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Jeanne M. Reardon
Jeanne M. Reardon
516-314-8433 | CALL TODAY
REAL ESTATE LAW FIRM
Serving Long Island & Greater New York
NOTICE: COVID-19 UPDATE, FIRM OPERATIONS CONTINUE UNINTERRUPED. WE ALSO OFFER CONSULTATIONS
BY PHONE OR EMAIL. PLEASE DO NOT HESITATE TO CONTACT US IF YOU HAVE ANY QUESTIONS.
Real Estate Law Blog
Real Estate Law Blog
Blog
Real Estate Contract Mortgage Contingency Clause
| Posted on September 30, 2018 at 5:50 PM |
 Most people obtain financing when purchasing a
house, condo, or co-op. In that case, the contract of sale will contain
a mortgage contingency clause making the sale contingent upon the buyer
obtaining a mortgage in a certain amount. If the buyer's loan
application is denied by the lending institution, the buyer can then
cancel the contract and get the down payment back.In
order to benefit from the protections allowed by the mortgage
contingency clause the buyer must strictly abide by all its terms, i.e.
the buyer must only apply for a loan in the amount stated in the clause
(or such lesser sum as buyer shall be willing to accept), and obtain
the mortgage within the time frame given in the clause. If the buyer
applies for a loan greater than the amount stated in the
clause and is then denied a loan, the buyer will have forfeited the
protection afforded by the clause and will not be able to cancel the
contract. If the buyer is then unable to obtain other funds to complete
the purchase the buyer will be in default under the terms of the
contract and
more than likely lose their down payment. On the other hand, if the
buyer is approved for a loan greater than stated in
the mortgage clause, then no problem. Nonetheless, I would never
advise a
client to take such a risk and put their down payment in jeopardy.
There are many reasons why the loan may be denied that have nothing to
do with the financial qualifications of the buyer and are beyond the
buyer's control. An experienced real estate attorney will help you
navigate through this process. The
mortgage contingency clause is there to protect your down payment
should your loan be denied. To best protect yourself when purchasing a
home with a mortgage, hire an experienced real estate attorney who fully
understands all aspects of the mortgage contingency clause and will
guide you through the entire closing process. To speak with
an experienced real estate attorney, call us at (516)
314-8433. To learn more about our services and how we can assist you, visit us
at www.jreardonlaw.com |
Categories: Condos and Coops, Home Buying and Selling, Real Estate
