Mortgage Contingency: Safeguarding Your Home Purchase
"Learn how to protect your home purchase with a Mortgage Contingency. Get tips and advice on the importance of this safeguard when buying a house!"
What is a Mortgage Contingency?
A mortgage contingency is an important part of any home purchase contract. It is a clause that states that the buyer must be approved for a mortgage in order for the sale of the home to go through. If the buyer is not approved for a mortgage, the contingency clause gives them the option to walk away from the deal without being liable for any costs.
Why Use a Mortgage Contingency?
Using a mortgage contingency can provide buyers with peace of mind when going through the process of purchasing a home. By including the contingency, buyers are able to ensure that they are not taking on risk that they are unable to manage. If the buyer is unable to secure financing, the contingency allows them to back out of the deal with no financial consequences.
It also provides protection for the seller. If the buyer cannot secure financing for the home, the seller is not obligated to sell the home at the agreed-upon price. This gives the seller the peace of mind that they will not be unknowingly sold into a situation where they would be in a bind.
What To Consider When Including a Mortgage Contingency
When a buyer is including a mortgage contingency in their home purchase, there are a few things that they should keep in mind. First, they should be sure to include a time limit for when the mortgage will need to be secured. This is typically 30 days, but it could vary depending on the market and the size of the loan needed for the purchase.
The buyer should also make sure that they understand all of the conditions and requirements for the loan. This includes the interest rate, down payment, and any other fees that may be associated with the loan. By understanding all of the details, the buyer will be in a better position to make sure that their contingency clause is effective.
Conclusion
A mortgage contingency is an important part of any home purchase contract. By including a contingency, buyers are able to ensure that they are not taking on risk that they are unable to manage. Knowing the conditions of the loan and the time frame for securing the loan are key things to consider when including a contingency. By taking the necessary precautions, buyers can help safeguard their home purchase.