Understanding the Home Mortgage Loan Closing Process: Purchase Agreement

If you are shopping around for the perfect place to call home, you probably have an ever increasing number of questions. In this regard, many of your concerns and questions likely center around the home mortgage loan closing process itself. For many people -- including most first time home buyers -- the home mortgage loan closing process can seen rather mysterious. In this article you will be provided with information about the home loan closing process. This article specifically deals with providing you a better understanding of the real estate purchase agreement.

What is the Real Estate Purchase Agreement?

The real estate purchase agreement is the initial or preliminary agreement that is entered into between the seller and the buyer when it comes to the conveyance of real estate. The real estate purchase agreement is entered into when a buyer makes an offer on a piece of real estate and a seller accepts that offer.

At the time the real estate purchase agreement is entered into, in the vast majority of cases, the buyer will be obliged to make an escrow payment. (The escrow payment will be discussed in greater detail in a moment.)

Generally speaking, the real estate agreement will established a time in which closing will occur. Certain things will need to occur before closing occurs. For example, a condition included in the real estate sales agreement likely will be the condition that the seller will have to get financing if the closing is to occur. In addition, the seller will have to work to make certain that the title to the real estate is free of any encumbrances.

What is the Escrow Payment?

The escrow payment is a type of deposit that is put down by the buyer when it comes to a real estate sales agreement. Although the amount of the escrow payment can vary, the conditions surrounding the escrow payment are nearly always the same.

In this regard, a buyer will not be able to obtain a return of the escrow payment made if he or she fails to follow through on the sale of the real estate as outlined in the real estate sales agreement. There are instances when a seller can “back out” of the sale and obtain a return of the escrow payment. For example, generally speaking if he or she cannot obtain financing, he or she can back out of the sale. Similarly, if the seller cannot obtain clear title to the property, the buyer can back out of the sale and get his or her escrow payment returned.

Who Prepares the Real Estate Purchase Agreement?

The real estate agreement can be prepared by an attorney or, in some instances, by a licensed Realtor. In those instances that a Realtor prepares the agreement, a standard form likely will be used.