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Trulia Portl…, Home Buyer in Portland, OR

What happens if the loan isn't approved after a sale price is negotiated?

Asked by Trulia Portland, Portland, OR Sat Apr 13, 2013

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The standard rule is all offers are subject to financing approval unless it was changed on the earnest money. I will not show buyers property unless they have been pre approved for a loan which means they have already submitted their paper work to under writing. Buyers think that they got a loan once so it is easy. It is not easy and that is why the average buyer has a 749 credit score and puts 20% down and there are 37% of buyers paying cash and cashing out their stocks into something that is showing a good gain right now. Some of the big banks like the pre qualified letter that says if you are breathing and everything on their list that they have not asked you to verify is true they might give you a loan. we are seeing many buyers being told 2 weeks before closing after further review they cannot get a loan. This is terrible and could have been solved 4 weeks before and saved the buyer $800 in costs. So please you buyers out there get pre approved. If your lender one of the big boys will not do it, contact me and I can get you pre approved in 7 days. Good luck to you. Tom Inglesby, Broker.
0 votes Thank Flag Link Fri Apr 19, 2013
Of course it all depends upon how the offer was written. It should have been written with or without a loan contingency. With a contingency the buyer is free to go with no penalty. Also approval of the sales price isn't the same as full short sale approval. The offer should be written with a contingency covering FULL short sale approval. Bottom line.....without seeing the contract, this question can not be answered with 100% certainty.
0 votes Thank Flag Link Sat Apr 13, 2013
What happens if the lender cannot get the loan done because some buyer's issues? Or, what happens if the loan is not approved because of a low appraised value? Can you be more explicit please? Both things can happen "after the sale price was negotiated" and each of the two question has a different answer.
0 votes Thank Flag Link Sat Apr 13, 2013
Your offer should be contingent upon financing... If you have been declined by one company get a second opinion. Often a lender will have a "credit overlay" that another lender won't or will have a work around for.
0 votes Thank Flag Link Sat Apr 13, 2013
The offer is normally contingent on a loan so if you cant get one the transaction is normally null and void.
0 votes Thank Flag Link Sat Apr 13, 2013
To start with a sale with financing is always subject to a finial loan approval, as this offers all parties a protection should a loan not be approved. So before addressing what happens it is more important to learn why a loan is not approved.

If it is something that can be overcome by making the lenders UW with providing new or different documents to make the loan, then you move forward with the sale. If it is an issue of the home being purchased not being appraised for sales price then you can go back to seller and see if will take the lesser or pay something in between and you the buyer pay the difference.

If there is no way to get your loan approved, or seller will not accept a lesser value then you have an out for your purchase. This will cancel the transaction and any funds you have paid to the escrow company would be refunded to you.

To help you out I would start by sitting down with a mortgage banker like me to go over your options and do a pre-approved mortgage prior to making an offer. This way we can together go over any type of issues that may come up. Let me know if I can help.
0 votes Thank Flag Link Sat Apr 13, 2013
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