As a homebuyer, you’re likely looking for ways to make your offer stand out, especially if you’ve fallen in love with a house. Sometimes, outbidding other buyers isn’t an option. You may be willing to give up some protections. The decision to waive the mortgage contingency, while potentially making your offer more appealing, carries a sloshing bucket of risks and considerations. But it can also tilt a sale in your favor. In this post, we’ll provide insights that can help guide you through the process of deciding whether to waive this clause. We’ll review the risks involved, offer a real-life example, and provide strategies to mitigate these risks. A mortgage contingency is a clause found in most home purchase agreements that safeguards the buyer. It stipulates that the offer to purchase a home is contingent upon your ability to secure a mortgage loan. This means that if you are unable to obtain the full and proper financing within a specified period, you can back out of the deal without penalty, which in most cases means you can retain your earnest money deposit. This clause can play a huge role in a home sale because it protects you from losing your earnest money deposit or facing legal action if you’re unable to secure a mortgage. It’s particularly important for buyers who are not paying in cash and require a loan to complete the purchase. Without a mortgage contingency, if your loan falls through, you could still be contractually obligated to purchase the home, which could lead to significant financial and legal complications. So how do you know if waiving this clause is right for you? Deciding whether to waive the mortgage contingency is a significant choice that hinges on your personal circumstances and the current housing market where you’r shopping for a home. Waiving this contingency can make your offer more attractive to sellers, particularly in a competitive market where multiple offers are common. It signals to the seller that you’re committed and confident in your ability to secure financing without the need for this safety net. In some cases, a seller with multiple offers may actually ask you to waive the mortgage contingency. However, waiving this clause can be a double-edged sword. While it enhances your offer, you risk losing your deposit if you run into an unexpected hiccup in your financing plans. This could mean not getting the home you want, especially in an active seller’s market. Before waiving, HomeLight recommends you consult with a financial advisor or mortgage professional to evaluate your situation. It’s crucial to assess your financial stability, the likelihood of obtaining a mortgage, and your tolerance for risk. Let’s review what could be at stake.What is a mortgage contingency?
Should I waive the mortgage contingency?
