I'm Under Contract: Now What?
Congratulations, you are on your way to owning your very own home! Follow these suggestions so that everything flows well between now and closing.
Now that you are under contract, you'll be working with a title company. They hold your earnest money and work on a lot of the activity that goes on between contract and closing.
The earnest money is deposited on your behalf. But not to worry, this money is applied toward the purchase price of the home. If your transaction is cancelled, you may be entitled to receive your earnest money back.
The time between when you sign your contract and when you close is often 30 to 45 days. During this time, each item specified in your contract must be completed. Each contract is different, but most include the following:
1. Inspection contingency: A property inspection should be completed as soon as possible after the contract is signed. The results of the inspection will likely need to be addressed prior to closing. Items that you're not happy with from the inspection can often be negotiated with the seller.
2. Financing contingency: Once the contract is signed your lender will work on finalizing your loan. If you are paying cash, no lender is involved. If you are unable to obtain financing by the contingency date, you can terminate the agreement and your earnest money will be refunded to you.
3. Title contingency: The title company handling your purchase will research the property to ensure the title is clear for you. Clear title means there aren't any outstanding debts, back taxes, or unpaid loans connected to the property. They also ensure legal access and the property boundaries. After they have done their research, you will receive a copy of the title commitment. This is the title company's guarantee that they will provide coverage. It's a good idea to review the title commitment. The good folks at the title companies are experts at answering any questions you might have.
4. Insurance contingency: Your lender will require you to purchase one year of insurance at the time of closing. If no lender is involved, insurance is not required, but is highly recommended. It is a good idea to start the process of finding insurance as soon as you have a signed contract.
In addtion to the contract items above, we recommend a couple additional steps.
First, contact the local utility companies to schedule service for the date of closing.
Second, 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.
You've made it! Once the sale has closed, you're the proud owner of a new home. Congratulations!