In the wake of the Silicon Valley Bank collapse, homeowners and prospective buyers are wondering just how much they need to worry about regional bank failures.
The recent failures were limited, but there are still things prospective buyers can do to protect themselves, according to a Wall St. Journal article.
Those who already have a mortgage don’t need to worry, as mortgages will be sold to a different servicer in the case of a failure. But if you’re in the midst of trying to buy, real estate lawyers suggest asking for a funding contingency, according to the article.
This is a provision that would protect the buyer’s deposit in case the lender goes out of business or can’t provide the loan for reasons beyond the buyer’s control. It’s something sellers will generally accept and would allows the buyer to find another lender within a certain period of time, Daniel Gershburg, a real estate lawyer, told the Journal.
Buyers should also research multiple mortgage lenders and apply for preapproval from at least three, Kate Wood, a home and mortgage specialist at NerdWallet told the Journal. This will give them the ability to compare loan estimates.