Can I Get Out of Closing on a House Without Losing Money?

Cancel a mortgage by following the correct procedures.
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It's wise to add contingencies to your purchase offer on a house so you can cancel the deal in certain situations. Your contingencies can save the day, helping you get out of closing on a home without losing money, as long as you follow proper procedures. If a contingency doesn't help you cancel a loan, you still have another cancellation option called the right of rescission.

Standard Contingencies

Including a financing contingency protects you from having to proceed if you can't get the financing terms you need. A home inspection contingency is also common – it protects you if the inspector finds problems that need significant repair. Other standard contingencies include tests for radon, mold and insect infestation, as well as tests on the water, septic and sewage systems. If any of these reveals an issue, a buyer can execute a contingency to cancel the home purchase.

Special Situations

Some real estate purchases include additional special contingencies to protect the buyer from having to proceed in certain circumstances. For example, if a buyer must install a public sewer system or well, a contingency can ensure the installation and required water rights go according to plan. A contingency that covers the real estate title will ensure you can cancel a deal if the title research uncovers a lien on the property.


Contingencies must have specific requirements. For example, a home inspection contingency should detail the results that would be unacceptable to the buyer. A contingency must also have a specific period during which the buyer can execute it without losing earnest money and without paying fees. When issues reach resolution – financing is acceptable or the inspection does not reveal issues, for example – the buyer removes the contingency, indicating he will not execute the contingency. If you execute a contingency during the contingency period, the contract dies without assessing penalties.

Right of Rescission

A buyer can cancel a mortgage at any time during the three-day right of rescission period after a real estate closing. During this period, the lender waits to disburse the loan to ensure the buyer does not exercise this right. If you decide to execute your right to rescission, you must notify the lender in writing before the time elapses. You will receive a refund of all money you paid as a part of the credit transaction. The only money you would not receive a refund of would be third-party charges such as a building permit purchase or zoning variance fees.

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