Strengthen Your Home Offer By Waiving Financing Contingency

The housing market has been pretty wild for the last few years and homebuyers have had to bear the brunt. Home prices are up and many would-be sellers are saving on the cost to refinance mortgage loans and staying where they are. This adds to a lack of available real estate. 

Competition is another obstacle. If you’re ready to purchase a new home, you need to act fast and make sure your offer is more attractive than other buyers. 

This is why many people today opt to waive contingencies as a way of sweetening their offer. Doing so often moves buyers to the front of the line and allows them to get into the home of their dreams before someone else does. However, it can be a risky move. 

Another option is an Upfront Approval Guarantee, and it might be the key to your home-buying success. Keep reading for a better understanding of this powerful mortgage product and why waiving contingencies can add fire to your offer. 

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What is a Contingency and Why Are People Waving Them?

The idea of a contingency isn’t exclusive to home buying. It refers to a set of conditions or requirements that must be fulfilled before a contract is put into place. 

In the housing market, contingencies are conditions within the purchase agreement that help protect the buyer and seller. If one party fails to meet a condition, the other party can back out of the deal without incurring financial penalties. Two of the most common are the home inspection and appraisal contingencies. Let’s take a closer look at each. 

Home Inspection Contingency 

Standard in many real estate contracts, a home inspection contingency is something most buyers require. It allows them to have the home inspected within a certain timeframe. If a certified inspector finds issues, the buyer can negotiate with the seller for a lower price, ask the seller to repair problems, or back out of the deal altogether. 

Appraisal Contingency 

Appraisals are important in many home buying and ownership situations. They’re very common when purchasing a new home and are also part of the cost to refinance mortgage loans.  

Buyers use appraisal contingencies to ensure the home’s value is at least that of the asking price. If a professional appraiser finds that the home is worth less than what it’s listed for, the buyer can negotiate for an appropriate price or back out.   

The Benefit of Waiving Contingencies 

Because buying a house is so difficult due to high competition, many buyers opt to waive contingencies. Why? Because with fewer conditions in place, their offer is more attractive and lets the seller know they’re committed to the deal. 

Waiving contingencies also speeds up the sales process. Without the need for an appraisal or inspection, you avoid delays and cut down on the risk of the sale falling through. 

Some sellers today won’t consider working with you unless you waive contingencies. Doing so upfront will give you an advantage over other buyers and could be the best way to quickly secure the home you want before it’s snatched up by someone else. 

Finally, waiving contingencies means you no longer have to spend money on the inspection and appraisal. Like closing fees and the cost to refinance mortgage loans down the road, these are home-buying expenses that can eat into your budget.  

Know the Risks 

While waiving contingencies can do great things for your offer, there are some downsides. It’s important to consider them closely before moving forward and speak to an experienced mortgage lender if you’re unsure how to proceed.

If you waive the inspection contingency, you won’t know if there are issues with the home before you buy. Because you’re purchasing the house “as is,” you’re making yourself vulnerable to financial setbacks due to necessary post-purchase repairs. However, if you’re confident in the condition of the home or don’t mind a fixer-upper, waiving the inspection contingency is an option. 

When you waive the appraisal contingency, you risk paying too much for the home. This can happen if the value of the home ends up being much less than the sales price.  

Understanding Financing Contingency 

Another very important clause in a mortgage contract is the financing contingency. This protects the buyer by allowing them to back out of the deal if they can’t secure the financing they need to purchase the home. 

A financing contingency specifies a deadline for the buyer to obtain a mortgage loan. If they decide to back out before this date, they can reclaim their earnest money. A buyer can also request an extension if they need more time. However, once the deadline has passed, they’re obligated to the sale. 

When a buyer makes an offer on a home, they typically get pre-approved by their mortgage lender for a certain amount. The seller isn’t going to accept an offer unless the buyer gets financing and the contingency stipulates the deal won’t go through until this happens. 

However, it’s only after the offer is accepted that the lender verifies the buyer’s income, credit score, assets, debt-to-income ratio, and other loan application documents. Unfortunately, many purchase offers fall through at this stage. 

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Adrenalize Your Offer With an Upfront Approval Guarantee 

While pre-approval is a useful tool when purchasing a home, it doesn’t always work out for buyers. If the underwriter ends up rejecting your loan application, you’re back to square one. 

The Moreira Team offers something better in the form of an Upfront Approval Guarantee. This is one of the most powerful purchase tools in today’s competitive real estate landscape. 

Instead of just pre-approving you for a loan, an Upfront Approval Guarantee gives the seller the assurance that you’re fully approved for the loan. Plus, you can waive financing contingency, further strengthening your offer. This is a great strategy when beginning your house-hunting journey. 

Sellers love the Upfront Approval Guarantee because it speeds the process along and assures them the deal won’t fall through due to issues with financing. It also saves them from worrying about the cost to refinance mortgage loans if they can’t find a buyer. 

Here’s how it works: 

  • You fill out an application and provide your financial information. 
  • An underwriter reviews your documents. 
  • Once approved, you know exactly what you can afford. 
  • Any issues get resolved before you make an offer. 

Once you’re fully approved you can start shopping around with the confidence that your offer is stronger than other potential buyers. If you find the house of your dreams and want to seal the deal, waiving the financing contingency can help you close quickly. 

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Get Upfront Approval Guarantees, Learn the Cost to Refinance Mortgage Loans, and Much More

At The Moreira Team, we offer a wide range of mortgage products to help you secure the financing that’s right for you. Our team provides one-to-one service and finds innovative solutions to get you into the home of your dreams. We can also help you understand the cost to refinance mortgage loans when you’re ready. 

We understand the power of waiving financing contingency terms and can leverage that with our Upfront Approval Guarantee. It’s our goal to help strengthen your offer so you stand out from the competition. 
Get your custom rate quote today and kickstart the housing hunting process.