Contingencies and Interest Rates

**firsttimehomebuyer** · 09-30-2010, 08:37 PM

Hi, first time home buyer here. I have found the perfect house and am ready to make an offer on it. I'm worried about interest rates though. I have already been pre-approved at x%. Is there any protection I can add to my offer in regards to my interest rate? For example, could I add a contingency to my offer similar to the following:

Offer only good if buyer is able to secure the pre-approved interest rate of x%.
Offer only valid for 'y' amount of time from the submission date.

I have asked my realtor and he/she seems to be a little shady when I bring this up. She/he says that it is not a general practice to put in an interest rate contingency. Is this true?

I'm just not wanting to risk offering a certain amount today and have the interest rate shoot up on me and me not be able to afford the mortgage.

Any help would be appreciated.

Thanks in advance!

**Greg** · 10-01-2010, 05:49 AM

Run Forest, run. Get away from this agent as fast as you can.

A loan contingency HAS to contain a time frame and an interest rate for it to offer you any protection. What if interest rates go up to 10% by the time you lock in your rate?

If you were foolish enough to sign an exclusive buyer agency agreement with this agent don't worry. You can still work with another agent because this agent is not fulfilling their fiduciary responsibility to protect their client which breaks their side of the contract. You can not be forced to honor a contract which the other side is not honoring.

If this agent is trying to pull this blanket over your eyes there is no telling what else they may be doing.

**firsttimehomebuyer** · 10-01-2010, 09:05 AM

Thank you so much for re-affirming what we believed. We have signed NOTHING, so we have no obligations to anyone. Will report back with more info.

Thanks again for the response.

**gotlivechat** · 10-01-2010, 11:09 AM

I can't see why any homebuyer couldn't have any type of contingency (besides the standard ones listed).
But it also depends on how badly you want the house, especially if there are multiple offers on it. A seller will use contingencies to differentiate between matching offers...

**CalgaryListings** · 10-02-2010, 10:04 AM

In my area, the offers have a conditional area to fill out that states interest rates etc. If the buyer is not able to qualify for the mortgage with the guidelines in the offer, they are able to exit the agreement on the basis that their financing condition was not met. This is done without penalty to the buyer.
This is a great question, and I am going to write a blog post on it, thanks for asking!