Loan Contingency

What is a loan contingency?

The loan contingency allows Buyers to cancel the contract and receive their earnest money deposit back if they are unable to obtain financing.

Do I have to have one? 

No! You can elect to waive a loan contingency. However, cash-only buyers are typically the only buyers able to do so. If you waive the contingency as a loan-buyer and you later lose your financing, you are on the hook to follow through with the contract or risk losing your earnest money deposit.

How long is the contingency period? 

The contingency is in the Offer that you (the Buyer) submit to the seller. The standard period to obtain your loan and release the contingency is 21 days; however, you can change that time frame. 

Is the loan contingency related to my pre approval? 

Yes, and no. The pre approval relates to your lender’s willingness to offer you financing. The lender is saying you look qualified as a buyer; however, they have not fully underwritten your loan so they cannot say for sure. The loan contingency is in place to protect Buyers who get pre approved but later find out they cannot obtain financing.