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Third (3rd) Party Financing Addendum – For Conventional, FHA, or VA Loans

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The third (3rd) party financing addendum is attached to a sales contract that outlines the terms of a loan (e.g., conventional, FHA, VA) that is agreeable to the buyer in order to close on the property. The sales contract is usually contingent upon the buyer receiving the loan as detailed in the addendum. If the buyer is not able to obtain the terms as detailed, the sales contract becomes void with all earnest money being returned to the buyer. If the buyer is able to get approved for financing in accordance with the terms of the addendum, the closing should occur within the specified time period (no more than 30 days).

Seller Financing Addendum – Use if the buyer is going to be seeking a loan directly from the seller of the property.

By Type

Conventional Financing Addendum – Provided by the Association of Realtors for buyer’s to enter the financing details they would need in order to close on the property.

FHA / VA Financing Addendum – Contains special language in the case of government FHA and VA loans.

Reverse Mortgage Financing Addendum – Typically for individuals 62 and over, allows the seller to collect cash in exchange for equity in their home.

USDA Financing Addendum – For buyers in rural and suburban areas who usually do not qualify for conventional loans.

How to Write

Step 1 – Download in Adobe PDF, Microsoft Word (.docx), or Open Document Text (.odt).

1 – You Can Obtain This Addendum Template Using This Page

You will need a clean working copy of this addendum in order to fill it out and attach it to the relevant contract. Obtain a copy by clicking on the PDF, Word, or ODT buttons on this page. It is generally recommended to store one blank copy on your machine then using it when necessary.

2 – Document The Addendum Date And Introduce The Concerned Parties

The first task to attend to is the paragraph item labeled “I. The Parties.” Here, we will need to report the date of the contract this addendum will be attached to. Enter this date as the month (written out) and calendar day on the first blank space and the two-digit year on the second blank line. In addition to the contract’s execution date, we will need to report the names of the Buyer and the Seller precisely as they appear in the signed paperwork. Use the third blank space of this paragraph to report the full name of the Buyer as listed in the concerned sales contract. Next, locate the name of the Seller listed in the contract and present it on the blank space just before the parentheses label “Seller.” This first article will also require a record of the property being sold. This should be documented as the building number, street name, and (if applicable) suite number on the blank space after the phrase “…For The Property Located At.” Then report the City and State where this property is located on the last two spaces here of this item.

3 – Indicate The Type Of Financing The Buyer Is Implementing

This addendum will need to solidify the financing obtained by the Buyer to purchase this property. Three choices will be presented in article “II. Financing.” Each will require some additional information, so make sure you have your references available.

If the Buyer has obtained a Mortgage for this sale, then mark the first checkbox (labeled as “Conventional Financing”). In sales contracts where the Buyer has obtained a Mortgage, we will have to indicate if it is a “First (1st) Mortgage” or a “Second (2nd) Mortgage.” Do this by marking the checkbox A or checkbox B. Be prepared to record such items as the principal dollar amount (minus any PMI premiums), the maximum interest rate and its lifespan, as well as information relation to the Origination Charges (as per the Buyer’s Loan Estimate) to the appropriate areas in the paragraph you selected. If the Buyer will employ “USDA Guaranteed Financing,” mark the second checkbox in this list. Here, you must supply some defining factors of this loan. The minimum guaranteed amount, minimum monthly amortization rates and lifespan, and the maximum interest rates involved with the Origination Charges are some of the items you must provide to supplement the language of this statement. Select the third checkbox if the Buyer will use “Reverse Mortgage Financing” to obtain this property then, report on this financing by presenting the original amount, applicable interest rates, and the time frames involved. If the Buyer will work through “FHA Insured Financing” then mark the fourth checkbox. You will also need to indicate the minimum amount of the section 203(b) FHA insured loan along with some information regarding its monthly amortization, the maximum interest rate that may be applied, the time frames involved, and some information regarding the loan’s Origination Charges. Mark the last checkbox if the Buyer has arranged for “VA Guaranteed Financing,” then look up and report the VA guaranteed loan’s minimum amount, monthly amortization, some of the applicable interest rates, and their time frames.

4 – Establish Lender Power And Approval Deadline

Some cases will require the Lender’s approval of the Buyer’s financing method while others will not require such approval. We will address this issue in “III. Lender’s.” If the Buyer’s financing must be approved by the Lender for this sales contract to continue then, mark the box attached to bold words “Subject To Lender’s Approval” then report the calendar date when the Lender must provide his or her written approval on the blank lines provided. If the Buyer does not require the Lender’s approval on his or her method of finance, then mark the checkbox next to the bold words “Not Subject To Lender’s Approval.” Finally, in article “IV. Property Approval,” record the due date when the property approval must be obtained by the Buyer from the Lender for this sale to proceed using the blank lines after the words “The Buyer Shall Have Until…”

5 – Buyer And Seller Signatures Are Both Required For Execution

The final stage of this addendum requires some binding signatures. An area at the end of this document has been supplied for these items. Each signature party must have reviewed, comprehended, and decided to agree to every article in this addendum before signing the finished product.

The first signature area will begin with the blank lines labeled “Buyer’s Signature” in article “VIII. Authorization To Release Information.” This will allow up to two Buyers to sign and print their names and record their signature dates. If there is only one Buyer, he or she should only tend to the first signature area. If there are more than two then edit this document to allow additional space for each Buyer to sign his or her name, print it, and provide the signature date. Each Seller named in the contract will also have to provide his or her signature and printed name on the blank lines labeled “Seller’s Signature” and “Print Name” (respectively). Each signature party must also report the date when he or she signed this addendum.  


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