Under Contract: Now What?
Congratulations! You are on your way to owning your very own Louisville home! Follow these suggestions so that process will go as smooth as possible.
You will be asked for a down payment on the home you are purchasing. The amount required will depend 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 Louisville area home, you are going to need a title company to act as an independent third party. The title company will coordinate much of the activity that goes on during the closing period. This earnest money deposit check will be held in the real estate broker's account. In most cases, this is simply applied to your downpayment or closing costs at closing. Make sure that there are sufficient funds in your account to cover this check. The deposit check will be cashed immediately!!
If the sale is not consummated, you may be entitled to receive all of your earnest money deposit back. In certain instances, the seller may be able to retain this money as liquidated damages. Prior to executing a purchase contract, it would be wise to speak with your counsel regarding whether or not it is your best interest to have a liquidated damages clause as part of the contract.
1. The period that you are "under contract" is often 30-45 days, but may be longer or shorter. During this time, each item specified in the contract must be completed satisfactorily. By the time you have an accepted contract, you have come to an agreement with the seller on the closing date and the contingencies. Each contract is different, but most include three main contingencies: 1. Inspection contingency 2. Finance Contingency 3. Appraisal Contingency
2. Inspection contingency: You will have a specified number of days to complete any and all inspections you want unless you waived this right. Typical inpsections in this area include a general inspection, land survey, radon and pest. Remember: You can bring in any and all inspectors you want. So for an example, if you are really worried about electric, hire an electrician. General home inspections look for large issues but are not licensed in every area. They may site worries about structure but do not have the license to tell you if it is sufficent or not.
3. 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.
4. Appraisal Contingency: The Louisville home you have offered on must appraise for the purchase price. If it doesn't you can choose to pay the difference if you are getting financing, take it anyway if you are cash buyer, renegotiate based on the appraisal or walk away.
3. A requirement that the seller must provide marketable title. Your title attorney will review the title. The title must be "clear" to ensure that you do not have legal issues regarding your ownership.
HOWEVER!!!! It is ectrmemly important you purchase an owner's title policy to protect you from liens missed in the title search.
4. Secure homeowner's insurance. This will be required before you can close the sale unless you are a cash buyer. It would be in your best interest to apply for insurance as soon as possible after the contract is signed. This will also give you time to shop for the best rate.
5. Contact local utility companies to schedule to have service turned on or transferred to you when you close.
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. What you thought to be a "permanently attached" chandelier that would come with the property might have been removed by the seller and replaced with a different fixture entirely.
You've made it! Once the sale has closed, you're the proud owner of your new Louisvile home. Congratulations!