How property investigations, appraisals, and loans work.
When you’re in the process of buying a home, it’s important to understand the three key contingency periods that ensure everything is in order before the sale is finalized. These contingencies are crucial steps in protecting your interests and making sure the property meets all your expectations and requirements. Today, I will share the three key contingencies you need to know:
1. Investigation of the property. The first contingency period involves a thorough investigation of the property. This step includes several critical elements such as the home inspection, the preliminary title report, natural hazard disclosures, seller disclosures, and, if applicable, the Homeowners Association (HOA) documents. During this period, you have the opportunity to inspect the property for any potential issues, review the title to ensure there are no legal concerns, and assess any risks related to natural hazards. Once you’re satisfied with the results of these investigations, you’ll sign a document to remove this contingency, allowing you to move forward with the transaction.
"Understanding contingencies can be the difference between a successful and stressful home-buying experience."
2. Appraisal contingency. The second contingency is the appraisal contingency. This step involves obtaining an official valuation of the home to ensure that the property is worth the price you’ve agreed to pay. The lender will typically require an appraisal to confirm that the home’s value supports the loan amount. Once the appraisal is completed and you’re comfortable with the valuation, you’ll sign another document to remove this contingency, signaling that you’re ready to proceed to the next step.
3. Loan contingency. The final contingency is the loan contingency. During this period, the underwriter and lender team will review your financial documents to ensure everything is in order for the mortgage approval. They may request additional documents or updates to finalize their review. Once all requirements are met and the loan is approved, you’ll sign the final document to remove this contingency. This marks the last major hurdle in the transaction, bringing you one step closer to closing and finally receiving the keys to your new home.
By understanding contingency periods, you can protect your investment, avoid unexpected surprises, and move forward with confidence in your real estate journey. If you have any questions or need personalized guidance through this process, I’m here to help. Don’t hesitate to reach out through phone or email. Contact me today at 760-201-9252 or email [email protected] to get started on making your home-buying experience as smooth and successful as possible.
