Home Buying in Orange>Question Details

John Jones, Other/Just Looking in Riverside, CA

New Home Owner but Laid Off - Now What?

Asked by John Jones, Riverside, CA Fri Dec 12, 2008

I have a co-worker that purchased a home with her mother. This Sunday the home will be officially out of escrow and next week they will be moving in. The problem is that she just found out that her mom lost her job due to the poor economy affecting the company she works for.

Both incomes were anticipated in order to make mortgage payments and other bills. Is it too late to back out of the purchase? How will that affect her ability to purchase another home in the future?

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John -

First and foremost, your friend (the buyer) needs to talk with their Realtor ASAP. If the buyer has NOT removed their loan contingency and they are no longer eligible to secure a mortgage (which they cannot without all of their collective income) the buyer should be get out of the transaction on that contingency.

If they have removed the loan contingency and / or all other contingencies, they may have some difficulty. The most important thing is for the buyers to communicate with their Realtor because their agent has all the facts in front of them and will know the demeanor of the seller's agent and the seller.

In this economy, these things happen and communication is the ultimate tool in mitigating legal issues and losses. In the best of circumstances, the seller may have another buyer waiting as a back-up offer. The buyer may lose their deposit or even up to 3% of the purchase price if that money is already in escrow.

Best to talk to the Realtor and possibly an Attorney - Realtors cannot provide legal advice.

Best of luck !

Thom Colby
Web Reference: http://www.thomcolby.com
0 votes Thank Flag Link Fri Dec 12, 2008
Sorry to hear about this situation. Unfortunately, it's not all that uncommon right now. If they haven't already done so, they need to talk with their agent right away. Joe is right, they need to wiegh losing their deposit with the ability to make payments on this loan. Depending on their loan contingency, they may be able to get their deposit back if they bank won't fund the loan. If this is what they want, then they need to let the bank know right away. A good agent should be able to help them through this. Hopefully the agent is more concerned about his clients than his commission check.

Jeremy Lehman
Century 21 Beachside
Jeremy@LehmanHomes.net
3 votes Thank Flag Link Fri Dec 12, 2008
The best thing she can do is go out and get whatever job she can right away. Even if it is a low paying job until something better comes in.
If they default on the loan it we be more difficult to buy later.
They should do their best to make a couple of payments. Most of the banks will revisit your mortgage if you get three months behind but you have to have a job. They will try to work with them but they must have jobs.
Thomas Santore
Associate Broker
Coldwell Banker
845-590-5488
1 vote Thank Flag Link Fri Dec 12, 2008
John,

Sorry to hear about her circumstances. If the home has NOT closed escrow, she might be able to get out of the transaction. She may end up loosing her deposit, but she has to weigh that with a foreclosure on her record. If you are working with an agent, please get together with him/her and the lender for alternatives.

Good Luck

Joe Homs
Realty Partners
949-625-4533
joe@joehoms.com
Web Reference: http://www.joehoms.com
1 vote Thank Flag Link Fri Dec 12, 2008
She can back out since their was an offer contingent on her obtaining a mortgage. If she can no longer obtain a mortgage, she should notify the seller immediately via her agent. This seller may have another home to buy that they will no longer be able to buy. This will not affect their ability to buy in the future, they will just need to base the mortgage off the person who is working. Hope that helps.
1 vote Thank Flag Link Fri Dec 12, 2008
Excellent answer Jeremy.
It is professional curtesy to do the right thing. Doctors and nurses have a code so do we. It is not about commissions it is about service. If more agents followed your advice many of the problems we have with our housing industry may have been avoided.
0 votes Thank Flag Link Thu Sep 22, 2011
Your friend should talk to their agent and let them know of the situation. Also, their lender maybe looking at their employment again prior to getting loan docs and they may not qualify anymore. If they have not removed their loan contingency, then tehy will not lose their deposit, if they have, they might want to talk to their agent so that their deposit can be returned if the sellers have a heart. You may want to way the situation, either losing your deposit or losing the home in the next 6 months.
Web Reference: http://www.TheOCmls.com
0 votes Thank Flag Link Thu Oct 22, 2009
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