Here is a perspective from a Pennsylvania mortgage lender.
Your buyer's lender should be able to quickly assure you that that you have a vaible buyer. Additionally, you should know the buyer is serious if they are procedding with inspections that cost them money.
Most mortgage loans might not be obtained for properties that are in need of repair determined by the appraiser. If it is small in scope and cost sometimes an acception can be made where 1.5 times the amount of repairs can be held in escrow by a closing attorney but this is a rare exception.
As I stated before a roof that is in bad need of repair might be an impediment to you getting a clean appraisal and the property being in a condition that your buyer's bank will see as safe collateral. Assuming it is that bad might limit you to cash purchasers only which are a very small and picky group traditionally. You might have to be unnecessarily flexible on your price if you offer you home in an unavailable for traditional financing or even if you expect the buyer to make repairs upon moving in.
There are lending options that can be research on HUD.gov called the FHA 203K and its streamlined version. These loans allow for a purchase or repair project to be financed. This product knowledge could be used as a selling point in that you allow the buyer to do it their way. These programs are perfect for over coming objections on any property whether it is repair items, expansion, upgrades or just the new owner wanting to personalize the home to their taste. You do not have the ability, to my knowledge, to refinance if your home is currently or has in the last six months been listed. I would recommend informing your listing agent of this as a potential selling point and then contacting your local mortgage lender found through HUD to go over the details of the loans ability to help you in your sale. If you have other questions concerning your options please do not hesitate to contact me directly to discuss in detail. Best of luck!
Patrick Cashman NMLS#215938
1st thing to ask
did you run a tri merge credit,?
have you inspected actual financial docs to verify income?
does the buyer have funds to close?
does buyer have funds for the MANDITORY 3.5% down?
CAN THE BUYER USED HIS TAX CREDIT THAT HE WILL RECEIVE IN THE FUTURE AS A DOWNPAYMENT ?
once you receive the answers, verify those answers with a competor mortgage company
Texas defines only two types of Conditional Approval letters. Unfortunately, many loan officers use the terms "Approval, Pre-Approval and Pre-Qualification" which don't have any true meaning. Often they are used interchangeably and don't carry a lot of weight.
Generally, a 'Pre-Qualification' letter indicates that the loan officer has checked credit, verbally been told how much the applicant makes and loosely checked other debts of the applicant.
If you see an "Approval" letter or letter that begins "You have been approved..." it is probably no better than a Pre-Qual letter and often has less done to write the letter than a Pre-Approval. The term Approval truly means that both the applicant and the property have been checked and qualify for the type of loan applied for in a written application. You can't have an approval without an appraisal done by the lender on the property.
For the best type of Conditional Approval look for the following comments within the letter:
Credit has been checked
A written application for the loan has been received
Employment or Income has been verified
Bank deposits or Funds for closing have been verified
You didn't ask but there are two possible ways (and more coming) for a buyer to use the $8k tax credit for down payment. Texas offers a temporary loan in connection with certain Texas loans for the tax credt. A handful of lenders are offering temporary loans of the tax credit, too. In both cases the money is paid back when taxes are filed.
What do you think ... buyer is sincere?
Normally, buyers do not spend the money on an inspection unless they're serious. If they're still negotiating or planning on closing, they're sincere.
National Featured Realtor and Consultant, Texas Mortgage Loan Officer, Credit Repair Lecturer
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That being said, you need to understand that there are very few lenders (if any at all) allowing a borrower to borrow the full 8K tax credit. The tax credit is given when the person files their taxes next year and will typically receive the credit after that time. There are a small amount of lenders (which can be found through the Pennsylvania Housing Finance Agency http://www.phfa.org ) which will lend the buyer probably up to $8K (typically up to $6K) to use as a down payment. And usually the buyer must finance the home through that agency.
Also, pre-approval means that the lender has (usually) run a credit check on the person and if the rest of the info (income and debts) is correct, then the person can be loaned "x" dollars.
Hope that helps,
Pre-approval letters are usually very reliable - especially today with the checks on credit and the stringent loan guidelines. That being said, if your offer is contingent on the buyer getting a mortgage (which is most likely the case), a bad roof can be a reason to turn down a mortgage. Talk to your agent about this and any other concern that creeps up. They have the details on your deal and can give you more definitive answers.
Well, I don't think the buyer will be able to use the credit as a down payment. I know there was talk of that and that there were some mortgage lenders who could allow for it, but I don't know of any who know how to do it yet.
The approval will depend on if the mortgage lender has done a tri-merged credit check which means checked the buyer's credit and scores with all 3 agencies not just one. Then VERIFIED the buyers assets and employment. If the lender did not do these things and issued the approval, the approval is as good as the toilet paper in your bathroom. It doesn't matter what any lender tries to tell you otherwise.
Your Realtor should have called the lender and asked those specific questions before you accepted the offer.
It depends on how much your home is worth as far as the deposits are concerned. Usually, my buyers put down $1000 and then in so many days, they put down more money. Your Realtor is supposed to be looking out for your best interests not the buyers, so the larger the deposit the more serious the buyer is.
Most home owners think that they can keep that deposit if something goes wrong with the sale and that is simply not true. You have to go to court and let the judge decide who keeps the money and then the deposit is usually split in half between you and the your Realtor's broker and you can't sell your home until the deposit issue is resolved and it could take a while. So, I always tell my clients, not to worry about the deposit. If something horribly goes wrong such as the buyer out and out lies about who they are or defaults and walks away, then you can worry about the deposit. Otherwise, don't get caught up in it.
If the home is being sold in "as is" condition and it was listed that way, then the buyer should be responsible for getting a new roof, not you.
I don't have all of the facts but I hope this helps.
(215) 669-0589 Direct
(215) 358-1100 Office ask for Renee