Contingencies that should be included in your home offer

When it comes to buying a home, particularly if it is your first, there will be many details you are unsure of. Dealing with all of the unknowns can be difficult and stressful, and this is one of the main reasons why contingencies are so important. Contingency clauses that are included in the purchase of your new home make it much easier to navigate your way through the confusing loopholes, and allow you to ensure that you understand exactly what conditions must be met before the deal can be settled. To guarantee that you are getting the best possible deal when it comes to the purchase of your new home, here are some contingencies that should really be included in your purchase.

Mortgage contingency

 A mortgage contingency is perhaps the most common contingency, and should definitely be included in your arrangement with the seller. As a buyer, this contingency provides you with added security during the purchasing process. The mortgage contingency states that the buyer will attempt to obtain a specific type of mortgage (whether it be Federal Housing Administration, Veterans Affairs or a traditional mortgage) with a certain interest rate by a specific date before closing. If you can’t secure a loan that follows these terms, you can back out of the deal at no cost – the earnest money deposit and anything else that has already been paid will be refunded. As securing a mortgage with favorable terms can be the most difficult aspect of purchasing a new home, a mortgage contingency can make life much easier for a buyer.

Appraisal contingency

Appraisal contingencies work in two different ways. The first states that if a buyer is unable to find an appraisal that is at least as high as the seller’s asking price, the buyer can back out of the deal at no cost. The second way in which an appraisal contingency works is that, failing to find an appropriate appraisal of the property, the buyer may negotiate a lower purchase price with the seller. If the seller refuses, or a deal is unable to be made, both the buyer and the seller are able to back out of the deal.

Inspection contingency

While this is an important contingency in the purchase of any home, it is particularly important if the property you are purchasing is older or in any way run down. An inspection contingency means that the buyer has a certain amount of time (generally between three days and two weeks) in which they can perform numerous inspections on the home to ensure that everything is in good working order. These inspections are particularly useful for ensuring that the plumbing, foundations, septic system, electrics and anything else you may be concerned about is in good working order. Should any inspection result in a problem or something that you are concerned about, you can change your mind about purchasing the property at no cost.