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What is a financing contingency?
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Once a property goes under contract there is customarily a certain amount of earnest money due as a token of commitment from the buyer. The earnest money can range from a few percent to a heft double digit percentage. If the buyer then finds out that he is not able to secure financing at the terms stated in the contract (interest rates, maximum monthly payment, loan amount) the buyer can terminate the contract before the loan commitment deadline. Such termination would be followed by the earnest money release back to the buyer. |
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