Buyer not approved - can we accept another offer?

What is the name of your state? North Carolina

Here is the situation. We got an offer which we accepted and both parties signed. The offer states in the CONDITIONS section that the buyer must be able to obtain a VA or Conventional loan at a Fixed Rate for a term of 30 years at an initial interest rate not to exceed 6% per annum, with mortgage loan discount points not to exceed 1.5% or the loan amount. Buyer shall apply for said loan within 15 days of the Effective Date of this contract. Buyer shall use Buyer's best efforts to secure the lender's customary loan commitment letter on or before May 15, 2005.

The buyer applied for the loan and was denied. The buyer wants the house enough that he has decided to try for approval with a different lender at a rate of 7.5% (higher than the 6% in the contract).

In the meantime, we have received another offer which is for a little more money, the buyer wants to close a month sooner (better for us), and already has an approval letter from the lender.

Is the original contract void if the buyer has to change the specified interest rate in order to get the loan? Or, if he is denied again, do we have to wait until May 15th to get out of the contract?

We would like to accept the second offer as there is less concern of there being problems getting to closing. Can we?

Thanks!