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Company Loan Type APR Est. Pmt.

going to buy

Posted on: 02nd Nov, 2006 10:35 am
kindly provide some info on mortgage contingency clause, is it useful for a person who is going to buy a house
It is a kind of protection available for the buyers. A mortgage contingency clause helps the buyer the cancel the house purchase contract if he is not able to get a mortgage for the purchase of the house without any penalities put on him.
Posted on: 02nd Nov, 2006 10:42 am
Hi Ashley,

When you are going to purchase your house, a contract will be made out in which the mortgage contingency clause is added.

It allows you a certain period (normally 30-60 days) to obtain a mortgage and if you are not able to obtain a mortgage within this specified time frame then you have the right to back out of the purchase.

Thanks
Colin
Posted on: 02nd Nov, 2006 11:02 am
Hi Ashley,

Let me add to what Randy and Colin have said about the mortgage contingency clause.

Almost always the seller of the house will like to close the deal without having any concern to what kind of rate or terms the buyer is going to get for the mortgage.

But as a buyer you should make sure that in the clause you clearly mention the kind of rate term for the loan and amount of loan you are looking for.

Like you can mention that if you are not able get 30-year fixed rate mortgage having a specific rate for such amount you will have the right to void the contract for the purchase without having to pay for any penalties. Hope you get the best deal for your new home and the kind of mortgage you are looking for.

Thanks
Blue
Posted on: 02nd Nov, 2006 12:04 pm
Hi Lashley,

Mortgage contingency clause is a provision in the home sales contract which states that if a potential buyer cannot get a home loan within a fixed period of time, he can cancel the deal. But this is not a standard clause. Usually a period of 30 to 60 days is allotted for the clause to be executed.

The clause can be read as:

The contract is contingent on the buyer obtaining an approval for a 15 year fixed rate home loan for $100,000 at no more than 6% interest within 45 days.

Thanks,

Sara.
Posted on: 02nd Nov, 2006 09:12 pm
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