Changing loan types after you are under contract – Too risky?

Signed Sold Delivered

Part of making an offer on a home is specifying which type of loan you intend to use for the purchase, down to the number of years and type of interest rate (fixed or adjustable). While the contract (at least in our area) allows you to change the type of loan that you use, doing so comes with certain risks that should not be ignored.

The direct effect of such a change is on the contract’s financing contingency, which is meant to protect you a) if rates go up further, or b) you are unable to get the loan you need to buy the property after all.
In order to exercise the contingency to void the contract and get your deposit back under either of those circumstances, you have to present the sellers (within the allotted time) with a denial letter for the exact loan that you described in the…

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