We've all heard the stories, two days before closing the buyer is turned down for a mortgage and the seller cannot close on his new home. Following are some thoughts for you to consider.

Is the buyer pre-qualified or pre-approved? Knowing the difference can be critical to a smooth closing. Click here for a thorough explanation.

If my buyer is turned down, will I get to keep the earnest money? Generally not. Most purchase agreements call for the buyer’s earnest money to be refunded if the buyer is turned down for a mortgage. However purchase agreements are negotiable. You may want to consider a clause that protects you if you must put the house back on the market.

Has your buyer exhausted all avenues? Just because a buyer is turned down for an "A" paper loan does not mean they can’t get a loan. There is a billion dollar industry looking for buyers who have been turned down by traditional lenders. Explore alternative financing.

Can you qualify for both mortgages? Lenders will sometimes waive traditional qualifying ratios if they know your current home is on the market and you will not carry both mortgages for very long. A home equity loan can be used to secure the down payment on the new home.