Steps to Home Ownership- #8: Sign Contract and Down Payment

Once your attorney receives the contract of sale and inspection report, you will be contacted to discuss them. Your attorney should advise you if there is anything of concern in either the contract or the inspection report that needs further discussion with the seller and seller’s attorney. If any issues arise from the inspection you may need to put more concessions in place or reduce the purchase price.

One item that will need to be clear is how the excess home heating oil or propane, if applicable, will be handled at closing. Typically, the utility company will provide a statement of the oil/gas that is left in the house’s tank and you will be responsible for reimbursing the seller for that oil/gas at the closing.

After any changes/updates are made to the contract and both parties are satisfied, you will sign the Contract of Sale and be asked for a down payment. A down payment shows that you, as a buyer, are committed to purchasing the house. The down payment will be held in escrow, which means the money will go into a neutral bank account. At the closing, the down payment will be applied to the final cost for the mortgage. However, if the signed contract does to not go to closing due to the buyer’s fault, the seller may be able to keep the down payment in the escrow account.

So, signing a contract with a down payment is a serious decision that should not be taken lightly. Make sure you have completely discussed the contract with your attorney and understand all the possible ramifications of signing the contract.