Can we get out of a purchasing contract if the interest rate is different than stated?

UPDATED: Apr 5, 2012

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Can we get out of a purchasing contract if the interest rate is different than stated?

In our contract it states the price will bear interest at a fixed rate of 3.750% per year for a term of 30 years. We have been approved for the loan but the interest rate is 4.250%. Is this something we can use to get out of the contract?

Asked on April 5, 2012 under Real Estate Law, Virginia


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

For a definitive answer, bring the contract to an attorney to review with you--the specific language of the contract is critical to determing your rights under it. T

hat said, as a general matter, if the contract specifies a certain interest rate but that's not the interest rate you received, that *may* be grounds to terminate the contract, since it may be a material (or important enough) discrepancy from or violation of what you agreed to. Alternately, even if you can't terminate the contract due to this, it's possible you could get some compensation, such as a reduction in the price. To oversimply: say that the mortgage is $200k. A half-point difference would be a difference of $1,000 the first year. Suppose that over the life of the loan, the total difference in amount paid would be $18k (I'm guessing--I don't have a mortgage calculator in front of me). One option is to reduce the purchase price to save you  the money you'd otherwise lose from the higher interest rate.

Again, though, you can't answer contract questions in the abstract, so you need to have the agreement and factual situation reviewed in detail by an attorney.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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