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Old 08-22-2008, 02:15 PM
 
27 posts, read 245,182 times
Reputation: 53

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Hello all,

I am a first time home buyer and I need some help trying to understand the mortgage contingency. The document says that it is subject to my getting a mortgage Commitment within 30 days of the contract signing. And that once a bank issues an Commitment I am absolutely bound even if the bank "refuses or declines to fund the loan for any reason." Now does it mean that if I lose my job just before closing and the bank refuses (for understandable reason) to through with the loan I am still stuck with the contract? If my understanding is correct, is the provision a "market" provision that every buyer has to live with? I am risking my entire down payment deposit here. Can I make the deal contingent on the bank actually funding the mortgage?

This is in New York by the way.
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Old 08-22-2008, 02:56 PM
 
Location: Pennsylvania, USA
5,218 posts, read 3,855,892 times
Reputation: 908
Quote:
Originally Posted by futurenyc View Post
Hello all,

I am a first time home buyer and I need some help trying to understand the mortgage contingency. The document says that it is subject to my getting a mortgage Commitment within 30 days of the contract signing. And that once a bank issues an Commitment I am absolutely bound even if the bank "refuses or declines to fund the loan for any reason." Now does it mean that if I lose my job just before closing and the bank refuses (for understandable reason) to through with the loan I am still stuck with the contract? If my understanding is correct, is the provision a "market" provision that every buyer has to live with? I am risking my entire down payment deposit here. Can I make the deal contingent on the bank actually funding the mortgage?

This is in New York by the way.
Hi..

Once you get your commitment you've basically got the okay from the bank to close and closings are set up pretty quickly after that. Your purchase contract should read that it is contingent on you getting a mortgage..

You sign the contract usually AFTER inspection, but before you put in your loan application (your signed contract is submitted as part of your applications). You put down money on the cotnract, usually half of your down payment. That mortgage contigency clause protects your downpayment from being held by the buyer should you put in an application for a mortgage and the bank denies you a mortgage.. A commitment means you already have the mortgage and have been approved. Mortgages not being approved is usually the only way a buyer is excused from the contract without his down payment being siezed and given to the seller.
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Old 08-23-2008, 01:59 AM
 
Location: Not where you ever lived
11,544 posts, read 23,889,120 times
Reputation: 6124
You NEED a REAL ESTATE ATTORNEY before you SIGN.

Most home sales are "contingent" upon the buyer obtaining a loan. If you cannot get a loan, you are not obligated to buy the property.

I've bought a sold houses for 30 years. A lot of things can go worng with a sale. starting with the down payment. DO NOT put any more money down than you can afford to burn. By this I mean to light a match and burn your money into ashes. If $500 is all you can afford to lose, don't let a realtor convince you to put up $1000. All the down payment does is tell the buyer you are serious. That money goes into escrow (a seperate bank ccount all realotrs must have) and it used toward your closing costs.

If you don't put down 20% at closing, you will be forced into a PMI which is your monthly panyment plus taxes and insurance included.

Do not buy a house you cannot afford. If the monttly payment exceeds one week of your salary, it is too much house for you. Think smaller.

Do Not buy any home that has not passed inspection by a state licensed Home Inspector. Put it in writing. This is a 'contingency" that protects you. You don't want a house with a lot of costly hidden defects to repair. The house inspector is not your dad or best friend unless he is licensed to instpect houses. Looks are deceiving. Put it in writing on the main contract before you sign it.

If you have health issues you DO WANT a mold inspection, too. I paid for three of these in one year. Two houses were filled with mold. It'll kill ya.

If you don't understand anything, know this. IF IT IS NOT in writing in the contract itself, IT is NOT enforceable. Real Estate is the one prroperty that cannot be sold by an oral agreement. There has to be a "meeting of minds" between the buy and seller and written into a legal contract before property can change hands. .
IN other words if you insist on a house passing inspecton. and it doesn't, and your demands are not in that contract, you will own that house defects and all. A slick realtor tried to pull that on an senior, handicapped, first time buyer, friend of mine - because he found out she had a lot of money. The house had been in a tornado and the rafters were twisted. He didn't win but it took months to get her down payment returned.

Your REAL ESTATE Lawyer should be able to read the legals, give an opinion and hold the CLOSING in his OFFICE in most states. .

No one, not even a realtor, can co-mingle funds. The closing costs on the last house I sold included rent money put into escrow! It was predicated on IF I did X then Y would result. IF. And the buyers realtor had the hutzpah to change the amount of money we agreed to pay per diem to a flat weekly rate. There was no rental contract between us and the buyer. Rent payments and a house closing is an attempt to combing or co-mingle funds from two unrelated sources.

There are all kinds of realtor tricks from pre-signed Listing Agreements to phony closings, to threats of jail, to stalking, to withholding vital facts from a client, to using "verbal contract' as an excuse to kill a sale -- just to name a few. All of this happened before my last house was sold. Every bit of what this realtor tried to pull was illegal.

Hire a REAL ESTATE lawyer. It's the best investment you can make. Not all lawyers are trained in real estate.

It normally takes about 6 weeks from signing the offer to the closing unless it is a cash sale.

Good Luck and welcome to your new home.
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Old 08-23-2008, 07:23 AM
 
Location: Pennsylvania, USA
5,218 posts, read 3,855,892 times
Reputation: 908
Quote:
Originally Posted by linicx View Post
You NEED a REAL ESTATE ATTORNEY before you SIGN.

Most home sales are "contingent" upon the buyer obtaining a loan. If you cannot get a loan, you are not obligated to buy the property.

This 100% absolutely correct.. you should always have an attorney adn the contigency clause protects you down payment in the event you are turned down for a mortgage

I've bought a sold houses for 30 years. A lot of things can go worng with a sale. starting with the down payment. DO NOT put any more money down than you can afford to burn. By this I mean to light a match and burn your money into ashes. If $500 is all you can afford to lose, don't let a realtor convince you to put up $1000. All the down payment does is tell the buyer you are serious. That money goes into escrow (a seperate bank ccount all realotrs must have) and it used toward your closing costs.

This person is obviously NOT from NY. Let me explain..


If you don't put down 20% at closing, you will be forced into a PMI which is your monthly panyment plus taxes and insurance included.

Do not buy a house you cannot afford. If the monttly payment exceeds one week of your salary, it is too much house for you. Think smaller.

Do Not buy any home that has not passed inspection by a state licensed Home Inspector. Put it in writing. This is a 'contingency" that protects you. You don't want a house with a lot of costly hidden defects to repair. The house inspector is not your dad or best friend unless he is licensed to instpect houses. Looks are deceiving. Put it in writing on the main contract before you sign it.

If you have health issues you DO WANT a mold inspection, too. I paid for three of these in one year. Two houses were filled with mold. It'll kill ya.

If you don't understand anything, know this. IF IT IS NOT in writing in the contract itself, IT is NOT enforceable. Real Estate is the one prroperty that cannot be sold by an oral agreement. There has to be a "meeting of minds" between the buy and seller and written into a legal contract before property can change hands. .
IN other words if you insist on a house passing inspecton. and it doesn't, and your demands are not in that contract, you will own that house defects and all. A slick realtor tried to pull that on an senior, handicapped, first time buyer, friend of mine - because he found out she had a lot of money. The house had been in a tornado and the rafters were twisted. He didn't win but it took months to get her down payment returned.

Your REAL ESTATE Lawyer should be able to read the legals, give an opinion and hold the CLOSING in his OFFICE in most states. .

No one, not even a realtor, can co-mingle funds. The closing costs on the last house I sold included rent money put into escrow! It was predicated on IF I did X then Y would result. IF. And the buyers realtor had the hutzpah to change the amount of money we agreed to pay per diem to a flat weekly rate. There was no rental contract between us and the buyer. Rent payments and a house closing is an attempt to combing or co-mingle funds from two unrelated sources.

There are all kinds of realtor tricks from pre-signed Listing Agreements to phony closings, to threats of jail, to stalking, to withholding vital facts from a client, to using "verbal contract' as an excuse to kill a sale -- just to name a few. All of this happened before my last house was sold. Every bit of what this realtor tried to pull was illegal.

Hire a REAL ESTATE lawyer. It's the best investment you can make. Not all lawyers are trained in real estate.

It normally takes about 6 weeks from signing the offer to the closing unless it is a cash sale.

Good Luck and welcome to your new home.
There is NO WAY in NY State that you can go into contract on a home with only $1000 down or even $5000 down. THe whole purpose of the down payment is to show you are committed to buying the home. Someone putting down 20% total on the house and putting 1/2 tht down on the home makes the seller confident that they are committed to purchaasing the house..because no one would walk away from that kind of money However. .. walking away from $5000, while it's not something anyone likes to do is certainly "easy".

Here in NY you tie your home up in contract for atleast 3 months (it can move faster if , but typically 3 months)... that is the standard time from accepted offer to closing.. and No Owner, nor any REaltor would allow someones home to be tied up that long without the monetary guarantee that the buyers aren't going to change their mind.

That is why the ONLY thing that can get you out of a contract for the home with the down payment still in your possession is if you can not obtain a mortgage.

As for the inspection...it's NOT in the contract.. but that is why here in NY you do your inspection BEFORE you sign the contract.. .and your attorney, if they are worth any amount of money, would never allow you to sign or release a contract with the down payment to the other party UNLESS AND UNTIL YOU HAVE HAD YOUR INSPECTION.

As for escrow.. in NY , Realtors DO NOT write up contracts nor do they hold money in escrow.. the attorneys do.

As for the "offer binder' Realtors have the buyers sign it.. BUT NO MONEY IS PUT DOWN UNTIL THE CONTRACTS ARE SIGNED. We also do not allow sellers to sign those offers simply because we do not want to bind our sellers to one offer if there may be another offer coming in behind that one that may hve better terms/money etc. So.. the ONLY time you bind yoruself to a home is when you've had the inspection, been to your attorney with tht inspection report and contract and then sign said contract with the payment given to your attorney for the other attorneys escrow account.

The contingency clause protects your money should you not get a mortgage.. but the big downpayment protects the seller from abuyer that simply changes their minds and decides to walk after tying up the house for a period of time.

This is typically how a deal goes down..
Buyer makes an offer and an acceptable price is negotiated. Once offer is accpeted the Realtor working with the buyer as a customer (not a client, unless buyer broker is signed) faxes over the offer binder with the terms (price, down payment amount on contract, down at closing etc.) and the buyers attorney information. The buyer is then told or advised to get an inspector into the property in the next day or two to have the inspection. In the meantime, the information on the terms agreed upon between buyer and seller and all pertinent information is faxed to the sellers attorney. The sellers attorney will draft a contract and will send it over to the buyers attorney who will look it over, probably make changes that they will either jut fax to the sellers attorney to re-draft with changes that both attornes discuss or agreed to or the contract will be amended at the buyers attorney's office. While all that is going on (which takes a few days) you're having your inspection done. By the time the contracts are ready for you to sign you should have your inspection report in front of you. If all is okay you take that reprot to your attorney to review, go over the contract.. sign the contract and bring the down payment check to your attorney. It gets sent to the sellers attorney

Typically if there is an issue with the inspection you can raise your concerns to your Realtor...and if there is re-negotiating to be done with an either "fix it" or "i want to lower my offer " etc.. it's could be done between the buyer/seller through the Realtor.. it typically is done that way. Anything that the seller has agreed to "fix" or take care of you must report to your attorney so that he can add that to the contract. (Typically what is fixed are things like leaky roofs, leaking plumbing. If there is a code violation , like wrong outlets in kitchen/sink you can usually get the seller to take care of that and the chimeny pointing. - It's important to remember that the point of the inspection is to make sure that there are no major issues... like leaky roof, leaking plumbing and cracked foundations... or any safety issues such as excessive mold..etc.).

Contract is signed, money put into escrow and you then put in your application for the mortgage. Bank sends their own appraiser to the home .

It is important that you do a walk through BEFORE the closing.. this is to make sure that the condition of the house is the same as it was when you went into contract... and you should check to make sure that all the things seller agreed to do is done (and if it's something you can't neccesarily see for yourself.. say like a Chimney pointing, you can ask for a receipt as proof that it was done, etc.). You basically want to make sure that hte homeowners didn't put a big hole in the wall when they moved etc. Typically if the homeowner isn't moving out till a week or two after closing, your attorney will request that money be held in escrow in case damage is done AFTER the closing while the buyers are moving.

Hope this has been of some help to you.. its pretty detailed.. but it's good information.

Last edited by TristansMommy; 08-23-2008 at 07:41 AM..
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Old 08-23-2008, 12:16 PM
 
Location: Chesterfield, VA
1,218 posts, read 4,274,103 times
Reputation: 532
Future -

You may want to post this in the New York forum. There are probably some agents/attorneys there that may be able to give you more specific advice.
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Old 03-27-2014, 07:20 PM
 
1 posts, read 3,456 times
Reputation: 10
I went to the land and record to obtain a copy of my deed and I found out that my deed of trust was redacted What does redacted means?
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Old Today, 07:06 AM
 
21 posts, read 5,846 times
Reputation: 13
Chiming in on this because the mortgage contingency topic is serious and not enough people understand the risks involved. There is a difference between a mortgage contingency and a funding contingency. If you waive the mortgage contingency and you get a commitment letter, you can still lose your deposit if the bank decides not to actually fund the loan. You can protect against this by including a funding contingency. There is a good explanation here: https://www.hauseit.com/waiving-mort...-property-nyc/

Virtually none of my friends who bought had any idea what this contingency meant. Brokers don't necessarily want a buyer to have contingencies bc it makes a deal more complicated, so I would suggest you take your lawyer's advice and not that of your broker!
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Old Today, 08:05 AM
 
Location: MID ATLANTIC
7,222 posts, read 16,340,387 times
Reputation: 7266
Quote:
Originally Posted by BabeSearch View Post
I went to the land and record to obtain a copy of my deed and I found out that my deed of trust was redacted What does redacted means?
Readacted typically means specific sections are omitted or crossed out. Typically done to protect privacy. Kind of weird if you ask me, the whole purpose of public records is to document/proof of ownership.
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