When you’re buying a home for sale in Midland, the last thing you want to do is be held accountable for buying it without having financing in place.
Unless you have hundreds of thousands of cash stuffed in your mattress (or in the bank, like any sane person), you’ll need to take out a mortgage loan to buy a home. And in your real estate purchase contract, you agree to do exactly that: secure financing so you can buy the house from the seller.
Unfortunately, though, things don’t always work out the way we want them to.
That’s where a mortgage contingency can swoop in and save the day.
What is a Mortgage Contingency?
A mortgage contingency lets you back out of a real estate deal if you can’t secure funding by a specified date. When you can’t get a lender to commit to a loan after the seller accepts your offer, you need a way out – and hopefully, a way to keep your earnest money deposit intact, too.
Earnest money can be a big deal. The average earnest money deposit is somewhere between 1 percent and 3 percent of a home’s sales price, so if you’re buying a $200,000 home, you’re handing over between $2,000 and $6,000 – and you don’t want to lose that just because you can’t get a lender to let you borrow the money to buy a house.
Bottom line: Don’t ever waive the mortgage contingency on a home. You could be on the hook for buying the house without financing in place – and in the best-case scenario, you’ll lose your earnest money deposit to the seller.
Are You Buying or Selling a Home in Midland, Texas?
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