When Do You Actually "Own" the House? (And When Can You Still Back Out?)
When Do You Actually Own Your Home?
If you are a first-time home buyer, the process of purchasing real estate can feel like a whirlwind. I was working with a client this week who felt exactly that way. Even though we did a full buyer consultation, once the document after document after document started flying at her, she felt completely overwhelmed.
She stopped me and asked a question that I think is on a lot of buyers' minds: "When do I know I really, really bought the house? When is it actually done?"
The short answer? It’s not done until you have the keys in your hand.
However, there is a lot of time between your offer being accepted and getting those keys. It’s important to know that you aren't trapped the second you sign a contract. There are specific "exit ramps" where you can stop, back up, and get your escrow money back.
Here is the scoop on the two main times you can back out of a real estate deal.
1. The Inspection Period (The "Any Reason" Phase)
The first major milestone in your contract is the inspection period. Right now in Brevard County, this is typically a 7 to 10-day window immediately after your offer is accepted.
Think of this as your "get out of jail free" card.
During these 7 to 10 days, you can back out of the contract for any reason you want.
- Did the roof inspection come back bad? You can back out.
- Did you decide the bedroom is too small? You can back out.
- Did you just decide you hate the paint color? (I wouldn't recommend losing a house over paint, but strictly speaking...) You can back out.
Does it cost you money? Yes and no. You will not get the money back that you paid the home inspector (that is a service fee for their time). However, you will get your full escrow deposit back with no questions asked.
2. The Financing Contingency (When the Bank Says No)
Once the inspection period is over, you are more locked in, but there is still one major safety net: the financing contingency.
We always want to make sure your financing is solid before we make an offer, but sometimes life happens. If your financing falls through—meaning the bank refuses to give you the loan—you can usually terminate the contract and still get your escrow deposit returned.
What causes financing to fall through?
- Job loss.
- Unexpected debt.
- A sudden drop in credit score.
A cautionary tale: I once had a deal fall apart because a buyer let a tiny $19 hospital bill go into collections during the closing process. That $19 bill plummeted their credit score by 100 points. They no longer qualified for the loan, and we lost the house. The silver lining? Because it was a financing issue, they did get their escrow money back.
The Bottom Line
Buying a home is a massive commitment, but the contract is designed to protect you, too. You have the inspection period to check the condition of the home, and the financing contingency to protect your wallet if the loan fails.
It is a lot to think about, which is why you shouldn't do it alone. If you are feeling overwhelmed by the paperwork, let’s sit down for a buyer consult. I can walk you through the ins and outs so you feel confident when you finally get those keys.
Edna Wilson, your hometown realtor—as hometown as apple pie.
