What happens if a loan rejection happens after the option period is up and an offer is already made?
toni asked:
I heard FHA loans can take anywhere from 1 to 6 weeks to approve. If our option period is 10 days from today, and we get rejected for our loan 15 days from now, what happens? Do we just lose our earnest money and that’s it? Or is it a more serious problem, as we’ve already made an offer because we were preapproved?
Kelly
I heard FHA loans can take anywhere from 1 to 6 weeks to approve. If our option period is 10 days from today, and we get rejected for our loan 15 days from now, what happens? Do we just lose our earnest money and that’s it? Or is it a more serious problem, as we’ve already made an offer because we were preapproved?
Kelly
Tags: Earnest Money, Fha Loans, Loan Rejection
March 29th, 2009 at 10:55 am
Tracy
Lose just your earnest money.
March 31st, 2009 at 3:23 am
Julia
you should ask to push your option period out further
April 1st, 2009 at 6:03 pm
Brenda
Since you are getting an FHA loan, your contract has some type of financing contingency. It will probably have a number of days (sometimes the same as the option period, sometimes different) by which you want to know if you’ll get approved. If your denial comes before the end of those days, you get your EM. If it comes after those days - and this should not happen since your loan officer and Realtor know to keep track of the days - you lose the EM. No other penalty.
April 4th, 2009 at 10:22 pm
Keith
almost all contracts have final underwriting as a condition of sale and if that has not happened then yes you get your ernest money refunded
April 7th, 2009 at 12:00 am
Jack
It will depend on how the contract is written, If you have a REALTOR, which is always the best way to approach buying a home, he or she should be protecting your best interests. That’s their job. I would guess they have written the contract so if you can not get loan approval you will get your earnest money back. In TX it is in paragragh 3. You should have received a copy of the contract. You will be out the option fee you paid and any insepction fees you paid during the option period however. Those are never returned as these are both options FOR the buyer,