When making an offer on a foreclosure, does it matter what the loan contingency amount is?

Asked by Larry Barlow, Harrison, TN Fri Feb 20, 2009

Within offer financial contingency states buyer having the ability to obtain a loan of (95% vs 80%) of the purchase price?

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Fri Feb 20, 2009
It may. If a bank is looking at two mortgage approvals, one with 5% down and one with 20% down, they may consider the buyer with the larger down payment more stable and thus more likely to close. They may even accept a lower offer from the more stable buyer.

Banks don't want to waste their time on riskier (lower down payment) loans which may not close
1 vote
Patrice & Je…, Agent, Chattanooga, TN
Sat Feb 21, 2009
Larry, always strengthen the offer when asking for a lower price. Size of down payment is one way of doing that. Do you have a property in mind? Let us know if we can help.

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Charlene Ble…, , Marion, NC
Fri Feb 20, 2009
Tony is exactly right about how a lender will view that portion of the contract. Plus, coming from your end, be sure you are willing and able to proceed with the purchase based on ALL the terms stated in the loan contingency section: amount, term, interest rate and points. A couple of points in rate could mean the difference between an affordable mortgage and an unaffordable one. And a point or two in origination fees and discount points could mean the difference between you having enough cash to pay closing fees - or not. So, if you put in an arbitrary number, and the bank will lend based on those rates and points, but not lesser ones that are actually affordable, you could lose your earnest money.
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