What Are Mortgage Contingencies?
Getting approved for a home mortgage is just one of the many steps to home ownership. What you may not realize is, after approval and before closing, there are many items you may be required to satisfy before you can set foot at the closing table. These items determined and identified by the bank are known as mortgage contingencies. They are requirements of the bank that must be fulfilled before you are cleared to close.
What are some types of mortgage contingencies?
Some mortgage contingencies may include, but are not limited to:
- Home appraisal. The home appraisal is required by the lender to make sure that the value of the home is equal to or greater than the loan amount you are requesting.
- Homeowner’s insurance. Homeowner’s insurance is required by every lender to make sure the home is insured in the event of a loss or natural disaster.
- Title Insurance. A title check, performed prior to placing the title insurance, will identify if any judgements or liens are on the property. Title insurance protects the lender from anyone later stating that they have an interest in the property. The lender will require that the title is clear prior to funding the mortgage.
- Credit issues. If you have any issues on your credit report, such as any collections accounts or high balance accounts, the bank may require you to pay those off before closing on the home. Although you were approved for the loan based on your good credit, the lender may still require that you take extra measures to make sure you can afford the mortgage payment.
What Happens if I Can’t Satisfy Mortgage Contingencies?
If you cannot satisfy the mortgage contingencies, you may not be able to close on your home loan. However, you should consult with your real estate attorney to help you understand what your options may be.
If you have questions about the legalities of buying or selling a home in New Jersey, it is important that you consult with an experienced real estate attorney who can provide you with assistance.
Ross and Calandrillo, LLC is a full-service divorce, family, and real estate law firm in Mountainside, New Jersey. For strong legal representation in all of your family law matters, contact Ross and Calandrillo, LLC to schedule a free consultation.