Real Estate Mortgages: Buyer Beware
The real estate market has been charging back from the Recession of 2008. Real property values have increased and with the economy continuing to improve, those considering purchasing new homes have begun to do so and take advantage of continued, historically low mortgage interest rates.
Whenever a contract of sale is signed by a purchaser, care should be taken with regard to the mortgage financing contingency. Not only does the purchaser have to determine the amount of the mortgage loan she or he will require, but they should also be concerned that the property will support the mortgage loan. This is determined when the lender, following the filing of a mortgage application, orders and obtains an appraisal of the real estate. Lately, it is not uncommon to see buyers who fail to qualify for their mortgage loan as a result of a real estate appraisal that was below the agreed-upon purchase price.
To minimize disputes over the termination of the contract of sale due to the failure to obtain a mortgage commitment, we advise our clients to attempt to negotiate with the seller additional contingency language as it pertains to the mortgage loan. The contingency language would protect the purchaser should the property appraisal amount be lower than the purchase price.
The firm is selected for the 2017 list of Top Ranked Law Firms issued by Lexis Nexis/Martindale Hubbell. A description of the selection methodology can be found at Lawyers.com. No aspect of this advertisement has been approved by the Supreme Court of New Jersey.