How do loan contingencies work?

If you are in escrow on a property, and you can no longer qualify to get a loan, you can back out of the deal because of your loan contingency.
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Let me explain...
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When you first submit your offer, there is a section where you write in how many days you want for your loan contingency period.
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Do you have a really good lender? She might tell you that you only need 12 days for your loan contingency period. 21 days is average.
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You can keep your loan contingency in place the entire escrow, but you probably won't get your offer accepted having that long of a contingency... the shorter amount of time the better.
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As long as you back out of the deal within your contingency period, you should be able to cancel escrow without any problems.