Mortgage 101- A must read!

Purchasing a house with financing? Learn about financing contingencies. 

By George Castro PA

Financing contingencies may offer an exit from a purchase contract or may also hold the Buyer liable if actions are not performed timely.  

Purchasing real estate is an exciting and nerve wrecking experience all at the same time. Especially for first time home buyers. Section 8 of the Florida Realtors/Florida Bar Residential Contract for Sale and Purchase,  “AS IS”, contains verbiage that that protects both the Buyer and Seller during the sale.  

It is the responsibility of the Buyer to make a loan application within a specific date and to obtain a loan approval within a certain time period. Why is this important? Failure to use "diligent effort" and/or to provide the Seller with the loan approval is considered a default and any money that is in escrow could be forfeited. The loan approval is a process in which the Buyers lender performs underwriting to determine if the mortgage loan will be approved. 

The loan process itself can take weeks to be completed and it is important to ask your lender how much time is needed. Please note other contingencies such as appraisal contingencies are also in play during your loan process. The appraisal contingencies can also affect the successful sale of a real estate contract. If a third party appraiser provides a report in which the purchase price exceeds the fair market value of the real estate, the loan can be terminated within a specific time period, and any deposits can be returned to the Buyer. 

Be sure you know what your financing contingencies are before you sign a contract for sale and purchase contract. 

This is not legal advice and you should always consult with an attorney.