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If you can't get a loan for what ever reason, then you can't get the loan which you described in the contract. Forget what I said earlier , I though you really wanted the property and wanted to overpay for it. I've seen it in rapidly appreciating markets where the comps haven't caught up with the market because demand was so high and people we happy to pay more to lock in the rates even if they had to pay way over previous sales.
Using your example, if the appraisal comes in at $450k, instead of selling price $500k, then the bank is only willing to lend me $360k instead of 400k. That means I can not get the $400k explicited stated mortgage committment in the contract from the bank, thus it does trigger the mortgage contingency clause? Am I right on this?
This is a great example. I would assume that the appraisal contingency is implied in the contract language if it stipulates that you need to receive a loan of at least a certain amount, right? If the appraisal comes in below the contract price, you won't be able to receive the loan of say, $800,000. Therefore, you can cancel the contract and receive your money back.
Seems like there are a number of ways to draft mortgage contingency language in a contract, and it may or may not include an appraisal contingency and/or funding contingency.
I just want to have the option to walk away without losing my deposit money if the appraisal is much lower than the sale price, and I don't want to bring extra money to fill the gap myself.
Then you need to have an appraisal contingency in your contract.
In general if you have a contingency that your get your earnest money back if the Mortgage loan is not approved and the appraisal falls so low that the loan is denied( and you don't want to pay the difference) you should get your earnest money back and the contract to buy the house is over.
In general if you have a contingency that your get your earnest money back if the Mortgage loan is not approved and the appraisal falls so low that the loan is denied( and you don't want to pay the difference) you should get your earnest money back and the contract to buy the house is over.
WANT being the key word. Is the bank supposed to deny the loan even if they could still grant it?
WANT being the key word. Is the bank supposed to deny the loan even if they could still grant it?
But they won't grant it. Not for the amount that was requested.
Not sure what the current issue is.... this is a very old thread! In our area, and with the wording on our contracts, if the financing contingency is used... the low appraisal contingency is redundant in some ways and contradictory in other ways... and not recommended.
Last edited by Diana Holbrook; 04-06-2018 at 03:27 PM..
WANT being the key word. Is the bank supposed to deny the loan even if they could still grant it?
As long as you have a contingency on the loan as far as appraisal price you can walk away and get your earnest money back if the appraisal is say $10k low and you don't want to pay it, they can't force you to.
The bank can't grant it unless they kick in the $10K.
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