I have a real estate purchase agreement question.?

Question

I am buying a home that will be finished in june. On the purchase aggreement it says subject to receiving under 7 on a first and under 8 on a second mortgage at the time of purchase. Well, I can understand receiving under7 on my first but under 8 percent on a second going stated income is going to be nearly impossible. Currently thats a quarter under prime and I am looking in the 9.5 range. If the housing market crashes more by then can I get out of my contract and receive my 5k that I put down on the home? I really do not think I will be able to get under 8 percent on a second going stated income. thanks

Answer 1

What state are you in?

Who wrote the purchase agreement, your own Realtor? In CA when I write PA's I usually put in a fairly low interest rate to protect the buyer. If you leave that blank or put in 12% it means the buyer is obligated to take a loan up to a 12% interest rate even if the monthly payments would be outrageous. It sounds to me like your agent put in low interest rates to protect you against that situation. It doesn't mean you can't still buy the house at a 9% interest rate on the first and 12% on the second, it just means that if the rates went up before you close on the house you'd have a legal way to cancel the purchase and get your deposit back.