What happens if a loan rejection happens after the option period is up and an offer is already made?

toni: What happens if a loan rejection happens after the option period is up and an offer is already made?
I heard FHA loans can take anywhere from 1 to 6 weeks to approve. If our option period is 10 days from today, and we get rejected for our loan 15 days from now, what happens? Do we just lose our earnest money and that’s it? Or is it a more serious problem, as we’ve already made an offer because we were preapproved?

Answers and Views:

Answer by Worldly25
Lose just your earnest money.

Answer by Noneya
you should ask to push your option period out further

Answer by teran_realtor
Since you are getting an FHA loan, your contract has some type of financing contingency. It will probably have a number of days (sometimes the same as the option period, sometimes different) by which you want to know if you’ll get approved. If your denial comes before the end of those days, you get your EM. If it comes after those days – and this should not happen since your loan officer and Realtor know to keep track of the days – you lose the EM. No other penalty.

Answer by golferwhoworks
almost all contracts have final underwriting as a condition of sale and if that has not happened then yes you get your ernest money refunded

Answer by Proud American
It will depend on how the contract is written, If you have a REALTOR, which is always the best way to approach buying a home, he or she should be protecting your best interests. That’s their job. I would guess they have written the contract so if you can not get loan approval you will get your earnest money back. In TX it is in paragragh 3. You should have received a copy of the contract. You will be out the option fee you paid and any insepction fees you paid during the option period however. Those are never returned as these are both options FOR the buyer,