To make a long story short, we've bid on a home...the bid was accepted. I spoke to the realtor today and we're to meet with our lawyer & the sellers lawyer to sign the buyer/seller agreements on Monday or Tuesday. We will meet with the mortgage company on Monday or Tuesday for the approval process to begin. My question is this: the realtor said that during the meeting with the lawyers, we will need to bring in the cashiers check for the downpayment, which is not a problem. He did however mention that after the agreement is signed by both parties, that if we were to change our mind about the home, we may be penalized & not receive our full refund. Is this common? Also, should I meet with the mortage company first...I ask this because we were only "prequalified" for the loan, we have no idea of what the interest rate will be on the loan. I don't want to get into something that we can't handle but unable to back out because we would need to fight for our downpayment.
When my gf and I purchased our home, we had to put down a couple of thousand dollars called "earnest" money. At this point I believe she was pre-approved for the mortgage. Basically, if we backed out of the deal, we would have lost the money. By purchasing the home, it was used towards the closing costs. If somone puts the money down, and is unable to get a mortgage, then I believe they would get their money back.
When I made an offer on my current home, it had included several contingency clauses. One was the usual inspection contingency and one of the others was ability to get financing. I only gave a $1,000.00 deposit when the offer was accepted. KK
George and KK are right. They agreement needs to read you get your ernest money returned should you fail to secure financing within a particular time period. I'd recommend using 60 days.
We're buying a house right now, too. We had to give 2500.00 down for earnest money, if we didnt qualify we'd get it back, but if we changed our mind, they'd keep the money. They took the lot off the market because we gave the deposit, if we were to have changed our mind, (We are having it built) they would have lost out on other potential buyers. Thats why they required the earnest money, to show we are serious. Jamee
The best way to protect yourself is to have the offer to purchase agreement subject to your obtaining financing WITHIN YOUR LIMITS-i.e. 80% for 30 years no greater than 8% interest-2 points etc. etc. If you limit it only to "obtaining financing" you could be stuck with 50% for 15 years @ 12% and have to renege and lose your deposit.
100.00% rite you always want to note the terms of the loan you expect. one Important loan term is no prepayment penality.
