If you’re like many people buying a home for sale in Tampa Bay, your real estate agent will most likely build a financing contingency into your contract. But what is a financing contingency, and how does it help you? This guide explains.
What is a Financing Contingency in Real Estate?
Contingencies are conditions that real estate agents often build into purchase contracts to protect their clients. A financing contingency is in place to protect the buyer. With a financing contingency in your contract, you won’t be on the hook for buying the property if you can’t secure financing. Additionally, if you need to exit the deal because you can’t get the money to buy the home, you’ll get your earnest money deposit back; it won’t be forfeited to the seller.
How Does a Seller Know You Tried to Get Financing?
When you have a financing contingency in your real estate purchase contract, you’re legally required to make a good faith effort to secure financing. That means you need to do what you can to try to get mortgage loan approval. You may need to show documentation that you attempted to get a loan to buy the property if you want to get your earnest money deposit back.
Can the Seller Keep Your Earnest Money if You Can’t Get Financing to Buy Their Home?
Usually, if you have a contingency built into your real estate contract, it helps ensure you get your earnest money deposit back. However, there are some instances in which the seller may be entitled to keep your earnest money deposit. If you’re concerned about your particular situation, you should talk to your real estate agent.
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