Even if you’ve been pre-approved for a mortgage, I recommend having a financing condition.

Whether you’re selling a home and moving into another, or you’re buying your first home the financing condition protects you should there be a deficiency in the collateral (the house you’re buying).

There are several things that could come up if you don’t have a financing condition, here’s an example of one:

If you have a 20% down payment, most lenders require an appraisal of the property. The appraisal is ordered by the mortgage broker who contacts a Certified Real Estate Appraiser (CRA) to do the work.This is a third part who evaluates the value of the home. With a 20% down payment most lenders to not insure the mortgage against default, therefore the lender wants to confirm market value. If the appraiser, assess the property for less than the value on the offer you’ve made, the lender will only give the mortgage based on the appraised value. The impact is that you may be short of funds on closing if you haven’t discussed this in advance.

Don’t feel the pressure to buy a house without a financing condition, even if you’ve been pre-approved.