Be a Better Buyer Series: Finance Contingency

Posted by The Bell Team - KW on Tuesday, August 20th, 2019 at 9:22am

finance contingency blog graphic

Over the next 12 weeks, this blog will focus in on the many parts of purchasing a home. We know that purchasing a home—whether it be your first or your fifteenth—can be stressful and confusing.

But it doesn’t have to be! We help people buy homes all the time! This series explores and explains the typical roadmap to purchasing a home. Some steps are more cumbersome than others, but if you know what to expect you won’t be taken off guard if (and when!) complications arise!

Another element of the closing process is finance contingency, which is a protective contract clause stating that if the buyer is unable to secure financing for their home, the seller returns their earnest money. The purchase of the home is contingent on the buyer being able to prove that they have the funds to pay for the home they want. If for some reason the buyer cannot secure financing, they do not run the risk of losing their earnest money.

Securing the home loan may take up to seven days, during which time your lender will ask for just about everything save for a blood sample. To ensure that you don’t miss your deadline, make sure that you’ve got all the necessary materials ready to send to your lender.

It’s important to fully understand the kind of loan you’re applying for. Each loan comes with a different set of rules, so make sure that you know you can meet each qualification before you submit your offer. When you have questions, ask! Your agent and your lender are experts, and they want you to secure financing as much as you do.

Protip: work with a direct local lender. The Bell Team’s preferred lender is Homestar Financial. Candice Crook is the branch manager, and she’s absolutely fantastic with getting things moving smoothly. She’s got a great relationship with our agents, so communication will be smooth as well. You can email her by clicking this link.

Additionally, keep in close contact with the listing agent. You’ll be talking to them and your lender a lot during this period, so make sure the ringer is on.

Not every transaction has a finance contingency. It’s in the seller’s best interest to accept an offer from the buyer with the fewest contingencies and stipulations. To put themselves ahead of the pack, a buyer may choose to forego the finance contingency. In doing so, they assume the risk of losing their earnest money, making up . Depending on your contract, you may also have to purchase the home without financing altogether. Of course your agent should lay all of this out for you before you choose to submit your offer, so proceed with caution.

Lastly, note that you could waive the finance contingency altogether if you secure your mortgage loan before submitting your offer. Not only will this give you more peace of mind, but your offer will be even more attractive to the seller because there’s no question of whether or not you can secure financing… because you’ve already done it!

Next week, we’ll talk about closing, the time everyone’s been waiting for! But there’s a bit more to closing than sitting at a long table and signing documents. Until next week, if you have concerns or questions that we didn’t touch on in this post, give us a call!


The Better Buyer Series

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