Mortgage preapproval. unable to come up with minimal down payment for 2 months.

Asked by Jasper5485, Johnstown, PA Tue Sep 13, 2011

I am preapproved for a mortgage. I found a house that I really love. We only have half the down payment. If the seller isnt in a hurry to sell. Can a 2 month contingency be negotiated into the contract to allow us to purchase the home contingent on getting the down payment in a 2 month period, the appraisal? What are the normal time constraints for finializing the mortgage and closing? Is this doable?

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John Juarez, Agent, Fremont, CA
Wed Sep 14, 2011
If you presented an offer on my client’s home framed in the way that you suggest I would advise my client to turn your offer down.

Why would a buyer take their property off the market in the hope that you could come up with cash that you do not have in another two months? I would fully expect that there would be a request for an extension of the contingency at the end of those two months because you are oh-so-close to having the down payment. I may appear cynical to some, but I think I am being realistic.
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Annette Levi…, , New York, NY
Wed Sep 14, 2011
How did you get a preapproval without showing funds to close the mortgage? I am afraid that your preapproval is not going to mean a mortgage commitment. I suggest you consult another mortgage officer that their preapproval is underwritten before you make any offers.
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Cameron Novak, Agent, Corona, CA
Tue Sep 13, 2011
A contingency can be negotiated into a deal, but make sure you work closely with your lender. There may be down payment seasoning requirements (meaning you have to show you've had the necessary cash for a certain amount of time).... additionally, you may be able to use gift funds. Get with your lender (I'm nervous that you don't have a good lender, or you probably wouldn't be posting your question here).
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Dan Tabit, Agent, Issaquah, WA
Tue Sep 13, 2011
Talk to your lender right away. If you are still saving up for the down payment have you considered closing costs, prepaids or reserves? Before you write an offer, make certain you have covered all the issues necessary to close.
Assuming you have these addressed and are 100% positive you'll have the down payment in 2 months, consider your request for a long closing a seller's concession. Seller's generally want to close in 30 days or less, depending on their situation. Sometimes, they are okay with a longer close, but they want a solid pre-approval letter, good earnest money and a strong offer.
Have your agent ask the seller's what type of terms they are open to. Sometimes a longer close is preferred as long as all other terms are strong.
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