Traps for the Unwary in an Environment of Rising Interest Rates
In the vast majority of Financing Addenda I’ve seen — along with the Inspection Contingency, the two critical Addenda in a Purchase Agreement — the Buyer’s agent fills in the blank above with 
the word “market.”
When rates are stable or falling . . . no problem.
However, when rates are rising or volatile, committing the Buyer to pay “market” interest rates can be dangerous, because it removes an important escape hatch if rates spike.
The better strategy?
Adding .25% to 1% to prevailing rates at the time the Purchase Agreement is signed.
