The most important contingency for the average buyer is the financing contingency. In simple terms, this gives the buyer the right to walk away from an offer if they cannot get a mortgage for the house. This is incredibly important, especially as lending guidelines seem to be changing rapidly.
Likewise, an appraisal contingency is a must. This contingency will allow you to ensure that your home is actually worth the value you will pay. As many types of loans are actually contingent on the appraisal amount being at or above the loan amount, this contingency can provide a bit of extra protection to many buyers.
It’s also a good idea to put a contingency on the sale of your current home if you’re looking to sell while you’re trying to buy. This can help you avoid the potential situation of having to pay two mortgages at once and gives you the ability to ensure that you’ll have the money for your down payment on your loan. Though not every seller needs such a contingency, it’s nice to have.
The last of the important contingencies you’ll need is an inspection contingency. This will allow you to back out of the contract if your home inspection discovers a major problem with your home. As one might expect, such contingencies are usually designed to make sure that you’re able to walk away from a problem that’s going to cost you more than it would be worth the repair.
Always make sure that your offer is contingent on the factors discussed here. Doing so gives you a safety net if something goes wrong and helps to preserve your options as you move forward with the buying process. Contingencies are vital to ensuring that buyers have at least some leverage when looking to buy a home.