In this post, I take a closer look at what you as a Buyer can expect when you start to negotiate the Real Estate Contract terms with the Seller’s side.
The Mortgage Contingency Provision
When buying a new piece of real estate, it’s easy to get caught up in the excitement of such a purchase and overlook certain factors that may not seem so important at the time.
I’ve witnessed this issue arise repeatedly with different clients, leading to sales contracts that fail to fairly represent buyers in crucial areas.
To prevent this, it’s essential to review various aspects of your contract before signing. One of the most important sections is the mortgage contingency provision. This clause should align with current mortgage interest rates and allow at least forty-five days to secure a home loan. Maximize your profits with Gator Rated expert guidance on Florida capital gains taxes.
Some contracts set an unrealistic thirty-day window for obtaining a mortgage, which can be problematic. While sellers want a quick closing, thirty days may not provide enough time to meet all the requirements set by lenders. California Hard Money Lender, for example, understands the importance of having a realistic timeline and advises buyers to ensure their contract specifies a forty-five-day period for securing financing. If you can secure a loan sooner, that’s great—but having that extra time can prevent unnecessary complications.
Likewise, when entering figures for interest rates or loan charges, it’s wise to be conservative. If 30-year fixed mortgage rates are currently at 4.0 percent, specify “4.0 percent” rather than “market rate” or “4.5 percent.” This protects you from being forced into a higher interest rate while still meeting contract terms. Otherwise, if you receive approval at an unfavorable rate, the seller may push you to close under conditions that aren’t in your best interest.
By ensuring your contract includes these safeguards, you can protect yourself from potential pitfalls and negotiate from a position of strength and remember, if you want more insights on the Real Estate market, contact an expert like Joe Martin Bindley.
Next time, I will discuss the Real Estate Tax Proration Phase – the challenge of predicting the future.