Buying a house can be an exciting process. You finally decided to get a home of your own and have been looking out for the perfect place. However, once you get an offer that looks good to you, you may be tempted to settle for it.
As a home buyer, the following are a few contingencies that you must consider before deciding on a house property.
1. Clear Title
The clear title contingency protects you from any outstanding liens or judgments that may be on the property. The title shows all the relevant details, including the homeowner’s name and if there is a mortgage on the property. Before the transaction can be completed, the title company will run a title report on the property for you.
2. Home Sale
This contingency protects you if you need to sell your current home so as to afford a new one. Most homebuyers cannot afford to take out mortgages on two different properties. Therefore, the home sale contingency allows you to pull out of a deal for a new home if your previous home is not sold by an agreed-upon date.
This is one of the home buying contingencies put in place to protect the lenders. It is a process where they value the new property to ensure you are paying a fair market value for the house. The appraisal is done to make sure that selling the property will enable the lender to recover their money if you default on your loan.
4. Home Inspection
No reasonable buyer will purchase a property without carrying out due diligence. Purchasing a property with structural issues or other major issues can further increase the property’s overall cost as the same will require repairs. Some areas which need to be checked by a licensed and certified home inspector include the plumbing, wiring, roofing, and HVAC. Proper inspection is needed before you sign the deed or put in any down payment to avoid financial losses.
5. Home Insurance
Before you have access to financing options for your new home, lenders usually require that you start the process of acquiring home insurance for the new property before the loan is finalized. This is a form of protection for the lender, which allows them to recover their money if any accidents happen within the transfer period.
6. Move-in Early
This contingency allows a buyer to move into a property even before the final closing, provided the seller agrees to it. Where the buyer moves in early, it becomes more difficult to abort the deal even if other contingencies crop up. However, if the deal fails, the seller can evict the buyer at any time. Real estate experts often warn the sellers against accepting an offer with a move-in early contingency.
In this guide, we have covered some of the contingencies you must consider before buying a new home. Although there are other factors to consider, these six lay down the groundwork for you to build upon. If you live in California and need proper financing for your next home, reach out to us at Andraya Coulter. Contact us today for any assistance related to financing the mortgage for your next home.