What happens if I don't show up for a real estate closing.?

Question

The mortgage is approved but with rate of 12%. I cannot afford the mortgage, taxes, insurance and condo fee at $1250.00 per month.

Answer 1

Deciding this is a little late - but don't just not show up. Call and let the agent know that you are backing out of the deal.

Whether you call or just don't show up, you will almost surely lose whatever hand money you've already put down on the deal.

If there was something in your original offer/contract making it contingent on getting financing at a rate lower than what you got, you can probably get out of the deal without penalty. But even then, let them know ahead of time, don't just not show up for closing.

Answer 2

This is something that should have been detailed to you before you even wrote an offer to purchase. If all of these details were explained to you prior to the contract and you entered into the contract knowing what the payment would be and your financing addendum states your interest rate will not exceed a certain amount than it is in your best interest to contact your agent, let them know the circumstances and you will most likely lose your earnest money (the money you paid to the realtor at the time of the offer). You will also owe for the appraisal on the property if you have not yet paid for it. I would suspect that while they will be mad, you will be able to obtain a cancellation of purchase agreement.

I am assuming your credit is an issue and your score is below 620 or you have had a bankruptcy in the last 24 months to be quoted a rate of 12%. I would also get a second opinion from another mortgage broker. If you have a score above 620, no lates in the last 12 months, no bankruptcy in 24 months and no outstanding collections you could possibly qualify for either FHA or FNMA My Community or several other programs like that. If you are not working with a broker that is familiar with these programs, go find one in your area. Ask friends and family for a referral or go to your local bank or credit union. Banks and credit unions typically have a good knowledge of conforming loan products and do not know much about the sub prime part of the business. Brokers might have a better working knowledge of the sub prime business but not know the other products. Or you could get someone like me that knows both ends of the spectrum. Good Luck

Answer 3

If you cannot afford the mortgage, then call your agent immediately who should have specified a clause that will allow you out of the contract. The APR of 12% is excessive, almost double the current rate. A reputable bank should have disclosed the rate upfront, so getting a delayed closing and a lower APR elsewhere may also be a good possibility especially if your FICO is over 640.

Do not be passive-aggressive and simply not show up for closing. That is immature and will incur expenses for termite & gas inspection, moving vans, disconnecting utilities, title work and myriad other costs.

The sellers may sue you for breach of contract but normally the condo will just be put back on the market and resold under those circumstances. The earnest money may be retained by the sellers, so don't count on getting that back.

Answer 4

If you are going to do that get a lawyer, you'll need one. Several things can happen.
1. You are taken to court and a suit for specific performance for you to close is filed
2. You are taken to court and sued for breach of contract
3. A termination agreement is made, in where your deposit, if any, most likely will be taken away from you and you are taken off the hook

If the bank approved you for the loan how come you can not afford it now? Are you dealing with a reputable lender?

Here are links you need to research.

HUD 100 questions and answers on buying a home
http://www.hud.gov/offices/hsg/sfh/buying/buyhm.cfm
FTC: High Rate – High Fee Loans (know your rights): http://www.ftc.gov/bcp/conline/pubs/homes/32mortgs.htm
Predatory Lending information from ABA: http://www.aba.com/Consumer+Connection/CNC_pred1.htm
Mortgage Loan Fraud a report http://www.fincen.gov/MortgageLoanFraud.pdf
Free legal aid search for all states: http://www.lawhelp.org/
Best of luck to you

Answer 5

You certainly should lose your deposit if you don't show up. If you tell everyone ahead of time what the problem is rather than just being a jerk and disappearing, they might have pity on you to some small extent.

Answer 6

yah, definitely call your loan officer and let them know you can't afford that payment.

Also, if it's a purchase or refinance and you want to see if I can get you a lower rate or a program with a lower payment. let me know.

Answer 7

You can get sued for breach of contract and lose your deposit.

Regards