Amendments to the Contract – An amendment to the contract is done when any change is made to the original Binding purchase contract. An Amendment is done for numerous reasons, some of which are, but are not limited to requesting repairs after an inspection, a price adjustment is made or a closing date is changed.
Appraisal Contingency – This is the time frame set forth in the Purchase Contract that the Lender has to order and obtain the appraisal on the property. If the appraisal comes back lower than the contract purchase price, the Buyer has the right to ask the Seller to reduce the purchase price of the home to the appraised value.
Binding Agreement Date – The Binding Agreement Date is the date that when the last party to accept the contract officially executes/binds the contract by signing it and notifying the other party via email or fax. All contract contingency periods start upon Binding Agreement Date, unless otherwise stipulated in the purchase contract.
Closing Costs – When you get a mortgage, you will need to pay closing costs, which are fees charged by lenders and third parties related to the purchase of the home. The Buyer has the option to ask the Seller to pay for a portion of the Buyer Closing Costs. This is a negotiated item in the Purchase contract.
Closing Disclosure – Lenders are required to provide your Closing Disclosure three business days before your scheduled closing. Use these days wisely. Double-check that all the details are correct. If something looks different from what you expected, ask the Lender why. Now is the time to resolve problems—if the explanation you get isn’t satisfactory, keep asking questions.
Counteroffer – An offer, made in response to a previous offer, that rejects all or part of it while
enabling negotiations to continue towards a mutually-acceptable sales contract.
Down Payment – The money paid by the buyer to the lender at the time of the closing. The amount is the difference between the sales price and the mortgage loan. Requirements vary by loan type. Smaller down payments, less than 20%, usually requires mortgage insurance.
Due Diligence Period – This is the Buyer’s time frame set forth in the purchase contract to conduct any property inspections and negotiate any repairs to be made to the property. The Buyer may also obtain a survey on the property and conduct any research on the neighborhood and schools.
Earnest Money – Generally earnest money is 1% of the Sales Price of the house. A check is written and is deposited into the brokerage Escrow/Trust Account at the time the offer is made or within the timeframe set forth in the Purchase Contract. Earnest Money is a deposit on a home and at closing the earnest money is credited back to you towards your down payment or closing costs.
Financing Contingency – This is the timeframe set forth in the Purchase Contract that the Buyer has to apply for their loan and receive loan approval. It is very important that as a Buyer you make application for your loan in a timely manner and that the lender you choose can meet the timeframe that is set forth in the purchase contract.
- If the Buyer does not qualify for financing and notice is given to the Seller within the
Financing Contingency timeframe set forth in the purchase contract, then the Buyer is eligible to receive a full refund of the earnest money deposit.
- If notice of loan denial is given after the Financing Contingency has expired, the Buyer will not be eligible to receive a refund on the earnest money.
- It is very important to choose a reputable Lender that can you can trust to accomplish your lending needs and most importantly communicates well with you as a Buyer and us, as your Buyer’s Agent. We will be happy to refer you to one of our trusted Lenders.
Funds Required to Close – This amount will be shown on the Closing Disclosure statement and should also be given to you by your Lender. Any funds that are required to close must be in the form of a wire transfer. The Closing Attorney will send you the wire instructions prior to closing. All funds should be wired 24 hours prior to closing.
Homeowner’s Insurance – A policy that protects you and the lender from fire or flood, a liability such as visitor injury, or damage to your personal property.
Mortgage Insurance – Purchased by the buyer to protect the lender in the event of default (typically for loans with less than 20% down. Available through a government agency like the Federal Housing Administration (FHA) or through private mortgage insurers (PMI).
Possession Date – The date, as specified by the sales agreement, that the buyer can move into the property. Generally, the it occurs within a couple days of the Closing Date.
Pre-Approval Letter – A letter from a mortgage lender indicating that a buyer qualifies for a mortgage of a specific amount.
Title – The right to, and the ownership of, property. A Title or Deed is sometimes used as proof of ownership of land. Clear title refers to a title that has no legal defects. Title Insurance – Insurance policy that guarantees the accuracy of the title search and protects lenders and homeowners against legal problems with the title.
Truth-In-Lending Act (TILA) – Federal law that requires disclosure of a truth-in-lending statement for consumer loans. The statement includes a summary of the total cost of credit.
Title Search – A historical review of all legal documents relating to ownership of a property to determine if there have been any flaws in prior transfers of ownership or if there are any claims or encumbrances on the title to the property.
Under Contract – You are officially “under contract” on your property once all parties have agreed to and signed (executed) the Purchase