Perf mortgage addendum – the specifics
Performance mortgage addendum is usually in continuation to the price and terms of purchase agreements between the seller and buyer for the property. This buyers mortgage financing plays a very significant part. As part of the purchase agreement, the contingency is in effect till the closing date and this is mentioned in the purchase agreement. In case the buyer cannot complete the financing before the closing date, then the purchase agreement stands cancelled and the buyer is refunded the earnest money. By securing finance or completing the finance means that the mortgage financing is completed.
The contingency is effective till around 3 weeks or more for the buyer to obtain a loan approval letter which is also called a loan qualifying letter or some statement from the lender stating that they are willing to loan the amount before or on the approval date of the loan.
The contingency also states that the buyer can waive off the financing contingency and the seller can cancel the purchase agreement after giving the buyer 15 days to cure and that the purchase agreement when is cancelled the buyer is refunded the earnest money.
The buyer is given the mortgage for a specified period of years with a specified rate of interest per year – this could be either fixed or adjustable.
The application of the mortage needs to be made in 5 business days of the purchase agreement being accepted. Incase there are discount points the terms and conditions need to be mentioned as well.
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