There is no doubt that removing loan contingency prior to funding is a risk. But every real estate deal carries with it certain levels of risk. It's unavoidable. It's not uncommon for Seller's to ask that loan contingency be removed with all other Buyer contingencies at day 17. That being said, you must speak with your Lender right away and make sure they have all documentation from you so as to facilitate the loan approval process. Ask them point blank, do you see any reason why the financing would not go through or be denied. Tell your Lender what the Seller is asking of you in the counter offer and that you do not want to remove loan contingency at day 17 and be told on day 40 of a 45 day escrow that the loan is being denied. Ask your Realtor to have the same conversation with your Lender. At this point, based on your dicussion with your Lender and your Realtors professional opinion you will be able to determine if you will accept the Seller's counter offer. The risk will still be an issue, but hopefully your conversations with your Lender & Realtor will give you the confidence to make the right decision for you and your family. I wish you the best of luck!
Peter Solomon / Realtor
T.N.G. Real Estate Consultants
The loan contingency is in place to give you time to get your loan formally approved through underwriting. On many loans types, this is enough time to get through the loan process and get approval. However, there are some loan types that take a bit longer depending on your circumstances and the approval type that you have. For instance, I have worked with FHA buyers who require manual underwriting during the loan process due to their credit situation and I have found that this type of approval takes more than 17 days. When I know this is the case, I will ask for 22-25 days loan contingency and 35-45 day escrow.
I would suggest you discuss this with your mortgage company and agent so that everyone is on the same page and understands your current loan approval situation. Ask your loan officer a direct question "Can you have loan approval in 17 days?"
Best wishes on your home purchase.
Most lenders do not understand (or care) about the buyer’s liability on this. If the loan is declined after the contingency period, they buyer could and most likely will lose their deposit. Yet they almost never order the appraisal in time to have it done. As a loan officer I order the appraisal first, that way the loan is fully approved by the end of the contingency period. If I can I even get the loan documents signed. If the loan is delayed, everyone runs around and is angry, no one needs the extra stress.
Please feel free for any adiitional question
Real Estate & Mortgage Broker
First, It depends what is written in your offer. There is a clause for the standard 17 day contingencies. Would need to know how your contract is written. You should be going over this with your agent and or their broker if you want more clairifcation than talking with your agent..
Second, the sellers agent can counter the same information that is already in your offer and just making it more transparent and upfront for you. I would read over your contract and note down all the questions you have and talk to your agent or their broker..
Third, as a buyer you want the loan contingency on as long as possible and the seller wants it off as soon as possible.. This is why you negotiate and keep in communication with the seller what you are doing and their agent can also talk with your lender as to the progress of your loan approval.. This is the most helpful of all..
Communication is key always...
Hope this helps you,
Ingrid Ski Realtor
That being said I’m guessing your agent check the box under page two of the Residential Purchase Agreement H 3 stating “the loan contingency shall remain in effect until the designated loans are funded”. Your agent most likely did this to add some protection should your loan not fund; however, if you are a qualified buyer the 17 days as written into the form should suffice.
When the seller "accepts" your offer, it is then submitted to the lender(s) who then typically take anywhere from 2 weeks to 3 months, to actually respond to your offer. That response might be in the form of an approval of your offer, OR, it could be a counter-offer at a higher price. Assuming that it's an approval, your 17 day contingency removal period should start the next day, and should be sufficient time to make yourself satisfied with the purchase, through inspections, appraisal, and other negotiations.
Good luck with your transaction.