Real Estate Mortgage-contingency rider in key West

This common provision allows the real estate buyer a certain period of time to obtain a commitment for financing at a specified interest rate for a certain amount of money. It usually lasts for 30 to 60 days, depending on the average time needed to obtain a loan commitment.

The clause might read, for example, that the contract is contingent on the buyer obtaining approval for a 30-year mortgage for $100,000 at no more than eight percent interest within 45 days. For additional protection, the real estate buyer might specify the type of loan he or she prefers, for example fixed or variable.

A real estate mortgage-contingency rider in Key West provides critical protection to the buyer. For example, it allows the real estate buyer to void the purchase contract without penalty in those cases in which the buyer is unable to obtain financing on the terms specified in the contract after making a reasonable or good faith effort to do so within the time provided. Because this type of clause favors the buyer, some Key West real estate agents suggest that the buyer obtain "pre-qualification" from a lender, which gives the seller a degree of confidence that the buyer will not use the clause to void the contract unless some extraordinary circumstance arises.

The seller may refuse to agree to a mortgage-contingency rider. This can and does happen in a very hot seller's market, in which case, there is not much the buyer can do. But the absence of a mortgage-contingency rider might mean that the buyer will be forced to finance his or her home purchase at an unfavorable interest rate. Because of this risk, Key West real estate buyers should be cautious about signing a purchase contract that does not contain this clause.

Sellers are not required to accept any of the buyer-protection riders we've described. However, as a general rule, most sellers in Key West will accept these and similar riders.

Key West Real Estate Sellers should ensure that the proposed interest rate is reasonable, based on current rates, and also allow a limited but reasonable time for the mortgage commitment. Similarly, most sellers accept an inspection rider but should make sure that this rider expires relatively quickly say, ten days from signing. Unlike a mortgage commitment, there's no reason that an inspection can't be done within a week or so.