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Financing Contingency In A Real Estate Contract

by | Jan 2, 2023

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Financing contingencies are included in the vast majority of real estate contracts, because they allow buyers to get out of the real estate purchase contract if they can’t secure financing.

Also known as “mortgage contingencies” and “loan contingencies,” financing contingencies make offers contingent on the buyer being able to get the financing needed to buy the property. Typically, these contingencies give buyers a certain amount of time (often 30-60 days) to apply for and secure a loan.

What’s Included In A Financing Contingency In A Real Estate Contract
Most financing contingency clauses in real estate contracts include:
•deadlines for loan approval and financing
•maximum interest rate
•amount that will be financed
•amount of closing costs and fees

Financing Contingencies – Buyers
Financing contingency clauses help protect buyers, ensuring that if they’re unable to obtain a loan for the property, they can get their earnest money back and not be required to purchase the property.

Financing Contingencies – Sellers
Financing contingency clauses help protect sellers, in that they force the buyer to get loan approval and financing within a certain period of time, or the contract falls through and the seller is free to accept another offer.

Waiving A Financing Contingency
As a buyer, you have the right to waive a financing contingency, which would make sense if you’re paying cash for the property. But if you need to get a loan to complete the purchase of the property, waiving the financing contingency can be incredibly risky. If, for some reason, you’re unable to obtain financing by the deadlines stated in the contract, and therefore can’t follow through with the purchase, you could lose your earnest money and face other penalties.

We’re Here For You – Experienced Real Estate Attorneys
If you have a dispute over a financing contingency clause or any other aspect of a real estate contract, we can review your real estate contract and let you know your options.

See related topics:
Earnest Money – Real Estate Sales Contract
Inspection Contingency – Real Estate Sales Contract
Appraisal Contingency – Real Estate Contract
Title Contingency – Real Estate Contract
Property Sale Contingency – Real Estate Contract

At Timely Contract, we have local real estate attorneys who have experience throughout Idaho, including: Boise, Post Falls, Coeur d’Alene, Lewiston, Moscow, and Sandpoint.

We also have local real estate attorneys who have experience throughout Montana, including: Missoula, Billings, Bozeman, and Kalispell.

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