Home Buying in 01748>Question Details

MP, Home Buyer in 01748

Do I have to put money down if I an approved for a 100% financing?

Asked by MP, 01748 Sun Jan 11, 2009

My Realtor is not wanting to put the offer in unless I put at least $2000 down and also thinks that my offer will be rejected. I would rather not tie my money up if my offer is going to be rejected. The property is a foreclosure and I am not willing to go much higher than my offer, which is 61% of the asking price. I am using this number because I know what the bank bought the house for.

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Greeting and thank you for asking your question.

Your REALTOR® is there to work for you as a Buyer's Broker and should represent you with integrity. If you want your REALTOR® to write an offer on a property of your choice, then you dictate the amount of earnest deposit you would like to put down and the price and the type of financing after speaking with a professional with a mortgage company near you and NOT one on line. The loan officer will pre qualify you and hopefully you and your Realtor® will come to a meeting of the minds. If not, I highly recommend that you find yourself another REALTOR®.

If you need us to refer you to a Realtor® in your area, please don't hesitate to call us toll free at 888 460-2911 or 928 649-9888

Good Luck and enjoy your new home which ever one it may be!

Sincerely,
Sandra J Steele
1 vote Thank Flag Link Sat Mar 5, 2011
MP:

You have to put some money up, but you can make the terms in your offer that the money only get's deposited if your offer is accepted. Your dough is not effected if the offer is not accepted.
0 votes Thank Flag Link Mon Mar 22, 2010
Hi MP

I'm glad you had some basis for your offer - many potential homebuyers just make up numbers. Your realtor can help determine the value of the home to help you get a better idea of the local market. The bank would have had the expense of foreclosing plus back taxes and maintenance in addition to the amount owed on its mortgage, so they may very well be seeking more than what your research showed.

If this was a HUD REO and you're getting 100% financing then your offer would likely be rejected. If not, it doesn't hurt to bid and try, but don't expect the sellers to seriously entertain your offer without a deposit. It can always be used for the costs beyond the zero down payment such as settlement fees. If your offer is rejected then it'll be given back to you.

Here's where I offer advice that's often ignored: Get a good real estate attorney, especially if your intent is to purchase a foreclosed property. Have the attorney review the offer before you sign it as well as the purchase and sale agreement to make certain that you have the maximum protection for your efforts and investment.

Let me know if I can be of help with referrals or in financing your home. I know you have a pre-approval but feel free to check in to compare.

Good luck in your home search!

Tom
Eagle Nationwide Mortgage Thomas.Stevens@ENMCdirect.com
0 votes Thank Flag Link Mon Mar 1, 2010
Thank you all for the responses! You have answered my question. I wish my Realtor had explained it this way. I was only told I had to, no real explanation.
0 votes Thank Flag Link Sun Jan 11, 2009
MH,

In MA, "consideration" or deposit money is essential to creating a legally binding contract. Even though the bank does not require a deposit for financing, a seller still would. Its a good faith to show you will not default on the agreement. Most banks in MA holding foreclosures require a $5k deposit. Bear that in mind for future properties that interest you, if this does not pan out. And as the poster below mentioned, there are many additional costs that the bank has other than the amount they purchased it for. A big fee they did not mention is paying to have any liens released. Many times, there are also outstanding taxes, water, sewer, and mechanical liens to be paid. Best of Luck!

~M
Web Reference: http://MelissaBMancini.com
0 votes Thank Flag Link Sun Jan 11, 2009
WOW approved for 100% financing? that is rare.

Any purchase you need to place money into escrow which applies towards closing costs. Realtor is correct regarding $2K. Money is paid to title company upon executed contract not prior.

How do you know what bank purchased the home for. KEEP in mind bank still needs to pay for realtors fees, closing costs, 3rd party vendors, legal fees transfer title back to bank, eviction process and many other miscellanous fees.
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Sun Jan 11, 2009
If you have a lender doing 100% financing, and as stated already, I did not think any lenders are doing 100% right now, you still need a deposit, however at closing your deposit would be credited back to you.
Good Luck.
0 votes Thank Flag Link Sun Jan 11, 2009
Are you pre-qualified for a loan?
Most lenders are not doing 100$ financing.
FHA requires 3% down.
In most areas the customary deposit is 3%. The check is not cashed until escrow opens, after your offer is accepted. After escrow opens you have a contingency period in which you can cancel and get your deposit back.

You should show this post to your Realtor...and the answers.
0 votes Thank Flag Link Sun Jan 11, 2009
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
All terms on an offer are open for negotiations including the deposit monies. There is almost always something put down even it is a token amount, as this is known as "consideration" which is part of the definition of an offer.

It is unlikely that you offer will be accepted and more than likely you will not even receive a counter offer from the bank. The majority of the banks have requirements in regards to offers. One of them is usually the fact that they will not accept less than 10% under the established market value.
0 votes Thank Flag Link Sun Jan 11, 2009
If the offer is rejected, you are not really tying up any money, your check will not be deposited until an offer is accepted.

As for putting money down, most foreclosure properties (as well as most non foreclosure properties) want a minumum of good faith monies (generally anywhere from $500 to $1000) with an initial offer. Your realtor should know if there is a minimum as a foreclosure property generally has guidelines for putting an offer in, which does include what they want as good faith monies.

I hope this answers your question, but as you have a realtor guiding you in this they should be answering this question as well.

Good luck in your offer

Michael Prescott

http://www.virtualhomes.com
0 votes Thank Flag Link Sun Jan 11, 2009
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