Home Buying in Calumet>Question Details

Jon, Home Buyer in Calumet, MI

I made an offer on a house based on FHA approval. We were denied. The purchase agreement said FHA and said

Asked by Jon, Calumet, MI Thu Jul 24, 2008

the offer was contingent on financing. When we were denied we went to another bank that pre-approved us immediately but not for an FHA loan. This greatly increases our out-of-pocket expenses (3% down is now 10% down). Last week when we looked at the house again we found some serious repair issues. Now we are trying to get out of the purchase agreement and the seller's agent is threatening to take us to court. Any advice?

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The short answer is read your contracts. There will be clause(s) explaining what you agree to do, what the seller agrees to do, and what happens if home has defects or financing problems. Your Buyer's Agent should be helping you!
2 votes Thank Flag Link Fri Jul 25, 2008
If your purchase agreement was contingent upon you getting FHA financing and you are unable to get an FHA loan you should be able to rescind the offer without penalty. That is a quick and easy answer but I would recommend that you get the assistance of and attorney as there often is extinuating circumstances. If the seller is threatening litigation it becomes even more important for you to consult an attorney
Web Reference: http://www.JeffThornton.com
2 votes Thank Flag Link Thu Jul 24, 2008
Your purchase agreement has several different contingency time periods. Contingency is a fancy word for "performance" each side has certain time frames to do inspections, appraisal and loan approval. As long as you have not removed in writing your contingencies you should easily be able to back out and get your earnest money deposit returned to you. Your agent should be able to explain this to you, you can also go to the broker / owner in his office if you are still concerned.
Web Reference: http://www.soldbypeter.com
2 votes Thank Flag Link Thu Jul 24, 2008
I agree with Derek, however I wonder if the house will appraise or if the bank will lend for a home with serious repair problems.
2 votes Thank Flag Link Thu Jul 24, 2008
If your Buy and Sell Agreement had a 3% down payment on contingent of financing and the only loan you can get is a 10% down you should not have anything to worry about. Talk to your Realtor and Lender they should be able to help you. If you did not use a Realtor, you are on your own and shame on you
1 vote Thank Flag Link Thu Jul 24, 2008
You will recieve many long answers to this ... many of which may be quite helpful ... but the short answer is this...

IF your inspection contingency can be exercised, then you may have the ability to terminate the contract on those grounds. If not, then that is up to you and your Agent how that is handled, or if it even can be.
Web Reference: http://www.DoorToDreams.com
1 vote Thank Flag Link Thu Jul 24, 2008
if you qualify for a bank loan w/ 10% down....i guarantee you that you will qualify for the fha loan.the problem with your deal...isn't you...it is the deferred maintenance on the home...also....did the listing agent offer it fha as one of the financing options?...there are two ways to legally get your emd back.....call me bob mcclure....mortgage now- farmington,michigan (248) 806-0366......best regards.....
0 votes Thank Flag Link Sat Jul 26, 2008
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