I have had the happy occasion to sheppard several of my buyers into escrow recently. Most, if not all, are equally elated and terrified when I tell them they got the house.
The contract rules your life for the next 30-45 days. It says what and it says when. The typical contract has 17 days for contingencies. This means you have 17 days to get your loan approved and 17 days to satisfy yourself that the property is in the condition you expect.
For this post, we are going to talk about this contingency period.
Now is not the time to call every lender in town. You should have done that before you got the house! The rules and regulations that govern how lenders process the loans changes constantly, and each change seems to lengthen the process.
Here’s what happens in the 17 days.
- Your loan application is completed
- All the supporting documents are collected
- Tax Returns
- Paycheck stubs
- Bank statements
- Canceled rent checks
- You lock your rate
- The appraisal is ordered and then done (lender handles this)
- The underwriter issues a conditional loan approval
At the end of 17 days you need to decide if you are sure your loan will go through. If you are, you will remove your loan contingency. This means your initial deposit is at risk of loss should you NOT get your loan at the end of the day.
Your Realtor has great recommendations for a home inspector, but you can also ask friends that have recently bought a home for their recommendations. Schedule the inspection for a time when you can attend, I think it is vital that you see and hear what the inspector has to say!
Home inspectors are generalists. They inspect major structural and mechanical system in the house as well as give a detailed visual assessment. Sometimes they will recommend a specialist- most commonly a chimney or sewer inspector with special video cameras.
Also, within 7 days the seller must give all their disclosures to the buyers.
My goal is to get the general inspection done in the first 5 days, specialists, if recommended, in the second 5 days and communicate the buyers requests in the last 7 days. The seller can either grant the request, deny the request or propose a compromise. I call this the “conversation”.
At the end of 17 days the conversation should be over and you either remove the inspection contingency or decide to walk away. If you remove the contingency your initial deposit is at risk if you cancel later on. If you decide to walk, you get your deposit back. In some cases there might be fees deducted.
These two contingency periods are at the same time. 17 days from, “Oh my gosh, they accepted our offer!”, you should know if you have a solid deal and everyone can start making moving plans.