When you’re navigating the homebuying process, you’ll come across a lot of new terms. One of the big ones? Contingencies. Understanding how they work can help you make confident decisions, protect your investment, and move forward with clarity. At SWBC Mortgage, we’re here to guide you to your happiest way home.
Contingency 101
A contingency is a condition written into your purchase contract that must be met before the sale is finalized. Think of it as a safety net designed to protect you, the buyer, from unexpected issues. If a contingency isn’t satisfied, you may be able to renegotiate or even walk away from the deal without losing your earnest money.
Why Contingencies Matter
Buying a home is one of the biggest financial decisions you’ll make. Contingencies help ensure:
- You’re paying a fair price
- The home is in acceptable condition
- You can secure financing
- You’re not locked into a contract without safeguards
They give you room to investigate the property and confirm it truly meets your needs.
Common Types of Contingencies
1. Financing Contingency
This contingency gives you time to secure your mortgage. If you’re unable to obtain financing within the agreed timeline, you can typically cancel the contract without penalty.
Tip: Getting pre-approved with a trusted lender like SWBC Mortgage strengthens your offer and sets you up for a smoother process.
2. Appraisal Contingency
Your lender requires an appraisal to ensure the home is worth the amount you’re borrowing. If the home appraises below the purchase price, this contingency allows you to renegotiate or step back from the sale.
3. Inspection Contingency
A professional home inspection helps uncover issues that aren’t visible during a walk-through such as roof condition, foundation concerns, electrical issues, and more. If significant problems appear, you can request repairs, negotiate credits, or exit the contract. Read more about the inspection process here.
4. Home Sale Contingency
If you need to sell your current home before buying the next one, this contingency provides the time to do so. It’s less common in competitive markets, but still a helpful option for some buyers.
How Contingencies Work in a Real Transaction
- You make an offer and include the contingencies you need.
- The seller accepts or negotiates.
- The contingency period begins, giving you a set number of days to complete inspections, finalize financing, or review the appraisal.
- You take action by ordering an inspection, submitting loan documents, or working with your real estate agent to evaluate any issues.
- You remove or resolve contingencies once each condition is satisfied.
- You move forward to closing with confidence and protection in place.
Can Contingencies Affect Your Offer?
In competitive markets, sellers may prefer fewer contingencies because they view them as more likely to delay or derail the sale. However, it’s important not to waive essential protections without understanding the risks.
Your real estate agent and your loan officer can help you decide which contingencies are necessary for your situation.
How SWBC Mortgage Helps
As your lending partner, SWBC Mortgage ensures you understand what each contingency means and how it impacts your financing. Our team provides:
- Certified pre-approvals through our online app, Turnkey®
- Clear communication throughout the process
- Guidance on timing, documentation, and next steps
- A smooth and transparent experience, the happiest way home
The Bottom Line
Contingencies are there to protect you. They help you enter one of life’s biggest purchases with peace of mind, knowing you have the time and information you need to make a smart decision. Learn more about the mortgage process here.
If you’re ready to begin your journey to homeownership or simply want to understand more about the process, our team at SWBC Mortgage is here to help.