Financing Contingency
A financing contingency is a clause that is included in home purchase or sale agreement. It states that you are only allowed to offer to finance if the house is approved for financing. This clause is used by buyers to set a time frame for applying for a mortgage or closing on loan. Within this clause, the buyer will also normally list the type of loan they intend to obtain, their down payment amount, the term of the loan and the interest rate.
What is a Financing Contingency?
A financing condition is a clause that is included in home purchase or sale agreement. It states that you are only allowed to offer to finance if the house is approved for financing. This clause is used by buyers to set a time frame for applying for a mortgage or closing on loan. Within this clause, the buyer will also normally list the type of loan they intend to obtain, their down payment amount, the term of the loan and the interest rate.
The Purpose Of A Financing Contingency, And How Do You Use It?
A financing contingency is a protection for the buyer in case they are not approved for a loan. Although a financing contingency may be specified in terms of stipulations, the goal is to ensure that the buyer isn't penalized for not being able to obtain financing and complete the transaction. Most buyer-initiated financing conditions will state that the buyer receives their earnest money back in the event you are not approved for the loan.
What Is Earnest Money?
To show that they are serious about the offer, most buyers will pay earnest money. This usually comes in the form of a check and is typically 1 to 5 percent of the purchase price. The earnest money check is kept in escrow, sometimes by the title company and real estate agent. It is then applied to the downpayment for the loan. Financing contingencies typically stipulate that the buyer's earnest funds will be refunded if they are unable to obtain financing.
What is a Financing Contingency?
A financing condition is a clause that is included in home purchase or sale agreement. It states that you are only allowed to offer to finance if the house is approved for financing. This clause is used by buyers to set a time frame for applying for a mortgage or closing on loan. Within this clause, the buyer will also normally list the type of loan they intend to obtain, their down payment amount, the term of the loan and the interest rate.
The Purpose Of A Financing Contingency, And How Do You Use It?
A financing contingency is a protection for the buyer in case they are not approved for a loan. Although a financing contingency may be specified in terms of stipulations, the goal is to ensure that the buyer isn't penalized for not being able to obtain financing and complete the transaction. Most buyer-initiated financing conditions will state that the buyer receives their earnest money back in the event you are not approved for the loan.
What Is Earnest Money?
To show that they are serious about the offer, most buyers will pay earnest money. This usually comes in the form of a check and is typically 1 to 5 percent of the purchase price. The earnest money check is kept in escrow, sometimes by the title company and real estate agent. It is then applied to the downpayment for the loan. Financing contingencies typically stipulate that the buyer's earnest funds will be refunded if they are unable to obtain financing.
Why Would You Not Have A Financing Contingency?
A seller will choose the offer with the highest dollar amount, the fewest contingencies, and stipulations in a competitive market. Multiple contingencies are required when a buyer offers to buy a house. These include appraisals, financing, and so on. To beat their competitors, some people waive their right to ask for financing or an appraisal contingency. This can put you at risk of significant financial loss. You could lose your earnest money and be required to buy the house with no financing.
