Is this to many contingencies to buy a house?

Question

The house is for sale as is & we intend to pay the fulll asking price. Are there any other contingecies we should think about? Also I don't quite get what escrow is.

$118,000 plus approximate amount added for closing costs. Seller will contribute it twords closing.

75 day Escrow

Approval within 30 days (from Lender & CHAP)

Contingent upon CHAP & Lender approval

CHAP (Clackamas Homebuyers Assistance Program)

-They give funds for closing or down payment.

Purchase contingent upon Home Inspection that is satisfactory to buyer.

Answer 1

First off, "escrow" is often a hard one for most since the word can apply to two totally different things. One kind of escrow acct is collected for your taxes and insurance and is held by your lender (or servicer). Your monthly payment usually contains PITI (principal + interest + taxes + insurance = mthly pmt) The lender separates the taxes and insurance and puts them in a separate account so that when your taxes and insurance are due, they have enough money to pay them on your behalf. The other kind of escrow also holds money (savings account would probably be easier to understand) but it is money for the actual transaction execution. The number of days "in escrow" refers to how long everyone agrees to complete the transaction by (or how long the money will be held for). At the end of (in this case) the 75 days, either the money changes hand, or, if the transaction is canceled, goes back to the appropriate parties. If everyone is agreeable, the 75 days can be extended if needed. I also think 75 days is a bit long, but I'll guess there's a reason? Any loan that deals with a Down Payment Assistance program will need more time to get approved and ready for closing since there are more steps to the approval...for both the 1st loan and DPA program...but I think 75 days is a bit much too. Any other reason for the long escrow? Pending the sale of another property? Seller needing time to find a new home?

These contingencies seem to be in line.

Also, it sounds like Realitym...is either in a bad mood, a pessimistic or bitter. If you should buy property right now or not really depends on your situation and the deal. Truly, no one can predict how long housing prices will fall and when they will start going back up...nor how long you will have your house so he can't accurately state that your housing values will not go up...or depreciate for that matter. I know of very wealthy people taking millions and buying homes right now. Buy low, sell high, right? Closing costs and taxes being "stupidly high" also isn't accurate. I'm a broker (out of CO) and my closing costs are lower now than they were a couple of years ago. ..then again, buy property in CA or NY and you'll have "stupidly high" closing costs. Taxes are based on where you live and property value, so if you live in Hawaii, yup, you'll have "stupidly high" taxes...if you live in a rural area in Kansas, your taxes will be "stupidly" low. It has nothing to do with the current housing crisis. In regards to "banks...failing", yes, there are some banks and lenders going under. They're afraid of foreclosure so they are pickier about who they lend to, making it more difficult to get a loan, but even if your lender goes under, once you have the loan, the bank/lender can go under and you'll still have your mortgage (as long as you keep up on the payments). All loans are sold anyhow; banks and lenders are only a means to an end. Don't let Realitym...get you down. If no one buys houses, this crisis will continue to get worse. If you have a good deal and can truly afford it (on a stable loan product), I say buy, buy, buy. Good luck and congrats.

Answer 2

That is all pretty standard, except for the 75 day closing, I would refuse that myself.  30 is the norm.

Answer 3

This sounds good actually to me.

Escrow is a fancy name for putting money away in safekeeping advance to pay things.

Property taxes, insurance, first couple months payment or in your case it seems 75 days 2.5 months.

Hope you have an agent looking out for you, it seems you do. :)

Escrow is cool...

Answer 4

O.K. First, this is not too many contingencies. 75 day escrow seems long though, usually 30 to 60 days...but since you need 30 days for loan approval, it should be O.K.

Can't think of any other contingencies.

Second is escrow; they are a third, neutral and unbiased party to the transaction. They coordinate the other parties (buyer, seller, agents, broker, lender, title company, etc.) You or your agent give them your good faith deposit check and it goes into their trust account. They will prepare and send you a lot of forms to complete including escrow instruction which reiterate the purchase contract and escrows responsibilities. When your loan is approved, the docs usually go to escrow and they arrange the signing. Escrow then sends the docs to the lender for review, meets any funding requirements and when the loan funds go to title co. they set up to record ownership documents. When recording is confirmed, they balance your file and distribute the proceeds!

Too much info? Sorry...

Congrats tho!

Answer 5

It is not wise to buy a house right now.  Reason being is that your new  home will  not be appreciating after you buy it in most cases, and may even depreciate.  Closing costs have gotton almost stupidly high as everyone wants  to get their hand in the cookie jar. Property taxes and insurance are stupidly high.  Let the lenders suffer for a few years!  Maybe they will be more willing to deal in a few years.  I have owned seven homes and I now rent.  Put the heat on your landlord and let him pay for everything in this depressed market.  Banks are failing with a risk of depression.  Bad time to buy! Oh but the real estate person will tell you "its a buyers market".  But if you insist on buying tell the seller to pay all of your closing costs and walk away if they wont.  Take the heat off of yourself, you are in control here.  And get some kind of appraisal before you put a penny of ernest money up front into any home.  Appraisers are scared and tight these days and you will get a realistic appraisal as long as the appraisal comes from an outside source other than one associated with your lender.  If you do buy make sure its for the long haul. And escrow is nothing more than a savings account they put your deposit in until the deal is done.  Or escrow is also a side savings account that after you buy they put money into out of your payments for insurance and property taxes. And before you ever give them ernest money (a downpayment or deposit) make them preapprove you and give you a letter of preapproval showing they intend to finance you. And before you give them any money make sure they lock you in on an interest rate in writing, and get only a fixed rate, no variable rates to protect your future. Go slow and dont rush, remember they need you, you dont need them. And 30 days for an approval is a joke, they can run a credit report and have you an answer and a letter of approval in under a week if they want.

Answer 6

Escrow is monies held in trust for such a transaction.  Like your Earnest money deposit will be held in escrow by a third party to the transaction so the monies are applied on contract term properly.

Why so few contingencies.......You can NEVER have too many "outs".  Contract OUTS are more important for the buyer than for the seller.

Contingent upon:

*Appraisal

*Land Surveys

*Financing

*Inspections (pest, infrastructure (electrical and plumbing) and structural)

In ground fuel tank--Get it inspected AND INSURED and make contingencies for credit for remediation if possible or at least have the owner pay for insurance: EPA and/or DEP fines can be VERY high, can go into the $100K's if the inground fuel tank is found to be leaking and contaminating wells or the property

*final walkthrough

ALWAYS ALWAYS make sure you can remove yourself from a purchase if ANYTHING goes wrong or IS wrong or you are stuck with a Lemon of a house.

Answer 7

What about "Contingent upon CHAP funds being received into escrow."  

Are you using an agent or are you and seller writing up something on your own?