Your RE/MAX Integrity, “Go To” Gal Karen J. Church at www.eugenehomesgal.com brings you a multi part series on Home Buying. Part 2: The Nuances of Your Contract - Loan or Financing Contingency
The process of purchasing a home is often much more complex than the average individual expects it to be. Items involved in your purchase contract can have a significant impact not only on the success of your purchase transaction, but on your stress level as well. In the segments to come, I have listed out some of the important items you should be aware of that require you to make decisions as a buyer entering into a purchase contract.
Loan or Financing Contingency Loan contingency is the period of time the seller is giving you to obtain full, formal loan approval. It is important to include a financing contingency in your offer, as it makes the transaction dependent on your receiving the mortgage you’ve applied for. It specifies your cancellation rights if you are unable to obtain financing.
This contingency is typically between 15 and 45 days depending on what has been negotiated in the contract. The earnest money deposit you make at the time the offer is accepted will be put in jeopardy once the contingency for the loan has expired. In fact, pursuant to the terms of the contract, if the loan contingency has expired and you fail to close the purchase transaction, you could lose your earnest money deposit and not have the failure of obtaining loan approval to lean on as an excuse. Written pre-approval will help to eliminate problems in this area. Please note: pre-approval is not the same as pre-qualification. I always recommend a pre-approval letter to attach to the earnest money agreement. This not only makes your offer stronger to the seller, but it gives your credibility in the seller’s eyes. You are coming into the negotiations prepared and ready to buy their home.
This information is provided by Mortgage Consultant, Josh Kittel, at Real Estate Lending Group Services. jkittel@relg.net
Please feel free to call me at 541-520-9242 if you have any questions or want to meet up with a lender to go over your lending options.
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