Home Purchase.....Mortgage Contingency???
To finance, or not to finance, that is the question. Whether 'tis nobler in the purchaser's mind to insert a mortgage contingency in the contract of sale, is indeed a question of paramount importance.
When purchasing a home, and financing is associated with said purchase, there customarily is a contingency inserted into the contract of sale, allowing the purchaser a specified time frame (usually 45 days) within which to procure successful financing (loan commitment) from a lender. If the purchaser is unsuccessful in his/her attempts, he/she reserve the right to cancel the contract of sale, and receive return of his/her contractual deposit/down payment.
This is the conventional route by which most real estate closing transactions proceed. Nevertheless, there are times where ...believed... (ill-advised)... "ingenuity" is invoked.
Purchasers who are so eager to buy "the home of their dreams"...and are "so confident" in their ability to procure financing....seek to make "an offer that the Seller cannot refuse"....so they agree to purposefully omit the mortgage contingency from the contract of sale, and submit the offer to buy "as an all cash deal".
The Purchaser figures that the "no financing contingency/all cash" offer will result in their ability to lower the negotiated purchase price...as well as place them in a more favorable light to the Seller.... than a potential purchaser who would be seeking financing.
Again, very ill advised.
Given the tumultuous nature of the newfound lending guidelines, coupled with the uncertainty of an individual's future credit worthiness and job security....even in the hands of the most competent of competent lending institutions, mortgage brokers/bankers.... there is ALWAYS a chance that one can be denied a mortgage.
Failure to have a mortgage contingency in place...and a subsequent denial for loan financing....can/will result in the purchaser potentially forfeiting his/her deposit/down payment, for failing to see the transaction to its' successful fruition....and breaching the contract of sale.
The fact that the bank denied the loan will give no standing to a Purchaser who purposefully omitted the mortgage contingency clause from the contract.
In summation, "don't roll the dice" with your money.
If, as a purchaser, there is any doubt whatsoever that you cannot see a closing transaction to conclusion absent mortgage financing... be certain to keep the mortgage contingency clause in place. Even if you believe you can obtain "private financing from a friend or family member".....if there is hesitation, then don't engage this risk. The consequences can be disastrous, and you will be needlessly assuming a risk that you should not be willing to take.
"When in doubt....always pursue the safe route".
DISCLAIMER: THE CONTENT OF THIS PUBLICATION IS FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS LEGAL ADVICE. NO ATTORNEY/CLIENT RELATIONSHIP IS CREATED BY SAID PUBLCIATION. CONSULT AN ATTORNEY FOR ANY/ALL LEGAL INQUIRIES.
