Mortgage Contingency Clause: How Does Having One Protect Me?
The Mortgage Contingency Clause makes your offer contingent upon your ability to get mortgage financing. Stated differently, the Mortgage Contingency Clause states that if you cannot get the mortgage financing that you thought you could, you get to back out of the contract and receive a full refund of your Earnest Money. The Mortgage Contingency Clause will contain the exact terms of the mortgage that you seek to obtain, for example a thirty year, fixed rate mortgage, at 7% annual interest, with no points or loan service charge. One common misunderstanding is that people think the Mortgage Contingency Clause obligates them to get a mortgage on those terms. In fact, the opposite is true. What the Mortgage Contingency Clause states is that if you cannot obtain a mortgage for at least those terms or better, then you get to back out of the transaction without penalty. One critical provision within the Mortgage Contingency Clause is the expiration date, which is the date by which you must o
