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Can a buyer back out of a home purchase after signing loan docs

Can a buyer back out of escrow after signing loan docs because he's not happy with his interest rate?  After signing loan docs the buyer requested an additional two weeks extension because he was not happy with the interest rate.  Two days before the loan is to be funded he asked for an extension.  Do I have options or do I have to give him the extension. What are my options?
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October 23 2013 - Pomona
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Answers (7)

Are you the seller? Ask your real estate agent and the buyer's lender also to find out. After signing the loan document means the buyer agreed with the loan terms. I don't think by delaying closing will change anything becuaSe the loan has all set and done ready to fund.
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December 04 2013
Great answers.  I would call the buyers lender and find out what is going on first.  If your buyer needs a lower rate to qualify perhaps you can help by buying down his rate, by offering to do so you may save the contract.   If the contract is contingent upon a certain interest rate and the interest rate now offered by the buyers lender is higher then it may a breakable contract - so signing might be in your best interest.  Talk with your Realtor and come up with the best course of action. 
Good luck
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December 03 2013
The Buyer should have verified his interest rate by the loan condition deadline.  There is no obligation to extend.  The Buyer is in default if he/she does not close; at least in Colorado.
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December 03 2013
Wow, sound like a sticky wicket there! Is the buyer in remorse, a financial burden or has he been coerced to sign these loan docs? Are you willing to give the extension as requested? If yes on your part offer the extension and have your Realtor® write and attach an addendum making the EMD non refundable. Before doing so I would have your Realtor® talk with the buyers lender directly for an accurate description of the problem, no numbers would need to be disclosed in the process. Good luck!
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December 03 2013
If the Agreement of sale has a mortgage contingency with a certain rate then that could be the buyers way out of the agreement.But you would not be able to keep his earnest money deposit over it. Because technically they could not get financing in the terms set fourth of the contract. You could end the deal and not sign extension. Which inadvertently would make the buyer except the interest rate or walk.
Good Luck
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November 29 2013
There is a financing contingency in the Purchase contract. Usually it is removed after 17 days...was this done? . Please do consult with your Realtor so that you understand the contract well, both it's terms and conditions.
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November 29 2013
The sales agreement will tell you if the buyer can cancel due to this, take a good look at it, and ask for professional advice if you are not sure. Some contracts have an interest rate cap stated in it, just for this purpose. The buyer may also have an out, if he cannot qualify with the higher interest rate, and the contract is contingent upon financing approval. Regardless, you need to weigh the opportunity cost if you put the home back on the market. Rates will be rising in the next year, and sometimes a contract in hand is worth more than the unknown. Good luck!
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October 23 2013
 
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