What Is a Mortgage Contingency? A New Jersey Real Estate Attorney Explains

Thinking of buying a home in New Jersey? Real estate attorney Andrew Krantz of Zager Fuchs clarifies what a mortgage contingency is and why it’s crucial for homebuyers.

By Andrew Krantz, Real Estate Attorney at Zager Fuchs, New Jersey

mortgage contingency NJCongratulations! You’ve found your dream home in New Jersey and your offer has been accepted. But before popping the champagne corks, it’s essential to understand the finer points of your purchase agreement, especially regarding mortgage contingencies (also known as financing contingency or loan contingency).

What is a Mortgage Contingency?

A mortgage contingency is a clause commonly included in real estate contracts that safeguards homebuyers. It essentially states that the buyer’s obligation to purchase the property is contingent upon obtaining mortgage approval. This means if, for unforeseen reasons, you cannot secure financing for the home within a designated timeframe, you can back out of the contract without penalty.

Why is a Mortgage Contingency Important in New Jersey?

The New Jersey real estate market can be competitive, and including a mortgage contingency protects you from losing your earnest money deposit – a good faith payment to the seller – should your loan application be denied.

Understanding the Details of Your Mortgage Contingency

While a mortgage contingency offers valuable protection, it’s crucial to understand the specifics outlined in your purchase agreement. Key elements typically include:

  • Timeframe: This defines the period you have to secure loan approval, often ranging from 30 to 60 days.
  • Loan amount: The contingency should specify the minimum loan amount you require to purchase the property.
  • Conditions: In some cases, the contingency might be subject to specific loan types or interest rates.

Consulting a New Jersey Real Estate Attorney

Andrew Krantz is a seasoned real estate attorney at Zager Fuchs with a deep understanding of the New Jersey housing market. He has a proven track record of guiding clients through the intricacies of real estate transactions, ensuring their rights and interests are protected.

An experienced real estate attorney like Andrew Krantz can ensure your financing contingency clause is properly drafted and protects your interests. They can also guide you through the entire home buying process, addressing any concerns you may have.

Contact Zager Fuchs in New Jersey Today

At Zager Fuchs, our experienced real estate attorneys are happy to answer your questions about mortgage contingencies and other aspects of buying a home in New Jersey. Schedule a consultation today and let us help you navigate the path to homeownership with peace of mind.