Mortgage Contingency: Have You Done Your Part?

Mortgage Contingency: Have You Done Your Part?

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Finding a buyer for your Connecticut home can be tricky. Especially when the sale of your home depends on the prospective buyer being approved for a mortgage. In many real estate contracts, a mortgage contingency helps protect both buyers and seller.


What is a Mortgage Contingency?

Sometimes called a loan contingency clause, a mortgage contingency is one of the most important stipulations for potential homebuyers. Basically, the clause states that if the purchaser cannot obtain a mortgage with specific terms within a certain amount of time, the buyer can back out of the deal without losing money.


When a buyer is taking out a loan for a home and not paying cash, they put down earnest money — a deposit towards the total home purchase price. Depending on where the property is located, this could be anywhere from 1% to 10% of the total purchase price.


The money then sits in escrow until the deal is finalized when it then goes to the seller. This is the general idea, but different states may handle mortgage contingencies slightly differently.


Benefits for the Buyer

A mortgage contingency creates a conditional agreement between the buyer and seller. It gives the buyer a certain amount of time to obtain an acceptable mortgage. If the potential buyer can’t get a mortgage within the allotted time period, the deal falls through. But the buyer gets their down payment back.


This gives a buyer a way out of the contract with less risk. Yet for the seller, there is always the fear that the seller won’t be approved for a mortgage. In that case, the seller must start over — marketing the home, holding open houses, and showing their home.


At the same time, a buyer who desperately wants a home and wants their offer to be more attractive to the seller may waive the mortgage contingency altogether and hope for the best.


Benefits for the Seller

When a buyer keeps the mortgage contingency, it protects the seller to a certain extent. For example, a contract might state that the buyer must get a 30-year fixed rate mortgage at 5% or less with no points. If the buyer fails to do this, the contract cancels automatically. This allows the seller to move on to the next potential buyer.


Also, if a buyer waives the mortgage contingency, it can potentially stop a bad deal before it goes too far. Failing to get a loan before the contingency date could cause the buyer to lose their earnest money, motivating them to move forward with the sale.


Did Your Buyer’s Mortgage Fall Through? BCZ is Ready to Pay Cash!

Trying to sell your Connecticut home, but not finding a reliable buyer is frustrating. If you have tried to sell your home only to be disappointed by buyers who can’t secure financing, BCZ Homes can help. We pay cash for Connecticut homes in almost any condition and close quickly.


Contact BCZ Homes today to learn more about selling your Connecticut home. In some cases, we can make an offer over the phone or via email. In other cases, we need to see your home in person first. Call 475-266-6999 or visit today to learn more.





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Mortgage contingency can be a blessing or a curse. If you’ve been let down by buyers, don’t fear! We pay cash for homes in almost any condition!

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