Can I Back Out After Going Under Contract?
Possibly. Signing a home purchase contract does not always mean you must close, but it does create legal obligations. Whether you can terminate, what notice you must give, and what money you may lose depend on the contract you signed and its deadlines.
I’m Paul Mattos with Refine Mortgage and Carolina Home Financing. My role is to help buyers understand the financing and payment before they make an offer. If a buyer needs to leave a signed contract, their real estate agent and, when appropriate, a real estate attorney need to review the agreement.
What Does “Under Contract” Mean?
A buyer and seller are under contract when they have a binding agreement on the sale. The agreement sets out more than the price: it can address deposits, inspections, financing, appraisal issues, notices, and the closing date.
Being under contract is not the same as having final mortgage approval. The lender may still need an appraisal, title work, insurance, updated documents, and underwriting approval.
It also does not mean you can cancel without consequences. The answer depends on the specific agreement.
Why North Carolina and South Carolina Need Separate Answers
In many North Carolina purchases using the common due diligence contract, a buyer can terminate during the agreed due diligence period by giving the required notice on time. The buyer’s due diligence fee and earnest money deposit are different payments. Generally, the due diligence fee is not returned when the buyer terminates during that period, while earnest money is generally returned following a timely termination under the contract. Exceptions and disputes depend on the facts and agreement. The North Carolina Real Estate Commission’s due diligence guidance explains the distinction.
South Carolina contracts can use different inspection, due diligence, financing, and termination provisions. Do not apply a North Carolina rule to a South Carolina purchase. Review the actual signed form, including any addenda, with your agent or attorney before deciding what rights or deposits you have.
In either state, the date, time, and method required for notice matter. Telling someone informally that you want out may not meet the contract’s requirements.
What If an Inspection Finds a Problem?
An inspection may reveal a repair you did not expect. Your choices depend on the contract and where you are in its timeline. You may be able to negotiate repairs or a price change, proceed with the home as it is, or terminate under an applicable contract provision.
A seller is not automatically required to make every repair a buyer requests. If you are concerned about a finding, send it to your agent promptly so there is time to review the contract and take the proper next step.
What If the Appraisal Comes in Low?
A low appraisal can change the available financing, but it does not automatically cancel the purchase contract. The buyer and seller might renegotiate, the buyer might contribute more cash, or the lender might review a supported reconsideration request.
The contract determines what happens if they cannot reach an agreement. My guide to what happens when an appraisal comes in low explains the financing choices.
What If the Loan Is Denied?
A mortgage pre-approval is not final loan approval. A loan may be affected by the property, appraisal, title, insurance, updated financial information, or underwriting findings.
A loan denial does not, by itself, guarantee that you can terminate without losing money. The signed contract determines whether a financing provision applies, what steps the buyer had to take, and whether notice must be given by a particular deadline. If financing becomes uncertain, contact your lender and agent immediately. Do not wait for the closing date to address it.
Will I Get My Earnest Money Back?
It depends on why and when the contract ends and what its deposit provisions say. The right to terminate and the right to receive earnest money back are related, but they are not identical questions.
There may also be a difference between being entitled to a deposit under the contract and how quickly the holder can release it if the parties disagree. South Carolina REALTORS’ guidance on termination and earnest money illustrates why notice and deposit handling need separate attention.
Before signing, ask your agent to identify:
Every deposit or fee you will pay and who receives it
Which payments may be refundable, and under what conditions
The inspection, due diligence, financing, and other key deadlines
How a termination notice must be delivered
What happens if you miss a deadline
How to Reduce Financing Surprises Before You Sign
I want buyers to know more than a maximum pre-approval amount. Before an offer goes out, I review the available income, credit, debts, assets, and loan options. When possible, I prepare a property-specific Total Cost Analysis showing the estimated full payment and cash to close, including taxes, insurance, mortgage insurance, and HOA dues where applicable.
That upfront review can reveal a concern before you take on contract obligations. It cannot guarantee approval or prevent every issue that might arise later.
Once under contract, respond promptly to document requests and talk to your mortgage team before changing jobs, taking on new debt, or moving funds in a way that could complicate documentation.
What Should You Do If You Want to Back Out Now?
Act before the next contract deadline. Tell your real estate agent why you are concerned and ask them to review the signed agreement and required notice procedure. If the issue is financing, contact your lender at the same time for a clear status update. If your rights or deposit are disputed, speak with a real estate attorney before sending notice or agreeing to a release.
Do not rely on a general article—including this one—to decide that you can cancel or that a deposit will be returned. The answer comes from your contract and the facts of your transaction.
If you are still planning a purchase in North Carolina or South Carolina, I can help you review the mortgage numbers before you make an offer. Schedule a mortgage consultation or start your application.
Paul Mattos
Mortgage Broker | Refine Mortgage
NMLS# 2339069 | Licensed in NC and SC
980-221-4959 | paulm@refinemortgage.net
