Real Estate professionals who are a little house-obsessed use abbreviations and specific Real Estate lingo daily that sometimes confuses consumers and clients because there are regional differences and/or because they are simply not familiar with the process. Neither are a problem, we are here for you!
Under contract, for example, is called in escrow in other parts of the country.. but what exactly does it mean when you are under contract? It does not mean that you "just bought a house", not yet anyway. It means that you and the seller have come to an agreement, the seller has accepted your offer - or you have accepted the seller's counter offer - and you have ratified a Residential Contract of Sale. When you are under contract, you are on your way to settlement, to close on the sale of your new home and to being able to say "I just bought a house"!
It's an exciting moment (especially if you have prevailed in a multiple offer situation) and process. Being under contract means that the house-hunt is over but there are a bunch of hurdles that need to be cleared, many are contract contingencies.
There are inspection contingencies (general home inspection, radon inspection, well/septic inspection, chimney inspection, pool inspection, lead-based paint inspection, mold inspection), financing and appraisal contingencies, selling another home or finding a home of choice-contingency ... then there is the wood destroying insect inspection (commonly referred to as termite inspection although it covers more than "just" termites), the title examination, the final walk-through. When all contingencies have been removed and all conditions have been satisfied, the lender will issue the "cleared-to-close" and you will go to settlement, sign a stack of final papers and will be able to celebrate the fact that you are no longer under contract but that you just bought a house!
By the way, Maryland is - what we call - a "wet state". That means that the loan has to be funded the day of settlement and that you'll receive the keys to your new home that same day (provided that there is no seller rent back).
Silver Spring, MD Home Buyer FAQ: What does "under contract" mean?
In short, under contract covers the entire period from the moment a Residential Contract of Sale was ratified, to the clearing of each and every contract hurdle, to the settlement table on Happy Closing Day!