You have a home under contract: Now What?
Congratulations, you are on your way to owning your very own home! Follow these suggestions (and the advice of your Realtors ®) so that the process will go as smooth as possible.
You will be asked for a down payment, or Earnest Money, on the home you are purchasing. You can choose to put down as much or as little as you want (depending on your mortgage), but remember, the more you put down toward the total price of your home, the less time it will take you to pay off and the less your mortgage payments will be every month.
In most cases, the seller's agent's brokerage will hold the Earnest Money and it is part of the purchase price. Most of the time a personal check will suffice, but occassionally a brokerage will require a Cashier's Check from you bank. And more and more common, brokers are allowing or requiring Earnest Money be deposited electronically. Frequently there is a nominal fee associated with that service as well.
If for any reason the sale is not consummated, you may be entitled to receive all of your deposit back. In certain instances, the seller may be able to retain this money as liquidated damages.
1. The period that you are "under contract" is often 30-45 days. During this time, each item specified in the contract must be completed satisfactorily. You have come to an agreement with the seller on the closing date and the contingencies. Each contract is different, but most include the following: 1. Home Inspection contingency: this should be completed in the first 5 business day after the contract to purchase is signed as unsatisfactory results of the inspection may mean that you will want to cancel the contract.
2. Financing contingency: Once the contract is signed, you have a period of time to secure funding. If, for any reason, you are unable to secure funding during the period of time granted to you by the contract and the seller may not provide a written extension of time. If you can not obtain financing, you can use this contingency to have your earnest money returned to you.
3. A requirement that the seller must provide marketable title. Your attorney will review the title report. The title must be "clear" to ensure that you do not have legal issues regarding your ownership. Your attorney will verify local and state ordinances regarding property transfer and make sure that you and/or the seller have complied with them.
4. Secure homeowner's insurance. This is required before you can close the sale by your lender. It is in your best interest to contact your insurance agent as soon as the home inspection process is complete.
5. Contact local utility companies to schedule to have service turned on or changed over to you on the day of closing.
6. Schedule the final walk-through with your agent. This is the time you make sure that the property is exactly as the contract says it should be, and makes ure all the seller's possessions are out of the home.
You've made it! Once the sale has closed, you're the proud owner of a new home. Congratulations!