Financing A Home Purchase In Texas? Know This.

By
Real Estate Agent with United Real Estate TX #0552717

Congratulations! You're pre-approved for a loan and found a home! Here's just some of what you should know. When you're financing the purchase,  pay particular attention (in Texas) to TPFA - Part 1
the second paragraph of the Third Party Financing Addendum that is part of the contract.

This document covers two types of approvals: one for you, the buyer, and one for the property itself.

If your lender has thoroughly vetted you and underwriting has checked you out six ways to Sunday and provided unconditional approval for YOU (not the house), then you and your agent can discuss checking the second box in paragraph 2A - Approval of Financing. You'll be on the hook for the loan unless the PROPERTY does not get approval. In today's market, if you can get this approval, it's one less contingency that a seller needs to consider and the seller may view your offer more favorably.

After pre-qualification or pre-approval, if a lender denies your loan due to credit history, income, assets or for another reason, this falls under the first part of Paragraph 2A - Approval of Financing. To receive your earnest money back, you'll have to terminate the contract within the time specified in the (hopefully filled in) blank field in that paragraph. In my experience, this is usually 21 days or less.

What happens if the property isn't approved? This could be due to circumstances such as a low appraisal, insurability, or lender-required repairs. Paragraph 2B - Property Approval, covers this. The time period to terminate under this provision is no later than three days before closing. You'll need to provide to the seller and title company a letter from the lender stating why the property approval wasn't granted.

To summarize, financing on the Third Party Financing Addendum is a 2-part process: buyer approval and property approval. Make sure you understand both parts and what the deadlines are for each part.

If you or your Texas real estate agent have questions about the Third Party Financing Addendum,  the agent has access to the Texas REALTOR's hotline: 800-873-9155.

Posted by

Lorrie Semler, REALTOR
United Real Estate Dallas

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Comments (2)

Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em: golfArizona@cox.net

Thank you for sharing the information. Buyers and sellers in your area will benefit from your expertise. Wishing you continued success.  Have a wonderful day and sell a house.  bill

Jun 19, 2022 12:30 PM
Lorrie Semler, REALTOR® in the Dallas area. Call/text 972-416-3417

Bill Salvatore - East Valley Only sell one? I hope to sell more!

Jun 19, 2022 01:32 PM
Anna Banana Kruchten CRS, Phoenix Broker
HomeSmart Real Estate BR030809000 - Phoenix, AZ
602-380-4886

Hi Lorrie your state handles this quite a bit differently than mine.  You've explained yours very well that the general public can follow along and make sense of it.  Excellent post!

Jun 19, 2022 03:03 PM
Lorrie Semler, REALTOR® in the Dallas area. Call/text 972-416-3417

Anna Banana Kruchten CRS, Phoenix Broker Thanks! I'd love to hear how your state handles this.

Jun 19, 2022 04:33 PM