Melinda,

Your lender may be jumping the gun just a little bit. My concern is that we do not have a ratified contract on your current home as of yet and you now are responsible to pay for an appraisal, survey and possibly title work on a home that is contingent for the sale of your house. We want to make sure that you are covered in your contract to not be responsible for these items until you meet your sale of home contingency clause. Also know that some lenders approval may be a pre-approval for others based on credit and income only. Clarify with your lender and settlement company that you have not yet received a contract on your current home. Let them know that you do not want to incur any further charges if possible until we are ratified on both contracts. Good luck.

Hi Melinda:

Disclaimers first - I am in CA, not Virginia; each state might have different requirements .

You should look at the purchase contract you signed; There is usually a loan contingency clause allowing you to specify the highest interest rate, point and the type of loan you are willing to get in order to purchase this house. Hopefully you have not removed that contingency and also hopefully the terms the bank quoted with the specific monthly payment you mentioned is outside of the comfort zone you specified in the loan clause. If so, you might be able to cancel the contract without losing your deposit.

If not, the seller might still allow to back out, but it might cost you some good faith deposit.

You might also be able to shop around more and see if you can find another lender who is willing to give you a better rate/term.

Good Luck,
Sylvia .

The best place to start looking for answers is in your contract. In our Agreement of Sale here in PA, the mortgage contingency has a section that allows the buyer to define the limits on the interest rate and points they will pay. The buyer may choose to accept a loan outside those terms but they are under no obligation to do so. Ask your REALTOR to go over the contract with you. You may also need to talk to a lawyer.

Also, check with the lender to see if they can do better. At the same time see what other lenders can offer. Get it in writing. We are curious to know how much different your payment is from the estimate provided. If it's dramatic, have your lender go over in detail the reason why.

Does your current home have an agreement on it or are you still waiting for the right buyer to come along? If you are just waiting for settlement on your home then you may need to move quickly with your research of solutions. If your home is on the market still, check the home sale contingency and see if you have a potential way out. As always, keep total communication with all the parties involved. They can be a great source of help but when nasty suprises are dropped on them at the last minute, poeple tend to get upset.

Good luck!

If you cannot afford it, may be you should not do it....because you still have to deal with insurance and taxes.
..or maybe you need to take a closer look at the interest rate the bank gave you and see if you can do better elsewhere

Is the payment relatively close to something you would be comfortable with? Or is it much larger than what you are willing to pay? You may consider a different loan program to get your payments in line with what you can afford.

You may also ask the sellers to allow you out of the contract. They may not, but they may sympathize with your situation.

If I understand your question correctly you have your house on the market and you have contracted to purchase another house. I will assume for the moment you did not use an agent to purchase the new house.

If the bank has approved you for the loan, then you cannot use financing as the reason to void the contract to purchase the new home, unless in yorur contract you stated the terms of the financing you were attempting to obtain. If you specified interest rate and number of years of financing then if the interest rate is higher than that, you would be able to void the contract, however I am not an attorney and I cannot advise you on that issue. This is only my understanding. I am not attempting to give legal advice. Since you need legal advice you will need to contact an attorney.

You and your attorney will need to examine the contract for clauses that will let you escape the contract, if there are any.

As a buyer's agent I always insist on language being in the contract that gives my buyer some number of days in which to walk on the contract for no reason. In Georgia we have a paragraph in our standard contracts, written by the Georgia Association of Realtors that we call a "FREE LOOK" paragraph. We usually make the duration of this clause at least as long as the financing clause so that if the Buyer feels uncomfortable with the financing, but is qualified for the financing, he can still get out of the contract with the FREE LOOK paragraph.

This is one of many reasons why when purchasing or selling real estate one should use a good REALTOR.

Again, this is not to be considered legal advice. Please consult an attorney if you need legal advice.