There are so many unknowns when buying a house which is why you should enlist the help of an Orlando Realtor. Because once you’ve bought it then that’s it! You’re in it for the long haul.
Using contingency clauses in your home contract to purchase will eliminate some of the uncertainty of buying a house by outlining the conditions that have to be met before closing the transaction.
Mortgage Contingencies Protect The Buyer
The most common contingency in residential real estate contracts is a mortgage contingency. In a nutshell, it states that if the buyer can’t secure the financing he can back out of the contract.
You can keep the verbiage simple or get very specific with all the details like; stating the type of loan [traditional, VA loan, FHA loan, etc.] You can even state what interest rate you’d be willing to go up to.
A mortgage contingency in a contract is an absolute must when buying a home unless you’re paying cash for the home.
Mortgage Contingencies Also Protect Sellers
In the previous paragraph, we learned how a mortgage contingency can help a buyer. However, sellers are also protected by mortgage contingencies. Here’s how… If a buyer goes past the predetermined amount of time as stated in the purchase contract to obtain financing, the buyer is still obligated to buy the home or they will have to forfeit their earnest money deposit to the seller.
Sellers can also demand that the buyer must have their financing in place several weeks before the closing in order to prevent the buyers from backing out at the last minute.
Appraisal Contingency
Mortgage contingencies and appraisal contingencies go hand-in-hand. There are a couple of different ways appraisal contingencies are implemented. In one version it states that if the buyer is unable to get an appraisal that is at least as high as the selling price, the buyer can then back out of the deal if they wish. The other option they have is to ask the seller to lower the sale price of the home. At this point, the seller can either agree to the price reduction or back out of the deal.
Inspection Contingency
Inspection contingencies provide the buyer with a pre-determined amount of time to take care of all the inspections they want to be performed on the house [usually 3 to fourteen days] prior to the closing. If the inspections uncover any issues or problems with the home, then the buyer can either back out of the deal or try to get the seller to fix whatever issues are in question prior to the closing.
Depending on what state you’re in, there are many other possible contingencies you can add to the purchase contract such as home insurance and mold inspection contingencies.
Put Your Orlando Realtor To Work!
The main thing is to pay attention to the fine print. The way a contingency is worded is crucial, it’s not there for decoration. If you’re not careful, you could overlook deadlines, end up losing money, and even get sued.
You should never enter into a real estate transaction without hiring an experienced Orlando Realtor in your corner. An experienced realtor will walk you through the entire home buying process and will make sure that you are protected in every way possible.
