Financing Contingencies are Crucial for Central Ohio Home Buyers - Columbus Ohio Real Estate | Buyer's Resource Realty Services

Financing Contingencies are Crucial for Central Ohio Home Buyers

Mortgage interest rates are rising, and the pace of the increases are throwing some Central Ohio home buyers off balance. According to data from Columbus Realtors, the number of canceled purchase offers during June 2022 were up by 30% compared to April 2022. So far during July, about 21% of listings on the Columbus Regional MLS are “boomerang” listings that were once under contract, but are now back on the market.

While not every canceled deal is tied to a financing contingency, escalating rates seem to correlate with the increase in returning listings. Data from Freddie Mac shows that the average 30-year fixed rate mortgage increased from 3.76% to 5.78% between March and June 2022.

Even small increases in mortgage interest rates can affect a home buyer. For example, on a $200,000, 30-year mortgage, the difference in payment between a 4% rate and a 5% rate is $118.81. When rates rise (and keep rising), some buyers will not remain qualified for their desired mortgage amount.

It’s important for home buyers to obtain updates to their mortgage pre-approval at least once a month – or as often as needed when rates are changing quickly. But to protect yourself when making a purchase offer on a home, you need to have a financing contingency in place!

Until your rate is “locked in” by your lender, there’s really no telling what your actual interest rate will be. Using a well-worded financing contingency in your purchase offer prevents you from being obligated to accept financing that would be unreasonable for your situation. Example language would look like: “Subject to 30-year fixed rate Conventional mortgage approval in the amount of $209,000 with the interest rate not to exceed 6%.”  This is a brief example only; your contingency would be specific to prevailing conditions and your needs.

No buyer wants to see their home purchase canceled. Yet there are circumstances beyond your control that can affect your ability to see the purchase through, and contingencies help you manage these risks. The representation of an Exclusive Buyer’s Broker is a must!

As Exclusive Buyer’s Brokers, we serve your best interests at all times! Unlike real estate agents and brokerages who represent sellers, as an Exclusive Buyer’s Broker, we only represent you, the buyer, getting you the best price and terms with no conflict of interest at all times.

Understanding this distinction could literally save you thousands of dollars not only on the purchase price and terms, but also on seller concessions and home inspection issues, whether you are a first-time homebuyer or an experienced homeowner!

Contact us with your home buying questions! Remember, we are with you every step of the way…all the way home!

Andrew Show
Exclusive Buyer’s Broker, CEBA-M, MCNE, CSP, PSA,e-PRO, CREM, ABRM, AHWD
Buyer’s Resource Realty Services
Serving Metro Columbus, Ohio with Exclusive Buyer’s Agents
7100 North High Street, Suite 204, Worthington, Ohio 43085
614-888-4110 | 888-888-4110 Toll Free | 614-839-4110 Fax

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