When you’re in the process of buying a new house, there are a lot of terms and steps to keep track of. One crucial step is getting your contract approved. But what exactly does that mean?
Contract approval is a formal step in the homebuying process that occurs after you’ve made an offer on a house and the seller has accepted it. At this point, you and the seller will enter into a binding agreement, or contract, that outlines the terms of the sale.
This contract will typically include details like the purchase price, contingencies (such as inspections and appraisals), and deadlines for both parties to meet certain obligations. Once the contract is signed by both you and the seller, it is considered binding and legally enforceable.
So, what does it mean for the contract to be approved? Essentially, it means that your lender has reviewed the contract and all associated documents, and has given their official approval for you to move forward with the purchase.
This step is critical because it ensures that the lender is satisfied with the terms of the contract and the property itself, and is willing to lend you the necessary funds to complete the purchase.
There are a few things that can happen during the contract approval process. First, your lender may request additional documentation from you or the seller in order to finalize the loan. These documents might include things like proof of income, bank statements, or repair receipts.
Additionally, your lender may order an appraisal of the property to ensure that it is worth the amount you have agreed to pay. If the appraisal comes back lower than expected, you may need to renegotiate the purchase price or look for alternative financing options.
Finally, your lender will conduct a final review of all the documents to ensure that everything is in order and that there are no outstanding issues that could jeopardize the loan.
Once the contract is approved, you will typically be given a closing date, at which point the loan will be disbursed and you will take possession of the property.
In sum, contract approval is a critical step in the homebuying process that ensures that you have secured financing and that all parties are on the same page regarding the terms of the sale. By understanding what it means and what to expect, you can navigate this step with confidence and move one step closer to owning your dream home.