You can always seek lower rate

MAILBAG

June 12, 2005

Q. I put in a contract at the end of March when the loan rates were starting to rise. I am going to settlement soon and wanted to see if it is possible to go back to my bank and go with the newer rates since they have decreased. I also have another concern. I may receive a job offer that will force me to move out of town. Is there anyway to break a contract and pull out of the deal? What ramifications would occur if I did?

A. You definitely should ask the bank for a lower interest rate. If you did not lock in the rate when you applied for the loan, you should be able to now lock in at the current lower rate. Even if the lender has locked the rate, it might be willing to lower the rate as an accommodation to you.

You also can contact other lenders to find out whether they can qualify you and approve a lower-rate loan in time for your closing. Switching lenders might require you to pay additional costs for a property appraisal and a credit report unless the new lender can use the ones previously obtained.

You won't be surprised to hear that you can't break your purchase contract because you need to move out of town. You might be able to negotiate a termination of the contract. That will depend on the seller's willingness to put the property back on the market.

The seller might insist on your forfeiting all or part of your deposit or demand additional compensation. And the real estate brokers might have commission rights that would have to be satisfied or waived.

If you fail to close without a valid legal reason, you could be liable for substantial damages. I strongly advise you to get legal advice before breaking your contract.

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