✅ Top 7 Key Points: Mortgage / Finance Contingency

When purchasing a home, understanding the Mortgage or Finance Contingency clause in your contract is crucial it’s your financial safety net. Here’s what every buyer should know:

1️⃣ Protects the Buyer

This clause allows buyers to cancel the contract without penalty if they’re unable to secure financing within the agreed timeframe. It ensures you’re not locked into a deal you can’t fund.

2️⃣ Establishes a Deadline

Typically, the contract sets a period often 30 to 60 days  for the buyer to obtain a mortgage commitment. Meeting this timeline is essential to keep your deal on track.

3️⃣ Sets Terms & Conditions

The contingency outlines key loan parameters like the maximum loan amount, interest rate cap, and acceptable loan types. These protect the buyer from being forced to accept unfavorable terms.

4️⃣ Requires Good-Faith Effort

Buyers must actively cooperate with their lender submitting documents, responding to requests, and doing what’s necessary to pursue mortgage approval.

5️⃣ Conditional Commitment Satisfies It

Once a lender issues a conditional mortgage commitment (approval with certain conditions to meet), this often fulfills the contingency and removes it from the contract.

6️⃣ Strengthens the Deal

After the contingency is satisfied, the buyer’s right to withdraw becomes limited giving the seller more confidence that the transaction will close successfully.

7️⃣ Waiving the Contingency Carries Risk

In competitive markets, buyers sometimes waive the contingency to make their offers more appealing. But beware if financing falls through, you could lose your deposit or face legal consequences.

💡 Bottom Line:

A mortgage contingency protects your interests and ensures fairness in the buying process. Work closely with your LJ Mortgage Team to navigate this step with confidence and secure your path to homeownership!

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Purchase & Refinance NYS Registered Mortgage Broker | NYS Dept. of Financial Services Broker arranges mortgage loans with third-party providers. MORTGAGE BROKER ONLY, NOT A MORTGAGE LENDER OR MORTGAGE CORRESPONDENT LENDER. Licensed by the N.J. Department of Banking and Insurance. We arrange loans with third-party providers — we do not make loan commitments or fund mortgage loans. NMLS ID #2120286 | www.nmlsconsumeraccess.org

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