getting our deposit back after the home is under contract?

Question

we are in attorney review as of today, we got the pre approval pending i paid off 2 items on my credit report to boost my score to the level needed. the home owners are now pushing for a mortgage committment sooner. I should have what needs to be done by the end of the week. ( the letters to show the items were paid need to be here before my score will adjust). once that is done i am afraid i still might not get this loan, what if i can't get it after all said and done? i will lose my deposit??? what are the odds of not getting the committment after i receive the preapproval? I never wouldve made the offer before i got this done but i was afraid of losing the house in the mean time!

Answer 1

If you have a Realtor, ask him what are the time frames for the contingencies. Most contracts have a timeframe after which the financing contingency expires. That means that if you cannot qualify for the loan and back out BY that date, you get your deposit back. If you end up not qualifying for the loan and you back out AFTER that date, you don't get it back.

Traditionally, it was true that if for whatever reason you can't qualify, then too bad for the seller who had his home off the market for you... you would get your earnest money back. The new way is more fair. In the terms of the contract, you negotiate how long the seller is willing to take his house off the market for you to see if you can get the financing. If you go past that date, and don't close due to your inability to get the loan, the seller should be compensated.

Don't look at this as a "penalty" or stealing anything from you. This is the risk that the buyer enters into because the buyer decided NOT to find out first if they could qualify for a loan before shopping for a home. Also, if you decide NOT to get pre-approved, expect to pay more for the house.

To all other buyers out there - find out first what you DO qualify for... not what you MIGHT or PROBABLY will qualify for. Once you're in a contract, you'll start spending $ on an inspection and an appraisal. You don't want to spend these dollars on a house that you end up not even qualifying for...

Answer 2

First of, any monies deposited with the seller as earnest money towards the purchase transaction are typically non-refundable unless otherwise specified in the purchase contract. They are considered to be the only damages that a seller can get from a prospective buyer in the event the deal falls through.

Second, a pre-approval letter means nothin in real terms. All it means is that you are candidate for financing provided certain specifications set by the lender are satisfied. Try and get the creditors that received payments to fax the letters to the lender directly. Also, if you have copies of the payments e.g. an online print out of your account, I would send them too and let them know that the creditor will be sending their confirmation soon. These would allow the lender to proceed with your application and make the receipt of pending docs as a codnition precedent to closure. By the time you are ready to close on the loan, everyhting will have been received and sent to the title company for closing.

Answer 3

If, for any reason, you are unable to qualify for financing you are entitled to a return to your earnest money deposit. Your offer is always subject to your ability to obtain financing.

What your lender is attempting is called a "Rapid Rescore". They submit your proof of payment to the credit bureau and request the history be rescored. Sometimes this works fine, sometimes not, it depends on which credit agency they are using and several other issues.

A pre-approval does not guarantee a loan commitment. For a pre-approval to be valid, all of the prior to closing conditions must be met. One of those was your ability to qualify for the financing. Your credit score may well determine your ability to do so.

As for the homeowners pushing for a faster commitment, your sales agreement specified a closing date, that is the date agreed upon, they cannot void the sale prior to that date (and the actual phrasing gives the lender a few days to get the papers out as well).