Third Party Financing Addendum

What Is the TREC Third Party Financing Addendum?

The Texas Real Estate Commission (TREC) third party financing addendum is a standardized document used to notify the seller that the buyer would be procuring a mortgage. The form specifies details about this mortgage, such as the financial institution giving the loan, the type of loan, the amount, and other essential conditions. This particular addendum serves as a legally binding supplement to the sales contract should the buyer fail to procure financing.

Using the third party financing addendum

The third-party financing addendum in Texas is particularly common in the Lone Star state. It is absolutely essential for those purchasing property through an agreed-upon financing option, offering both the buyer and seller protections. Its clauses help ensure that if financing fails, the buyer can get back earnest money, which serves as a deposit when a purchase offer is made. 

How to Fill Out a Texas Third Party Financing Addendum

Ensuring accuracy when filling out this paperwork is crucial. This guide on completing the third party financing addendum pdf serves as a reference to avoid any contractual issues down the line:

1. Begin by typing the street address and city of the property in the space provided in the form. This information lets the lender know the property's location, which can affect loan approval.
2. After providing the address details, identify the type of financing you intend to use. The form offers multiple choices, including conventional financing, Texas veterans loan, FHA-insured financing, VA-guaranteed financing, USDA-guaranteed financing, and reverse mortgage financing. Check the box that applies to your situation.
3. Under 'Duty to Apply and Obtain Approval', check whether you are under obligation to apply for and secure the specified financing type. Ensuring you complete this section accurately is essential, as it affects the responsibilities and liabilities of the parties involved.
4. The next aspect to fill out is the financing approval section. It requires you to specify whether the buyer and property need approval or not. In some cases, for instance, the property may need to be inspected and verified to be in good condition before the lender approves the loan. 
5. In the 'Security' section, you provide the details about the collateral against the loan. It includes information about the property being financed. Ensure you fill in the appropriate information asked in this section, which could range from property details to the terms of the mortgage.
6. The form also has an 'FHA/VA Required Provision' section. If you are applying for an FHA or VA loan, fill out this part properly, as it includes terms specific to these types of loans.
7. Look for the 'Authorization to Release Information' section. Here, you will allow the parties involved to exchange information. Fill in your name and add your signature as the buyer. Similarly, the seller's name and signature should also be filled in.
8. At this point, you have completed filling out the form on the PDFliner website. Make sure all the information is accurate before submitting it to avoid any complications or delays with loan approval. 

Ensuring safety in third party financing addendum Texas

A third-party financing addendum form contains sensitive personal and financial information. Therefore, safeguarding this information is crucial. When filling out the form, ensure you’re in a secure place or on a safe and trusted computer. Remember to be cautious when emailing or printing these forms as they contain your personal information. Always use encrypted email and printers, and make sure to store the hard copies in a secure place.