What you should know before buying a home

Removing contingencies

Removing the contingencies both parties have agreed upon can take one of two forms, depending on how your offer was written:  you may be required to either give written approval or, if fail to do so, your approval may be assumed.

The contingencies to be removed may include:

Removing the Disclosure Contingency:  In most states the seller is required to disclose to you any defects in the property. If you approve the disclosures, the sales process moves forward. If you disapprove, usually the deal collapses.

Removing the Inspection Contingency:  If you wisely included this clause in your purchase agreement, you will have a period of time (typically a couple of weeks) to locate a professional home inspector, have the property inspected, and then approve the written report. If you don't approve the report, then either the sale falls through or you renegotiate with the seller over fixing the problem(s) identified in the report.

Removing the Termite and Other Inspection Contingencies:  Normally the home must pass a termite inspection in order for your loan to get funded. There may be other inspection contingencies as well covering lead, asbestos, radon, and other issues. You will usually be required to approve these reports for the escrow to move forward. Some regions do not require a termite inspection, but your real estate professional will guide you towards the proper plan of action.

Removing the Finance Contingency:  A large part of your work as a buyer involves following through on your financing. This means periodically checking with your lender to be sure there are no hold-ups in the loan process. At least a weekly check is recommended. You will need to watch out for surprise credit problems that might pop up and changes in interest market conditions that could affect your ability to get funding, as well as any confusion or mistakes with paperwork.

The Time Limit on Your Finance Contingency:  This contingency lets you bow out gracefully if you can't get a mortgage For example, you have 30 days to get a loan without penalty. Often escrow will close before that time limit expires and there will be no problem. However, sometimes the time limit on the finance contingency expires before escrow closes. At that point the seller may ask you to waive the finance contingency in order to keep the sales process going.

Remember, the finance contingency is your major protection against being forced to proceed without a loan; removing it could mean losing your deposit and, potentially, getting involved in legal entanglements with a seller.  You are cautioned not to remove the finance contingency unless you are 100% confident in your loan funding.

The Final Walk-Through:  A day or two before escrow closes, you will be asked to remove your final walk-through contingency. In this case, you will be given the opportunity to see the property again. If it's exactly as it was originally, you'll remove this contingency. If not, you will need to renegotiate over any problems with your agent and the seller.

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