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What is a Home Loan Contract Contingency?

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What is a Home Loan Contract Contingency?

Home loan contract contingencies serve to protect both parties, the sellers and buyers, in the home buying process. This contingency allows for either party to back out of the home contract if something does not go according to plan.

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Examples of contract contingencies for buyers

For the home buyer, the selling agent may put contract contingency dates into the agreement. This ensures the process is moving forward on the part of the buyer and lender. These could be dates for appraisals, deadlines for approvals, etc.

If a buyer is too slow in the process or not serious about purchasing, the sellers can easily back out of the agreement to pursue other buyers. This is also true if the buyers are unable to be approved for the home loan.

Examples of contract contingencies for sellers

Appraisal value requirement contract contingencies are often used. This means the sellers guarantee the property will appraise at or above a certain value.

If for any reason the property is appraised below that valuation, the buyer has the option to relieve themselves of the agreement conditions without penalties or fees.

Ultimately, these contract contingencies are used to facilitate both party’s commitments to getting to the end goal which is closing.

For the sellers, it is peace of mind that the process will run as efficiently and as quickly as possible and that the property will be purchased by qualified buyers. For the sellers, it is a guard against a poor appraisal and from issues found with the home after an offer has been accepted.

Contact your agent for more specific information about your specific situations and contingencies that may be beneficial for you to consider. For information concerning your VA benefits is available and our VA Home Loan Experts are eager to assist you. Whether it is determining your funding fee, figuring out your entitlement or applying for your next home loan, VA Loan Spot is committed to you. Call a specialist today at 800.537.2050.

Bobby Atkisson

Bobby Atkisson

Bobby Atkisson is a seasoned mortgage professional who provides high quality financial services to military members and veterans. With over 14 years experience in the lending and financial industry, his mission is to provide high quality mortgage programs with the most competitive interest rates. For expert advice and guidance on VA Home Loans and Refinance, contact Bobby today at 800-537-2050.