l o a d i n g


Jul 01 2023

How to Get Out of a Mortgage Contract before Closing

As a homeowner-to-be, you may have signed a contract to purchase a property and secure a mortgage. However, there are situations when you may need to get out of a mortgage contract before closing. This could be due to various reasons, such as financial difficulties, unexpected emergencies, or simply a change of heart. Whatever your reason may be, there are ways to get out of a mortgage contract without facing severe consequences. Let`s explore them one by one:

Review the terms of your contract: The first step to take is to review the terms of your mortgage contract thoroughly. Check for any clauses that may allow you to cancel the contract, such as a contingency clause for appraisal or inspection. If such clauses exist, you can use them as a legal basis to cancel the contract.

Negotiate with the seller: If your contract does not have any contingency clauses, you can still try to negotiate with the seller to mutually cancel the contract. Explain your situation calmly and respectfully, and ask if the seller is willing to terminate the agreement. However, keep in mind that the seller is not obliged to cancel the contract, and you may need to offer a financial incentive to persuade them to do so.

Get legal advice: If negotiations with the seller are not successful, you may need to seek legal advice. A real estate attorney can help you understand the legal consequences of canceling the contract and provide you with options to minimize any financial damages.

Consider defaulting: Defaulting on a mortgage contract is not an ideal option, but it is possible. Defaulting is when you fail to close the deal and follow through with the contract. However, this will result in losing your deposit and may also lead to legal action and credit damage. Therefore, it is recommended to consult with a real estate attorney before deciding to default.

Inform your lender early: If you are facing financial difficulties or unexpected emergencies that prevent you from getting a mortgage, you should inform your lender as soon as possible. Lenders understand that life happens and may work with you to reschedule your closing date or offer you other options, such as refinancing or modifying the terms of your loan.

In conclusion, getting out of a mortgage contract before closing can be a stressful and complicated process, but it is not impossible. By reviewing your contract, negotiating with the seller, seeking legal advice, and informing your lender, you can find a way to terminate your contract without facing severe consequences. Remember to be honest, respectful, and proactive throughout the process to achieve the best possible outcome.