Home Buying Process
Types of Financing Contingencies
Your Roadmap to a Confident Home Purchase
Whether you’re buying for the first time or the fifth, having a clear understanding of the home buying process makes all the difference.
My comprehensive Home Buyer Overview walks you through every stage—from financing and offer strategy to inspections, closing, and beyond—so you can navigate your purchase with clarity, confidence, and fewer surprises.
Not all financing contingencies are created equal—and understanding the difference can be the key to protecting your earnest money deposit. In this video, Adam explains the two types of financing contingencies used in real estate contracts, how each works, and what buyers need to know to avoid losing thousands. If you’re including a financing contingency in your offer (or debating whether to), this video is essential viewing.
What You’ll Learn in This Video:
The difference between automatic expiration and automatic extension
What documentation is required if your loan is denied
How the seller can respond if deadlines pass without action
Why automatic extension is often better for both buyers and sellers
How switching loan types mid-contract affects your contingency protection
What’s on the market now? Customize your home search.
Ready to start the process? Schedule a brief conversation.
Adam Tabaka (00:00):
If your contract contains a financing contingency, it may come in one of two forms.
(00:05):
With automatic expiration, if your application has been denied, in order to protect your EMD, you must deliver by the deadline to the seller, notice a void as well as a copy of the written rejection letter from your lender.
(00:19):
With automatic extension, your protection will continue beyond the deadline, but following the deadline, the seller may deliver to you notice requiring that you remove the financing contingency. If you don’t remove the financing contingency, the seller may choose to void the contract.
(00:37):
Automatic extension is generally preferable for buyers as it allows for some flexibility with respect to timing, should things get held up in underwriting. And in most cases it may be preferable for sellers as well, as it may not be advantageous for them to go back on the market and start the whole process over from square one.
(00:56):
It’s important to understand that the protection afforded by the financing contingency applies only to the type of financing that is specified in the contract. Now, at any point between contract and close, you may choose to switch to a different type of financing if you choose. But understand that if you do, the financing contingency will no longer apply.
(01:18):
Want to learn more? Check out my Home Buyer Overview. Ready to start the process? Give me a call or schedule time with me down below. Until next time, take it easy.
Your Roadmap to a Confident Home Purchase
Whether you’re buying for the first time or the fifth, having a clear understanding of the home buying process makes all the difference.
My comprehensive Home Buyer Overview walks you through every stage—from financing and offer strategy to inspections, closing, and beyond—so you can navigate your purchase with clarity, confidence, and fewer surprises.