Mortgage Contingency vs. Appraisal Contingency

Mortgage Contingency vs. Appraisal Contingency

We all know how being competitive as a buyer usually implies few or no that rates are higher, obtaining financing - and contingencies related to them - is even more important to address carefully. Melissa Marcogliese of COMPASS Westchester, NY reminded me yesterday how often the above are confused or not clearly stated in offers ....which can lead to problems.....knowing the difference between a mortgage/financing contingency and an appraisal contingency is important.


  1. A Mortgage Contingency, sometimes also called a financial contingency or loan contingency, protects you if you are unable to get funding for your mortgage. Under a financial contingency, you aren’t locked into your home sale until you receive a concrete approval letter/commitment letter from a mortgage company. With a Mortgage contingency, you should be able to get your deposit back in the event your financing does not come through. 


  1. An Appraisal Contingency is a clause in a contract that involves your lender ordering a home appraisal during your loan application..... A licensed appraiser then evaluates the property, its condition, location, comparable sales, signed contracts, etc resulting in a written professional opinion of how much the property is worth. Should this appraisal come in lower than the contract offer price, a contingency would allow you to renegotiate the price and have the seller provide cashback/credit at closing, or back out of the sale. Without an appraisal contingency, however, the option to walk away might not be available to you. An appraisal contingency is not required. You could be at risk of breaking the contract and losing your deposit, at the very least. And sometimes an appraisal comes in HIGHER than the contract price.....who doesn't love that?


Securing the best property for you is important. Protecting you is equally important. Educating you to your options - early - is invaluable.

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