Since it's already too late, do you have any other contingencies you can use to get out of the contract? Is there a homeowners or condo association? If so, that might be your best option. In Maryland, from the receipt of the HOA/condo documents you have 5-7 days to void the contract no questions asked.
I guess I would disagree with most posters here. If you are already fully approved for your loan, have the cash and are in solid financial condition, then a financing contingency doesn't give you much since you *will* be approved for the loan (or are already approved for the loan). For solid buyers like you, I've written many contracts with or without a financing contingency. If a buyer hasn't made full loan application and been fully approved, then this contingency should always be there.
However, in this market, having an *appraisal* contingency gives you the real protection you need. This contingency allows you to renegotiate price if your appraiser comes up with a lower value than your purchase price.
If your's is one of several offers being presented to the seller (multiple offers), then maybe it is worth considering the removal of the financing contingency in order to strengthen your position. And there are many other scenarios as well. Perhaps you come in with a very low offer, then maybe it makes sense to remove the financing and other contingencies in order to counteract the low offer. So there is no perfect answer to this question.
Short of that, I always recommend a loan contingency and will not recommend removing that until the lender gives a final GO ahead.
Even with all Cash Buyer, we have to make sure he/she has the reserve should there be emergency where they won't have enough cash to purchase.
My opinion on the matter is that with the country going through a credit crunch, a possible looming recession, the fall of the sub-prime mortgage and a record number of 2nd closing day credit worthiness reviews by underwriters, itâ€™s never a good idea not to have a financial contingency.
Granted, I am sure someone could argue that yes, a time does exist that a financial contingency is just ridiculous, especially if you are trying to be very competitive for a particular home however, I personally would much rather err on the side of caution and reason than simply putting my client at risk of not being able to back out if necessary.
In my humble opinion, not having a financial contingency seems like a rookies mistake.
Just because it didn't work out doesn't make it bad advice. And without having witnessed the dynamic, I think we'll never know.
I wonder what changed for you between not "technically" needing the contingency, and now when it looks like it would have been a good contingency to have? Did your loan approval not come through, or your circumstances change in some way? Your agent should not be talking you out of, or into! anything. You should be provided with all the info you need to make a decision, and be able to ask many "what if" questions. If you were competing with multiple offers, then you might have wanted to take a calculated risk that the absence of a financing contingency would make your offer more attractive to the seller. As others have pointed out, there are other considerations also- appraisal contingency?, settlement time-- without knowing the rest of the details, I would say it is difficult to offer an opinion. In any case, your agent should advise you of the pros and cons of every element of the offer, and make it clear to you that the final decision is yours to make. In the current market, I would say that generally an appraisal and financing and home inspection contingency should be an expectation for any seller, but there are always exceptions.
Best of luck,
Having said that, if you'd told the agent: "Look, we really want this house. It's our dream house. We want to go in there strong." Then removing the financial contingency would have been something to consider. I'm concerned--and I think many of the others commenting here may be--with your statement that "our agent talked us out of the financial contingency." Presenting the facts--for instance, that your chances of getting a ratified agreement were stronger without the contingency, or that your current home will easily and quickly sell for what you need--is fine. But then it should be up to you to decide...to weigh the pros and cons of the various option.
Reexamine the points that your agent made when discussing the issue with you. It's possible that they were relevant and persuasive. A lot of buyers get nervous after making an offer; that may be part of what you're going through. And certainly raise those issues with your agent.
Hope that helps.
As a buyer you might have sterling credit and a good downpayment. which is phase one of the entire loan process.
What has become a very critical element is the appraisal. Many times a lender will asked for an appraisal review or a second appraisal or even reduce the value as stated in the appraisal especially if they believe your area is in a very soft or declining market. Funds to close the loan are usally from sources that are out of state and they are often clueless about your specific neighborhood and it's market conditions.
A lender usually gives a written "conditional approval" which means they will grant the loan as long as you provide them with requested information and it is satisfactory to them.
Word to the wise, always leave contingency items in tact, even in an "as it" purchase.
Hope all goes well with your purchase.
All the best!