Forfeiting Your Mortgage Contingency – Boston Home Loans

A client recently reached out to me for advice after their Realtor had suggested the strategy of forfeiting their mortgage contingency in an effort to make their offer more appealing to the seller.

Waiving Mortgage Contingency

The only time it is a good idea to waive your mortgage contingency is when you are in a situation where you’re able to purchase in cash. The reason why a seller would be attracted to a buyer with no mortgage contingency is if the buyer is unable to obtain a mortgage. The seller would receive the money that the buyer had put in escrow that was meant for a down payment of your home. The seller is, of course, attracted to this because they basically get paid for your misfortune and for having to have taken their house off the active market and having to find another buyer.

Protecting Your Down Payment

If you are a buyer, you must understand how mortgage contingency protects the money you have put as your down payment. A mortgage contingency is a statement in the sales contract indicating that the sale of the property is contingent upon the buyer getting approved for a home loan by a certain date. So, if you can’t obtain a mortgage then you can get your money back in escrow.

Other Benefits of Mortgage Contingency

The mortgage contingency also help protects the buyer in other ways, by ensuring you didn’t overpay for the home. Also, by making sure you can afford a home and you’re not buying above your means and, lastly, protection against life events such as losing your job before you sign for a new home.

The best piece of advice I once heard from a great agent to her client was, only make an offer on a home you’re willing to walk away from so you can avoid having emotions clinging to the part of the sale.

If you need any real estate or mortgage advice, please contact me directly.

Phil Ganz (117 Posts)

Philip D. Ganz is a Boston Mortgage Broker and Boston Home Loan specialist. For information, expertise, consulting, or advice about home loans, refinancing mortgages, or commercial property loans, contact Phil with no obligation: 617-529-9317


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