Sometimes, life can be unpredictable. Well, let’s be honest, most of the time life is unpredictable. This should not scare homebuyers from taking the steps to buying a home, but it is essential to understand the basics of buying a house and know what you're committing to along the process. One frequent question we hear from homebuyers is, "If I change my mind, can I back out of the purchase after I make an offer?" In short, yes, you can back out of a purchase before closing but there are some important details to consider.
There may be some financial loss associated with backing out of a home purchase on the way to closing. Fortunately, your loan is not finalized until closing; if you have already established pre-approval on a loan and have a steady relationship with the financial institution, you can put your loan money toward a different home purchase in the future. You may have, however, already made what is called an “earnest deposit” on the home. This amount is generally paid upon making an offer on a home which shows a seller that you, as a buyer, are serious about the purchase. Depending on your reason for backing away from a home purchase and the terms of your contract, you may not get all or any of the earnest deposit money back. Your Realtor will be with you every step of the way to make sure the legal and financial ramifications are fair. Depending on the timeline of when you choose to back out, there may be a couple of services that are non-refundable as well. A home inspection and pest inspection are paid well before closing and are usually non-refundable.
There are different times during the closing process that would be more appropriate to back out of a home purchase. Before you make an offer on a house, make sure the seller and/or the lender are willing to make any repairs or nonnegotiable changes. Communicating those concerns with your Realtor is important as they can negotiate contracts and inspections requirements. This can be called an inspection contingency. If you do not get the results you desire from an inspection, you should be able to back out of buying the house without losing money or any other consequences. The seller also has responsibility as they have accepted your offer and need to make sure they take care of their end of the contract. If you do not complete the inspections or make a decision within the agreed contingency period, you could lose your earnest money if you decide to back out. The timeline of each contingency agreement is essential as you will need to be efficient with pre-closing undertakings and conclusions done in the conditional time-frame.
Once you are comfortable with the outcome of the assessments, your finances are in place for the loan and you confidently love the house you are about to purchase, you can close! Once you close, you cannot back out. It is important to take the appropriate time and have great understanding of the process before you decide on buying a home. Having a knowledgeable Realtor will make the experience run smoothly and he or she will be able to guide you to all of the information you will need to make the best decision. We wish you the best! Leave a comment down below if you have experienced any of these matters!
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Ouch! 3 Times You Can Kiss Your Earnest Money Goodbye via Realtor.com