Am I prepared for homeownership? Is this the home that I want to buy? Can I really afford this home, even though I was pre-approved for a high enough mortgage? Will I be stretching my finances to thin buying this house? I just found another home that I like better and is cheaper, at what point can I no longer back out of the purchase agreement without penalty? These questions and many others are very typical of the thoughts that go through almost every homebuyers mind at one point or another.
Many homebuyers go through the initial feelings of "what did I just do," after they place a bid on a home. These are simply the homebuying jitters. The homebuying jitters are normal and many people buying a home, especially first time homebuyers, go through a period of second guessing what they are doing. Buying a home can be a very exciting yet somewhat frightening experience with all of the information about getting a mortgage, the responsibilities of owning a home, and the realization of such a large investment that they are most likely going to have to pay on for at least the next 30 years. Therefore, do not worry yourself too much as you begin to doubt yourself and any of the decisions you are making, as they are very common and most people go through the same things.
Purchase
So now what do you do if you realize that your feelings are not just the homebuying jitters and for whatever reason you no longer want to buy the home you have agreed to buy through your legally binding purchase agreement? The answers here may not be as clear cut as you might like but they will provide information that will be important to know.
If you realize that you no longer want to buy this home after you have placed your bid, but before your bid has been accepted you will simply withdraw your offer on the home and get your check back for your earnest money deposit.
If you realize within the first few days that you are no longer interested in buying the home, most purchase contracts will provide you with 5-7 days to make application with a mortgage company, but if you back out of the contract within the first 5-7 days most sellers and Realtors will return your earnest money deposit without too much trouble since it is so early in the purchase process.
Now, what if you realize near the end of the purchase as the closing date draws near that you no longer want to buy this house? At this point, unless you have a valid reason why you need to back out of the purchase agreement, you are most likely going to lose whatever earnest money deposit you have given. Even with a valid reason at this point, chances are that you will still lose your earnest money deposit. You entered into a legally binding agreement to purchase this home. The sellers have stopped showing the home, have stopped accepting bids on the home and have agreed to sell you the home. Your earnest money deposit will be compensation to the sellers for lost time on the market and for your breach of the contract. Can you still try to get your earnest money deposit back, yes you can? However, it is rare that you would be able to get it back at this point. A few ideas of some valid reasons as to why you might be able to get your earnest money deposit back are non-disclosure of items by the sellers, breach of contract by the sellers, and damage to the home after the purchase agreement was finalized.
Therefore, really think long and hard about how much money you would like to give as an earnest money deposit when you place your initial bid to buy a home. The more you give as an earnest money deposit, the more you stand to lose. However, the more you give, the better your chances are of having you bid accepted. Anywhere from 0-00 are common earnest money average amounts given. 0 is the generally the least amount that will be accepted and is probably the most common overall, especially for first time homebuyers looking to buy a home with little to no money down.
Purchase Agreement - Can I Back Out of A Purchase Agreement
The author of this article, Dave Zwierecki, is the President of First Security Financial Service and has over 10 years of experience in the credit, mortgage lending, and home improvement fields. He is the owner of http://www.GoFirstSecurity.com which is a site devoted to the education of consumers regarding real estate, mortgage, credit, and home improvement related material.
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