Forfeit of contract before close

[lakeside16]

Missouri.
We made an offer on a house in Missouri, placed earnest money, etc. Loan committment letter completed. Now two weeks before our closing date (we are the buyers), we find out that our payments "well exceed" what we can afford. We told our real estate agent we can't afford the house and therefore we will need to forfeit our earnest money. The realtors stated, "You have no choice. You have to close or you will be sued and forced to close and/or buy the house." They offered us a remedy: to go to close no matter what and place the home back on the market for sale the next day - hopefully selling it before our first payment. We can't afford the house. Can they "force us" to buy the house? And if they do sue us/since they mentioned the word "sue" all day, can they sue us for the entire amount of the house?

[HomeGuru]

Originally Posted by lakeside16

Missouri.
We made an offer on a house in Missouri, placed earnest money, etc. Loan committment letter completed. Now two weeks before our closing date (we are the buyers), we find out that our payments "well exceed" what we can afford. We told our real estate agent we can't afford the house and therefore we will need to forfeit our earnest money. The realtors stated, "You have no choice. You have to close or you will be sued and forced to close and/or buy the house." They offered us a remedy: to go to close no matter what and place the home back on the market for sale the next day - hopefully selling it before our first payment. We can't afford the house. Can they "force us" to buy the house? And if they do sue us/since they mentioned the word "sue" all day, can they sue us for the entire amount of the house?

**A: your post does not make sense. If your payments "well exceed" what you can afford, how did you get qualified for the loan?

[lakeside16]

Thxs for a quick reply. Originally, we were going to place 20% down (if we sold another property note we had), and pay off a vehicle. Then when we couldn't sell the note, we told the finance guy who told us - we will do an 80/20 (or something like that) - virtually 100% financing. We told him we still need to keep our payments within a certain range - let's just say $1900 -2000 a month. After everything was said and down (pay taxes,insurance) on top of the mortgage, our payments would be more like $2700-2900 a month. With one income household, unable to pay off vehicle, I don't even make enough a month to pay both - let alone other bills and expenses. We told the realtors, etc. They said - too bad-you have to close anyway or we and everyone else will sue you.

[HomeGuru]

Originally Posted by lakeside16

Thxs for a quick reply. Originally, we were going to place 20% down (if we sold another property note we had), and pay off a vehicle. Then when we couldn't sell the note, we told the finance guy who told us - we will do an 80/20 (or something like that) - virtually 100% financing. We told him we still need to keep our payments within a certain range - let's just say $1900 -2000 a month. After everything was said and down (pay taxes,insurance) on top of the mortgage, our payments would be more like $2700-2900 a month. With one income household, unable to pay off vehicle, I don't even make enough a month to pay both - let alone other bills and expenses. We told the realtors, etc. They said - too bad-you have to close anyway or we and everyone else will sue you.

**A: post the specific language of the financing contingency.

[nextwife]

HomeGuru is correct in that your home financing contingency language determine WHAT your "legal outs" may be for this contract. Normally, the contingency language establishes, foe example, that one is only obligated to the contract if they are able to obtain an X year loan, for X amount of dollars, at an interest rate not to exceed X ,and payments not to exceed X. Additionally, if your "comfortable" payment DEPENDED upon the sale of another property, it was your responsibility to make that sale a contingency of the offer.

So please post the exact, applicable contingencies.

[jasonelki]

Lakeside, good luck in your situation, sorry I am not able to provide you with any "legal" advice, but I wanted to let you know I agree wholeheartedly with your posts in my thread.
Hopefully they will just take your earnest money and let you out of the deal. Hope everything works out for you.
Jason

[Charles11]

Originally Posted by lakeside16

Missouri.
We made an offer on a house in Missouri, placed earnest money, etc. Loan committment letter completed. Now two weeks before our closing date (we are the buyers), we find out that our payments "well exceed" what we can afford. We told our real estate agent we can't afford the house and therefore we will need to forfeit our earnest money. The realtors stated, "You have no choice. You have to close or you will be sued and forced to close and/or buy the house." They offered us a remedy: to go to close no matter what and place the home back on the market for sale the next day - hopefully selling it before our first payment. We can't afford the house. Can they "force us" to buy the house? And if they do sue us/since they mentioned the word "sue" all day, can they sue us for the entire amount of the house?

One of these agents is representing you? They both seem to be blowing their coal. By the time they sue you to buy the house they could have sold it many times over to someone else.

While you are posting the financing clauses also look under default remedies on buyer's failure to fulfill the contract and type in the language here. Sometimes the seller's retention of the EM (how much is it by the way?) is the sole remedy, sometimes they have the option to pursue damages and/or enforcement of the contract.

I'm surprised you still qualify for the loan after failing to come up with the 20% down payment.

It sounds to me like you are being strongarmed and that you may not have someone truly representing your interests.

Chas