Home purchase cancellations are above 15% for the second straight month. It's important to know the financial repercussions
Home purchase cancellations are above 15% for the second straight month. It's important to know the financial repercussions
Abstract
Amid higher interest rates and a softening housing market, home buyers are continuing to back out of purchase contracts at an elevated rate. Typically, buyers provide what's called an earnest money or "Good faith" deposit when an offer is made on a home, although the specifics vary from state to state. Given the financial risks of a broken contract, it makes sense to ensure the final purchase is contingent upon certain aspects of buying a house. More from Personal Finance:Car buyers pay 10% above the sticker price, on average62% of workers reduce savings amid economic worriesHere's how to prepare for student loan forgiveness For buyers, the softening market means entering into a contract with contingencies is more likely than it was just a few months ago. "Buyers are putting contingencies back in and not giving it all away to sellers like they did," said Stephen Rinaldi, president and founder of Rinaldi Group, a mortgage broker. Buyers "Are willing to walk away even if they can qualify because the house payments have gone up," Bingham said. The average fixed rate on a 30-year mortgage was 6.7% as of Friday, up from about 3.3% in early January, according to Mortgage News Daily.