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Old 07-23-2012, 06:55 PM
 
Location: PSL, FL
43 posts, read 174,737 times
Reputation: 18

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We are supposed to be closing on our house on August 13th. We were misinformed by our loan processors about cash reserve requirements and gifts (she told us the latter would satisfy the former: wrong). We are switching to FHA and everything looks okay (as per our new loan processor, who seems much more competent). Things are moving forward much faster now. We are having our FHA appraisal in the next couple of days and our loan processor says this looks like a "totally fundable loan".

My concern is that I think we might freak out our sellers. Can they back out now that we are switching from conventional to FHA?
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Old 07-23-2012, 06:59 PM
 
Location: Long Island
9,431 posts, read 20,189,321 times
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Quote:
Originally Posted by relocating_family View Post
We are supposed to be closing on our house on August 13th. We were misinformed by our loan processors about cash reserve requirements and gifts (she told us the latter would satisfy the former: wrong). We are switching to FHA and everything looks okay (as per our new loan processor, who seems much more competent). Things are moving forward much faster now. We are having our FHA appraisal in the next couple of days and our loan processor says this looks like a "totally fundable loan".

My concern is that I think we might freak out our sellers. Can they back out now that we are switching from conventional to FHA?
What does your contract state? Does it specify "Conventional" mortgage or does it only state that you obtain a mortgage (commitment)?
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Old 07-23-2012, 07:21 PM
 
Location: Austin
7,205 posts, read 18,940,045 times
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Why would your sellers need to know? A seller can't force you to get one loan over another. If they want to sell their house, they're going to let you do what you need to do to get financing to buy it.
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Old 07-23-2012, 08:11 PM
 
Location: PSL, FL
43 posts, read 174,737 times
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Coldwell Banker has really botched this for us...looking more closely at our contract, there is no mention of the type of mortgage; the sale is contingent on us getting a mortgage. Our contracts says that we were supposed to have a commitment letter as of June 29th. We didn't and our loan processor was supposed to secure an extension, which we aren't sure if she ever successfully did. Our new processor is working toward getting a commitment letter tomorrow (we started working with him Friday). Technically, the seller can walk without that commitment, if we have passed our date. Hopefully, they aren't really keeping careful tabs on the process.

Whichever way this turns out, we are going to go out of our way to let Coldwell Banker know how INEPT one their employees is. This is our first solo foray into home buying and we are doing the best we can to get through it, but there are just some things we DON'T know. This learning curve is steep. Thanks for your help.
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Old 07-23-2012, 09:11 PM
 
Location: MID ATLANTIC
8,140 posts, read 19,989,830 times
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Did the sellers sign an Amendatory Clause?

What is FHA Disclosures Amendatory Clause/ Real Estate Certification

In Virginia, the buyer may change financing as long as it does not impact the sellers negatively. Some feel FHA may impact the seller......the appraisal, while for the most part is the same, there are some minor differences. FHA has greater tolerances that conventional, but it's a darn shame you can't go that route.

What I am curious about is why is the loan processor telling you this? Where's your loan officer? Not only should this have been picked up at the get-go, no processor should be bearing bad news. I would be horrified if my processor delivered this kind of news to one of my buyers - that's my job, not the best part, but a necessary part.
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Old 07-24-2012, 02:55 PM
 
Location: PSL, FL
43 posts, read 174,737 times
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Quote:
Originally Posted by SmartMoney View Post
Did the sellers sign an Amendatory Clause?

What is FHA Disclosures Amendatory Clause/ Real Estate Certification

In Virginia, the buyer may change financing as long as it does not impact the sellers negatively. Some feel FHA may impact the seller......the appraisal, while for the most part is the same, there are some minor differences. FHA has greater tolerances that conventional, but it's a darn shame you can't go that route.

What I am curious about is why is the loan processor telling you this? Where's your loan officer? Not only should this have been picked up at the get-go, no processor should be bearing bad news. I would be horrified if my processor delivered this kind of news to one of my buyers - that's my job, not the best part, but a necessary part.
The sellers haven't done anything that has to do with the FHA yet. In fact, today was the first day they were notified that we switched- they received a new commitment letter. Our Realtor says that they are not happy with it because they think that this means that they are going to have to adhere to a much stricter inspection...I can't say that I blame them, I'm weary of this whole thing, myself.

Like I said before, we are new at this so I'm not sure who we should be dealing with at all, but our contact is a "financial agent" at our Realtor's office and a "loan processor" who is preparing documents for the underwriter.
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Old 07-24-2012, 03:24 PM
 
28,461 posts, read 75,137,154 times
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Firstly the odds of any home that is NOT marketed "as is" nor in an obviously derilict condition failing to qualify for FHA financing / getting a find of "deficiencies needed to be reconciled" are quite slim. There used to a LENGHTY checklist of deal kills but changes in the how the FHA process works (which have been around for at least 6 years...) has made only greivous omissions / items of repair necessary to repair -- Most Common FHA repairs , a pretty good summary...

Really I would NOT worry about this at all. If your real estate agent is other than a complete newbie they should have experience with this and be able to re-assure the seller that everything will be OK.
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Old 07-24-2012, 07:05 PM
 
Location: El Dorado Hills, CA
3,724 posts, read 8,837,271 times
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Here we can specify the type of financing on the purchase contract, but the default is a conventional loan (if none other is checked). Switching loan types and/or not making the deadline for a commitment letter might be reason to cancel, but that puts the seller back on the market to start all over. If it looks like there is a good chance to close within a reasonable amount of time, most sellers won't cancel, they will allow the extension. Of course, if you're market is heating up quickly and the sellers think they can get more money now, this might be enough reason for them.
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Old 07-24-2012, 07:07 PM
 
Location: PSL, FL
43 posts, read 174,737 times
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Quote:
Originally Posted by chet everett View Post
Firstly the odds of any home that is NOT marketed "as is" nor in an obviously derilict condition failing to qualify for FHA financing / getting a find of "deficiencies needed to be reconciled" are quite slim. There used to a LENGHTY checklist of deal kills but changes in the how the FHA process works (which have been around for at least 6 years...) has made only greivous omissions / items of repair necessary to repair -- Most Common FHA repairs , a pretty good summary...

Really I would NOT worry about this at all. If your real estate agent is other than a complete newbie they should have experience with this and be able to re-assure the seller that everything will be OK.
Ugh! Thanks! The sellers just signed the new addendum agreeing to the FHA appraisal tonight. We sort of really really chewed them down on price and made them fix a lot of things before, so I think that we soured them a bit. The house is from the 1920's (why we like it) and is in decent condition, but for sure there is some chipping paint on the windows (exterior) and a little white mold in the garage. They may be in for some more work before closing, but doubtfully anything major.
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Old 07-24-2012, 07:14 PM
 
Location: PSL, FL
43 posts, read 174,737 times
Reputation: 18
Quote:
Originally Posted by NinaN View Post
Here we can specify the type of financing on the purchase contract, but the default is a conventional loan (if none other is checked). Switching loan types and/or not making the deadline for a commitment letter might be reason to cancel, but that puts the seller back on the market to start all over. If it looks like there is a good chance to close within a reasonable amount of time, most sellers won't cancel, they will allow the extension. Of course, if you're market is heating up quickly and the sellers think they can get more money now, this might be enough reason for them.
They signed the addendum this evening for the FHA. Our bank claims that they will be able to tie this up as planned; our closing is set for 8/13. The appraisal and subsequent minor work is the only remaining issue.

The sellers are a family who has moved into a new build over a year ago. They have had tenants in the property since then. The tenants lease is up in December but they offered to move out for early August. I'm sure they have made arrangements to leave and I doubt the owners would want to move new people in and put the house back on the market.

As to the market in that area (a Philly suburb called Wallingford), I can't say. I do know that this house was on the market for over a year, if that tells you anything.
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