Under Contract: Now What?
Congratulations, you are on your way to owning your very own home! Follow these suggestions (and the advice of your Realtor ®) so that settlement with go as smooth as possible.
You will be asked for a down payment 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.
During this period of purchasing your home, you are going to need a settlement company to act as an independent third party so that you know when and who to give your money to get the deed to your new home. The settlement company will hold your deposit and coordinate the title search, survey, deed and all final documents with your lender. Make sure that there are sufficient funds in your account to cover this check!
The deposit check will be cashed. Assuming the sale goes through, this money will be applied to the purchase price of the home. 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. The terms laid out in the Purchase Agreement will indicate who keeps the deposit.
1. The period that you are "under contract" is often 30 days, but may be longer or shorter. During this time, each item specified in the contract must be completed satisfactorily. By the time you go under contract, 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. Inspection contingency: this should be completed as soon as possible after the contract to purchase is signed as unsatisfactory results of the inspection may mean that you will want to cancel the contract or negotiate repairs.
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 will not provide a written extension of time), you must decide whether you want to remove the contingency and take your chances on getting a loan. You may choose to cancel the purchase contract.
3. A requirement that the seller must provide marketable title. The title must be "clear" to ensure that you do not have legal issues regarding your ownership. The settlement attorney will handle this process on your behalf!
4. Secure homeowner's insurance. This will probably be required before you can close the sale. It would be in your best interest to apply for insurance as soon as possible after the contract is signed! You many also want to obtain flood insurance!
5. Contact local utility companies to schedule to have service turned on when you close. Some utility companies require several days notice to establish service so don't wait!
6. Schedule the final walk-through inspection. At this time, you should make sure that the property is exactly as the contract says it should be. Your agent will schedule the final walk through with you prior to closing!
You've made it! Once the sale has closed, you're the proud owner of a new home. Congratulations!
