not afraid to point out to someone that's trying to play games that no matter how little they might think that they need my business, the simple fact of the matter is that I need to do business with them even less.

 

Then again, some young people scrape together every dime they have for a down payment and compromise their demands just to get into something they can afford. After long and arduous searching, they finally find something that they can work with and the agents put the screws to them.

I can understand that heartache.

 

Then again, some young people scrape together every dime they have for a down payment and compromise their demands just to get into something they can afford. After long and arduous searching, they finally find something that they can work with and the agents put the screws to them.

I can understand that heartache.

So can I.

And if you have scraped together that last dime to get in the home, then there is a real likelihood that the home will end up being a curse rather than a blessing because you just aren't financially in a position to deal with the responsibilities of home ownership.

 

if you have scraped together that last dime to get in the home, then there is a real likelihood that the home will end up being a curse rather than a blessing because you just aren't financially in a position to deal with the responsibilities of home ownership.

I made that work in 1970, but in this century...Magic Eight Ball says, "Ask again later".

 

I made that work in 1970, but in this century...Magic Eight Ball says, "Ask again later".

And I made it work in the mid-90's. But it wasn't really that I made it work as it was that I got lucky and it happened to work. It works out okay much of the time, but the risk is very real. If my furnace had gone out the first couple of years that I was there I would not have had the money to replace it. If we had gotten rain the resulted in the basement flooding I would not have had the money to repair it. It was a townhome and if the HOA had had to impose a $3000 special assessment I would have been foreclosed on. If I had been renting and any of that happened, the worst case would simply have been that I would have had to move.

 

He made promises that he had no intention of keeping and he agreed to things in the contract that he later flatly refused to honor. The only thing that saved us was that I knew more about the contract than he did (and also more about it than either one of our agents).

Of course, that was a clear breech of contract. If the contract was written properly, that would be an out too.

So, yep, most transaction will go smoothly, but with the kind of money in play, it's best to treat it as what it is -- a very serious big stakes transaction that has the potential to enhance or ruin your life for decades to come.

Which is why I said to be cautious. What I wanted to convey is the process is pretty normal, and doesn't sound like something to be especially worried about.

 

Of course, that was a clear breech of contract. If the contract was written properly, that would be an out too.

It was written properly and we could have used that as an out. But at that point we still wanted the deal to close and so our choices were to: Bail on the contract (and get our earnest money back -- which at one point he was saying that we wouldn't, but I called him on that in a heartbeat), let the relevant escape deadline pass without bailing on it, at which point it became a defacto waiver on our part (which is what we did on the first couple of items), or sue him for specific performance, which is what a big part of me wanted to do but I knew it wasn't worth the time and hassle that it would represent.