What is a Financing Contingency?
A financing contingency is a clause in a purchase and sale agreement that expresses that your offer is contingent on being able to secure financing for the house. During this time, the buyer can use this clause to establish an agreed upon time period to apply for a mortgage and/or close on the loan. In this clause, the buyer will also normally list the type of loan they intend to obtain,(Such as VA, Conventional, FHA, USDA, Jumbo, etc.) their down payment amount, and the term of the loan and the interest rate.
What is the Purpose?
A financing contingency protects you the buyer in the event that you are not able to get approved for a loan. A financing contingency can be very specific about stipulations and conditions, but the main goal is to make sure that you are not penalized for being unable to get financing and completing the transaction. If something should happen during this time, we are able to stipulate that you as the buyer, gets your earnest money back if you are unable to get approved for the loan. This way, you can use it on another home.
Should I have a Financing contingency?
Depending on what type of market we are in, most sellers are going to pick the offer that has the highest dollar amount, less stipulations, and contingencies. To win the home of your dreams, some buyers will choose to waive their right to ask the seller for a financing or appraisal contingences.
However, Bethesda Realty Group suggest that you let us advise you on the best method. After all, we are the professionals and we do this every day.
Bethesda Realty Group