So you found a house you wanted to buy. But now you're having buyer's remorse due to rising interest rates?

That makes sense.

Interest rates for 30-year-mortgages are hovering around 6.5%.

Some buyers are delaying buying a house, hoping the federal government stops hiking (or even lowers) interest rates this year or next.
 

So, what happens if you sign a contract to purchase a house and then change your mind? Can you legally back out? That depends. There are numerous points in a contract in which you may be able to change your mind, says Juana Maria Gonzalez, a real estate broker with Results Realty of Dade County in Miami Lakes, Fla.

Read the contract

First and foremost, read the contract before signing it. Make sure there is language in the contract that protects you as the buyer. Having contingencies in place will make it easier (and legal) to back out.

A contingency is something that can be written into a contract that states certain conditions must be met before the contract becomes legally binding. For example, you may want to have a contingency clause that states if the home is appraised at a certain value that is lower than what the seller is asking, you can back out.

The inspection period

You’re going to want to make sure the home you plan to purchase, even if it’s sight unseen, has undergone a home inspection. You can say in the contract that the sale is contingent upon passing the inspection. “Almost every home has some defect that the buyer can claim is a reason they don't want to buy it anymore,” says Gonzalez.

If defects are found, you may have the option of saying that you want the seller to fix the problems or you will walk away from the deal. This may depend on how significant the issue is and how badly you want out. Fixing a broken sink is one thing, fixing cracks in the home’s foundation is quite another.

Financial and other issues

It’s always a good idea to make sure you can qualify for the loan that you want. If you don’t do this ahead of time, you may find that you can’t get a loan, or fail to get one in the time allotted by the seller. “That is another escape hatch if you want to get out of the deal,” says Gonzalez.

Another way you may be able to get out of a contract is if there is a title defect. This can be anything from unknown liens on the property to missing signatures of a spouse or other co-owner on the paperwork.

“If the property has a title problem that the sellers can't cure within the time allotted in the contract, the buyers can cancel,” says Gonzalez.

While these are some of the ways that potential buyers might be able to get out of a home purchase contract, if you’ve just changed your mind because you are having second thoughts, then getting out of the contract, without losing your earnest money may not be possible. That is where a real estate attorney comes in. He or she may be able to find an escape hatch. If not, you not only risk losing the money, but you also face the possibility of being sued for “specific performance,” which basically means a court can order the party breaching the contract to complete the sale.

“Since buying a house is one of the biggest investments that you will make and given the risk of making a mistake in the drafting of the purchase contract, inspecting the property and closing on the purchase, it is critical that you engage an experienced real estate attorney to assist you from the inception of the transaction and professional inspectors to ensure that you identify any issues with the real estate in advance of closing,” says Stevan Pardo, a real estate attorney with Pardo Jackson Gainsburg in Miami, Fla.

This article is intended to convey generally useful information only and does not constitute legal advice. Any opinions expressed are solely those of the author, not LawChamps.