Contingencies you should consider before buying your first home
Even a first time home buyer understands that the purchase of a house is undoubtedly a very lengthy process for the buyer as well as the seller. The home purchase agreement contains specific clauses that must be fulfilled before the process of buying a house completed. Such a condition is called contingencies.
A home purchase agreement or contract is an essential document in the process of buying a house. This contract defines the amount of time required to close the deal. It is a period between signing the purchase agreement and completion of the sale. Every home purchase contract contains different contingencies that apply to both the seller and the buyer. The period from the agreement contract permits both buyer and seller to fulfil all contingencies.
The buyers are required to put efforts to meet the clauses of contingencies. They also need to inform the seller about the completion of the time to time. In case any emergency is not fulfilled, the contract is subjected to renegotiation or even cancellation. Thus, it is crucial for buyers to understand following contingencies before buying the property.
Financial Contingency
It is a type of contingency applicable to the buyers that are planning to purchase a house on a mortgage or home loan. Under financial contingency, you get a time not just to apply for a home loan but also to receive the amount of loan to purchase the house.
If someone fails to receive the required amount, then he/she has to manage another way to manage finances or cancel the purchase. You can use home EMI calculators to estimate the amount you require to a new house.
Title Contingency
According to this contingency, you as a buyer are free to cancel the contract in case you find out that the seller is not a legal title holder of the property.
Inspection Contingency
This type of contingency gives you a right to inspect the property before a specific date thoroughly. Thus, it ultimately entitles you to demand repair in case you are not satisfied with the property. Furthermore, inspection contingency allows the buyer to back out from the contract if they are not happy with the house.
Appraisal Contingency
The institutions are giving you a home loan grants it based on satisfactory appraisal, which determines the market value of the house. This contingency protects you in case the price of the house is not as per the fair market value.
Home Sale Contingency
This one is the most useful, yet most un-used type of contingency. As per home sale contingency, the buyers are provided with a certain amount of time to find another buyer for his/her current property. In case he/she fail to find a buyer, they can back out from the purchase of the property with intact deposit money.
Knowing about the contingencies help you to understand the contract of purchase, as well as protect you from a financial loss in case the seller isn’t genuine.
