Mortgage Terms for Understanding: Escalation Clause
Apr 7, 2021, 16:42 PM
The more you know about the home buying process, the more confident you will be in making the important decisions that will shape your home ownership experience. The information provided will help you make the best decision in your home purchasing decisions.
What is an escalation clause?
An escalation clause is often helpful in a seller’s market, where there are more homebuyers than there are homes for sale.
Found in the underwriting of offers and indicating that the buyer would be open to and is able to increase their original offer, an escalation clause is used like a safety net to ensure they aren’t outbid by another party if higher offers are submitted.
Using an escalation clause is a smart idea when you want to strengthen your offer and edge out competing bids. When there is a lot of traction and interest in the property you are putting an offer in on, an escalation clause will state that you are willing
to escalate your offer (up to a certain amount) to beat out the competing offers. It also shows sellers that you are serious about the home, and you’ll go to lengths for the chance to be the winning buyer.
Read more about the basic terms of a mortgage transaction. Any way you look at it, the decision to buy a house is yours,
and yours alone. First, make sure that it's financially feasible. Can you pay the up-front costs of purchasing a house, as well as the ongoing monthly mortgage and other living expenses? We've provided a wide range of calculators for you to use to determine some preliminary answers. Plug in your figures and see if it all adds up. Let the mortgage team at Metro Credit Union mortgage help you further fulfill your home ownership dreams.