What is a mortgage contingency clause?
This is a clause in a sales contract that say basically if you can’t attain a Mortgage, your earnest money deposit (10% down payment upon signing the contract) will be returned to you. If you waive this clause in the contract, as is frequently done in a seller’s market, you will lose your 10% earnest money deposit if you fail to attain a mortgage. Always get pre-approved for a mortgage to diminish your risk.
Many buyers will have in their contracts a contingency clause which releases them from the transaction and provides for the return of their earnest money if they give notice of their inability to obtain mortgage financing on satisfactory terms within a certain period of time. The seller should determine if the financing did in fact become available, within the required time period.
