Please Help, question on Home Loan Contingency

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keith - 26 Apr 2006 07:59 GMT

I tried to search the internet but couldn't find the answer. This is my
situation:

I bought a new house (currently in construction, close in 2 monthes) 3
monthes ago. Full documented loan was pre-qualified and contract was
signed with loan contingency. The house is in construction and will be
close in 2 months. However, I recently lost job. The loan agent said I
no longer qualified for the orignal full document loan, but can get no
document loan with much higher rate. With my current financial
situation, that would be too much burden. I talked to the builder's
sales office regarding canceling the contract and get my earnest money
(> 10k) back, but they refused and said if I qualified for no doc loan
( NOT the orignal loan that I pre-qualified), then the loan contingency
doesn't apply and I should either close the house or lose earnest
money. This doesn't seems logical and fair to me. In order to get no
document loan, one need to have good credit score. However, in this
situation, my endeavor to maintain good credit become harmful as I have
the "option" and will have to take a different loan with much higher
rate.

Please, anyone has experence on this situation or lawers please shed
some light. Can I back out and get my earnest money back?

Thanks a lot,
Keith

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Blair/Lanze - 26 Apr 2006 13:34 GMT

Ever heard of Manulife One?
-available at Manulife Financial In Canada, I don't know if its available in
USA

>I tried to search the internet but couldn't find the answer. This is my
> situation:
[quoted text clipped - 21 lines]
> Thanks a lot,
> Keith

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Nehmo Sergheyev - 26 Apr 2006 14:14 GMT

Keith -

> I tried to search the internet but couldn't find the answer.

Nehmo -
It's a contract/legal question. The internet may not be able to help
you, but at least you could try a more relevant part of the internet
(or usenet if you make the distinction). Unfortunately, from what I've
seen, of all subjects, legal questions get the most misinformed
answers.

By the way, learn how to crosspost. What you did was multipost.

Keith -

> I bought a new house (currently in construction, close in 2 monthes) 3
> monthes ago. Full documented loan was pre-qualified and contract was
[quoted text clipped - 12 lines]
> the "option" and will have to take a different loan with much higher
> rate.

Nehmo -
I can't even attempt to _realistically_ answer without reading the loan
contingency section of your contract. Then I'd need more info as well,
and you might now want to provide all that publicly.

Keith -

> Can I back out and get my earnest money back?

Nehmo -

>From what you said so far, I very much doubt it. Sorry.

--
(||) Nehmo (||)

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mrsgator88 - 26 Apr 2006 14:36 GMT

Hi Keith,

I'm very sorry to hear of your situation, I hope you find another good job
soon. Laws and customs vary from state to state and from locality to
locality, so the answer depends on where you live and the wording of the
contract.

You will not get information any more meaningful that this in a news group.
You need to hire a lawyer. Even though the contract says you're stuck,
sometimes the right lawyer knows what to say and who to say it to. I know
of at least one person who did this. As a house gets closer to completion
it should be easier to sell, and possibly for more money as well. Home
sales are public records, and if the builder keeps your deposit and then
sells the house for 5k or 15k more, you would have a right to feel cheated.

FWIW, a loan contingency needs to be accompanied by an interest rate limit,
otherwise you could end up paying far above market rates. This is important
because really buying the monthly payments not the contract price. If you
don't cap your rate, then you really don't even know what the house is going
to cost. If a builder won't agree to this, then perhaps its not a good idea
to go with that builder and instead buy an existing house from a private
seller.

S

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crhras - 26 Apr 2006 23:19 GMT

There's plenty of stuff you could do but many (not all) of your options are
framed by the Contract For Sale that you signed. Maybe you could scan it
in, white out the personal parts and provide a public link to it. I'm sure
you would get better quality feedback. The first question I would ask
though is what the current estimated value of the property is in relation to
what you contracted to purchase it at.

Curt

>I tried to search the internet but couldn't find the answer. This is my
> situation:
[quoted text clipped - 21 lines]
> Thanks a lot,
> Keith

Reply to this Message

keith - 27 Apr 2006 05:10 GMT

Thanks for all the warmhearted replies. Regarding the loan contingency,
the contract states that:
it is contingent upon the ability of purchaser to obtain and provide
seller with written evidence of a first mortgage loan commitment.

There is no mention of the interest rate limit. However, can I dispute
upon first mortgage loan should not be a no-doc loan?

Thanks,
Keith

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crhras - 27 Apr 2006 05:44 GMT

This situation is really extrememly easy to get out of but without more
information any advice you get here would just be fishing around in the
dark.

Curt

> Thanks for all the warmhearted replies. Regarding the loan contingency,
> the contract states that:
[quoted text clipped - 6 lines]
> Thanks,
> Keith

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keith - 27 Apr 2006 05:10 GMT

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crhras - 27 Apr 2006 13:52 GMT

Have your mortgage agent give you a letter of denial and give it to escrow.

> Thanks for all the warmhearted replies. Regarding the loan contingency,
> the contract states that:
[quoted text clipped - 6 lines]
> Thanks,
> Keith

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railroad bob - 28 Apr 2006 06:27 GMT

Would be a good idea to talk to your tax accountant about this.

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Homeowner Forum / Construction / April 2006

Please Help, question on Home Loan Contingency