In Contract: Now What?
Congratulations, you are on your way to owning your very own home! Follow these suggestions (and your agent's advice!) so that the closing will go as smooth as possible.
You will be asked for a down payment on the home you are purchasing. This will be in your initial offer to buy the home (refer back to your contract!). 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, the Seller has selected a title or "escrow/settlement" company to act as an independent third party. The title company will hold your deposit and coordinate much of the activity that goes on during the contract (or "escrow") period. Make sure that there are sufficient funds in your account to cover your deposit!
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, less standard cancellation fees. 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.
The period that you are "in escrow" 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 have opened escrow, 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:
You've made it! Once the sale has closed, you're the proud owner of a new home. Congratulations!