Home Buying in Oakland>Question Details

Nemom, Home Buyer in Oakland, NE

We have a purchase contract on a home specifying a USDA loan but were just told the home isn't eligible. Can we find a new loan for existing?

Asked by Nemom, Oakland, NE Sat Feb 18, 2012

contract? We put an earnest deposit down on a foreclosed home, and the contract explicitly stated that the financing would come from USDA ( we were pre-approved.) now we learned from our mortgage broker that the loan will not make it through underwriting due to some repairs that need done to be USDA eligible. Do we have to wait until the loan is officially applied for and denied, or can we pursue a conventional loan? Since the contract explicitly states USDA funding, will we have to make a new offer on the home with the conventional loan stated? What is involved with starting the process over just to get the new lender on the contract?

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You may be able to write an addendum changing the financing and still move forward on your purchase. Check with your Realtor.
0 votes Thank Flag Link Mon Feb 20, 2012
Thanks for your help so far. Yes, the home will likely need to be purchased with a conventional loan now, as the repairs were minor in our eyes, but items that just won't fly under the requirements of the USDA loan program (exposed ceiling in one room, one or two outlets need updating, etc.) While it would take us no less than an afternoon to do these repairs up to code, the home is bank-owned forclosure property and they are neither willing to have repairs done to get the financing through or let us in to tidy up before it's ours. Sounds like this is a common issue, and had my broker or agent had told me about the appraisal/inspection requirements, we would have never tried to go the USDA route. Conventional should be no issue, but I just was unsure about the process of amending the contracts terms. Thanks so much!
0 votes Thank Flag Link Mon Feb 20, 2012
Your contract will indicate whether you are required to seek the seller's permission to change financing. Chances are, they will grant the permission rather than lose the sale. You should find an alternative loan as soon as possible to avoid delays in closing.
0 votes Thank Flag Link Sat Feb 18, 2012
The best thing to do would have your Agent communicate to the Seller's Agent that the home doesn;t qualify, and that you are going to have to pursue alternative financing means. If that requires that the contract be amended to allow for different financing, than that is the route you should take. The seller should be amenable to this assuming it doesn't affect dates significantly. Have your Realtor put it on the table so all parties are aware and go from there.

Mark Meissner
Realtor
ERA Landmark
Bozeman, MT
0 votes Thank Flag Link Sat Feb 18, 2012
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