What is a Mortgage Contingency in Real Estate?

When you buy a home for sale in Aspen or elsewhere, your real estate agent will protect you by building a mortgage contingency into your contract.
But what is a mortgage contingency, and how does it help you?

A mortgage contingency protects you if your financing falls through. Without this contingency in place, you could still be responsible for buying the home – even if you can’t get a mortgage loan to do so.
That’s not in anybody’s best interest… especially not yours.
The mortgage contingency gives you a certain period of time during which to get a loan that’ll cover the mortgage. The clock starts ticking when the seller accepts your offer. If you can’t get a lender to give you the money to buy the house within that time frame, you’re free to walk away from the deal with your earnest money and down payment intact.

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Don’t waive this contingency. If you fail to meet your deadline, in the worst-case scenario, you could be on the hook to buy the home. In the best-case scenario, you’ll forfeit your earnest money deposit to the seller – and that can be a serious pile of cash. Most earnest money deposits are between 1 and 3 percent of a home’s sales price, so if you’re trying to buy a $500,000 home, your earnest money deposit could range from $5,000 to $15,000 – and you don’t want to lose that.

Are You Selling a Home in Aspen?

If you’re ready to sell your home in Aspen, Woody Creek, Basalt, Carbondale or Snowmass, we may be able to help you.
Get in touch with us right now to find out how much your home is worth – and discover how we’ll be able to help you sell it quickly and for top dollar.
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