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Old 07-30-2007, 09:16 AM
 
6 posts, read 45,084 times
Reputation: 12

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So we sold our house 2 weeks ago, and have a signed contract the buyers have all been approved by there lender (FHA), all the inspections and appraisals passed with flying colors. But now I guess they have seen the bottom line number and with the escrow the payment is higher than they thought it would be and are getting cold feet. They have not officaly back out as of yet and my realtor is working with there reator to try and find a new lender with better rates and fee's.

Question: Is the payment being higher than thought a valid reason to back out? or just poor planning, know we can't make someone sign for something they don't want, but we should get the $500 deposit correct? Is there any way to hold them to the contract? Sue (not that we would)?

I have a feeling its more the fact there 20 years old and newly married and have big eyes looking at 30 years of payments.
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Old 07-30-2007, 09:50 AM
 
Location: Northwestern VA
982 posts, read 3,492,944 times
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If these folks have been pre-approved, already have their GFE (good faith estimate), and their lender hasn't told them they don't qualify...I don't see how the higher payment would be a reason for them to bail. I don't know how much money they put down, but based on the relatively small EMD (earnest money deposit) I'm guessing that they put nothing down. THAT is how they could have taken a little more control over lowering their monthly payments. Unless they provide you with a letter from their lender that they no longer qualify for the loan, if they bail, go for the EMD.
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Old 07-30-2007, 10:08 AM
 
6 posts, read 45,084 times
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No they have moeny down..our money. We jumped through hoops for them to buy our house. Listing Price was 74,900, they offerd full price but wanted closing costs up to 4k and 3% funding for down payment account, so we countered with 77,500 and there 4k closing and 3% down payment money, they accepted.

They just don't like the payment once the escrow was added in, I say its there own fault and the realtor fault to not find this information out. We assume and hope that there looking for a new lender that might have betters fees and rates for them.
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Old 07-30-2007, 10:19 AM
 
Location: Marion, IN
8,189 posts, read 31,281,328 times
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When I bought my first house I went through something like that. I was told my payment would be "around $450". What nobody ever told me about was PMI, homeowner's insurance, and property taxes. My actual payment ended up being closer to $570, and I nearly walked away. That $120 made a HUGE difference every month.

I had to refinance that house several times to cover large escrow shortages. I finally sold when I realized how much trouble I had gotten myself into. Luckily the market had not fallen on its face yet.

It is hard when you are young & inexperienced. It does not help that the people you work with don't bother to make sure that you have full comprehension of what you are doing.
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Old 07-30-2007, 11:42 AM
 
Location: alt reality
1,085 posts, read 2,237,604 times
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Quote:
Originally Posted by Columbia34 View Post
No they have moeny down..our money. We jumped through hoops for them to buy our house. Listing Price was 74,900, they offerd full price but wanted closing costs up to 4k and 3% funding for down payment account, so we countered with 77,500 and there 4k closing and 3% down payment money, they accepted.

They just don't like the payment once the escrow was added in, I say its there own fault and the realtor fault to not find this information out. We assume and hope that there looking for a new lender that might have betters fees and rates for them.
But if they go to a new lender, isn't it going to take about another month just to process all of their paperwork all over again? Are you willing to wait that long? How much was the difference once escrow was added in? Even if they got a better rate, they need to understand that taxes and insurance will go up so even if they are able to purchase now, what will they do in the future? I don't know, if they still can't afford it considering the price and terms you offered, it may be time to say peace out. Keep the earnest money though
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Old 07-30-2007, 11:56 AM
 
8,289 posts, read 13,594,548 times
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Columbia you should be able to keep the deposit however I know you would prefer the sale to go through. $500 is nothing to most people so he must be getting buyer's remorse or is realizing he can't afford the home.

How large is the difference in payments to his good faith estimate? The lender wouldn't fund a loan if they knew the payments were too large for them too handle.
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Old 07-30-2007, 12:04 PM
 
6 posts, read 45,084 times
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I am not sure what the actual $$$ amount is. From what I figure the loan, taxes, insurance, pmi would be around $740, which is still cheaper than an apartment that would be needed for the family (2 adults and 3kids).

Yeah its not about the $500 deposit we just want to sell the house, we don't need to sell the house but just like most people would like to sell it sooner than later.
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Old 07-30-2007, 12:21 PM
 
Location: California
510 posts, read 3,204,935 times
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A new lender can slam out a deal in 7 days from start to finish, mainly because the clients should have everything they need.

However, if their getting an FHA deal, likely some first time home buyer loan... I doubt they will find any substantially lower rate out there. The only shot they have is if they are in a fully amortized loan, and they drop to an interest only loan. That will be the biggest reduction in payment.

If they breach the contract for other reasons than are allowed in said contract, you could in theory sue them. Doesn't sound like you'd get much. The deposit for sure would be yours at this point though, and I can't imagine they'd be able put up much fuss at that point.

The only other thing I can think of to lower their payment, would be for them to buy down their rate more. The only problem is that the lower the loan amount, the smaller the difference a rate buydown gives you. You'll only see about a $50 drop in payment per 1% of rate drop, and to buy it down 1% would be very expensive relative to the savings.
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Old 07-30-2007, 01:57 PM
 
Location: Montana
2,203 posts, read 9,339,367 times
Reputation: 1130
Sounds like this was probably an AmeriDream FHA loan.They're probably first time homebuyers and pretty naive about the whole process. Their lender should have discussed what their monthly payment was going to be before all the paperwork got started. Although they could shoot this over to another lender, as Jeff brought out, it's probably not going to make a huge difference in the rate/monthly payment. The other option to buy down the rate sounded like a pretty good one to me, but it would probably be you that would have to buy it down, since it's obvious the buyers do not have the cash to do that.

From what you're saying, this is a really good deal for the buyers and gets them into a house for as cheap as what they can rent. I think you hit the nail on the head about it being buyer's remorse. Rather than everybody doing cartwheels to try to get this financed again, I think it sounds like their agent needs to be doing some handholding and reassuring at this point.

If everybody is running on panic here, it's only going to cause the buyers to panic even more. I think everybody needs to calm down and lay the facts on the table: this is a great deal, payments are as reasonable as rent, great opportunity to own a home and that opportunity may not be there if interest rates go up or housing prices do, . . . plus they're going to lose $500 they could use for new furniture for the house .

As long as they qualify for the loan, there's no reason for the buyers not to go through with this deal.
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Old 07-30-2007, 02:18 PM
 
6 posts, read 45,084 times
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I am not sure as to what the closing costs are we have agreed to pay up to 4k so if the closeing costs are only 2k then they can us the other 2k to buy the rate down, I assume there lender has thought of that but you never know these days. I do think its the buyers remorse we meet them when they wanted to ask questions it was just better to do face to face than work thru realtors. They both seemed really excited and loved the house, I agree it might be more being young and it being sticker shock.
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