When you find the condo or house of your dreams and want to make an offer, do you need a financing condition? Unless you can pay cash for the home, then yes you do. That little phrase – “subject to financing” – is an important protection for buyers. When an offer to purchase is made “subject to financing”, we gain the time needed i.e. 5 to 10 business days to ensure that you are fully approved for the necessary funds. Your lender and mortgage insurer (if it’s an insured mortgage) needs to feel as comfortable about the property as you do and will likely conduct an assessment. After all, the property is the lender’s security if something goes wrong. Even if you have a mortgage preapproval, the lender could decline based on the property for reasons such as:
• The address may be just outside the acceptable location perimeter for the lender.
• Concern over a former grow op, an environment matter, or zoning issues.
• The appraisal may not match the offer you’ve made.
Don’t let the rush to buy overcome common sense. A preapproval is a guideline only, and a lender could disregard it: especially if your income or financial situation has changed. That “subject to financing” gives you time to confirm with the lender, and to withdraw the offer if the lender’s queries turn up something negative about the house.
An offer without conditions leaves you and your family on the hook. If the financing falls through, you will lose your deposit, and could be sued by the seller. It’s not the happily-ever-after scenario you envisioned when you made your offer. So let us help guide you through your home buying so we can help you every step of the way!