purchase contract and earnest money

[brian peasley]

What is the name of your state?Wheaton Illinois. We signed a purchase agreement for a home that will soon be under construction. We also gave 8 thousand in earnest money. Meanwhile we persued in good faith a mortgage and also met with a real estate agent that pulled comparisons for our home. We will have 25 thousand less to put down on the home than originally anticipated. Because of this, the mortgage broker that we are working with is trying to approve us for a much higher loan than we are comfortable with. (54 pct. of our monthly income). The sad thing is, because of our good credit and low bills, they have come back with an approval. Am I obligated to take any loan that is offered? I feel I have acted in good faith persuing a loan and making sure I have funds to close but taking on a larger mortgage is not an acceptable means to cure our shortcoming. I feel that they are trying to get us approved at any cost. What is considered pursueing a loan in good faith? I have persued the loan, I just cannot agree to the terms - which I feel is my right not to put my family in financial jeapordy. WILL I get my earnest money back? (by the way, other mortgage companies have denied this loan because we are so tight). Please help.

My contract states that:
1. CASH. Within 30 days from effective date of this agreement, purchaser agreess to complete a financial verification at XMorgage Company at no cost to the purchaser, to verify that the purchaser has the financial ability to close with cash. If seller determines that purchaser does not have sufficient funds to acquire the property, seller may elect to terminate the agreement whereupon the payments made by purchaser to seller shall be returned to purchaser less expenses incurred by seller for extras, options, upgrades or special items and thereopon the parties hereo shall be released from all liability.

2. MORTGAGE LOAN. Purchaser and seller agree that this agreement is contingent upon purchaser obtaining financing secured by property. Purchaser agrees to apply within three business days from effective date of this Agreement with UMAC or another qualified mortgage lender for a Conventiona, FHA insured or VA guaranteed mortgage loan in the amount of 282,490 at prevailing interest rates and terms.

The terms and conditions of the loan are a matter of concern solely between purchaser and the lender and shall not in any way effect the rights or obligations of purchaser or seller hereunder. Failure to make timely application or to pursue the loan in good faith shall be deemed a breach of Purchasers obligations hereunder and the remedies for Purchaser's default under this agreement shall apply.

If purchaser is unable to provide seller a copy of a wrtten loan commitment satisfactory to the seller within 30 days, from the effective date of this agreement, or purchaser is at any time disapproved for such loan, Seller may require purchaser to immediately reapply for a mortgage loan with anohter lender designated by seller or seller may elect to terminate this agreement. If purchaser then fails to obtain a loan commitment within 30 days from sellers notice to reapply, either purchaser or seller shall have the right to terminate this agreement whereupon the payments made by purchaser to seller shall be returned to purchaser less expenses incurred by seller for extras, options, etc. and thereipon the parties hereto shall be released from all liability hereunder.

[HomeGuru]

Originally Posted by brian peasley

What is the name of your state?Wheaton Illinois. We signed a purchase agreement for a home that will soon be under construction. We also gave 8 thousand in earnest money. Meanwhile we persued in good faith a mortgage and also met with a real estate agent that pulled comparisons for our home. We will have 25 thousand less to put down on the home than originally anticipated. Because of this, the mortgage broker that we are working with is trying to approve us for a much higher loan than we are comfortable with. (54 pct. of our monthly income). The sad thing is, because of our good credit and low bills, they have come back with an approval. Am I obligated to take any loan that is offered? I feel I have acted in good faith persuing a loan and making sure I have funds to close but taking on a larger mortgage is not an acceptable means to cure our shortcoming. I feel that they are trying to get us approved at any cost. What is considered pursueing a loan in good faith? I have persued the loan, I just cannot agree to the terms - which I feel is my right not to put my family in financial jeapordy. WILL I get my earnest money back? (by the way, other mortgage companies have denied this loan because we are so tight). Please help.

My contract states that:
1. CASH. Within 30 days from effective date of this agreement, purchaser agreess to complete a financial verification at XMorgage Company at no cost to the purchaser, to verify that the purchaser has the financial ability to close with cash. If seller determines that purchaser does not have sufficient funds to acquire the property, seller may elect to terminate the agreement whereupon the payments made by purchaser to seller shall be returned to purchaser less expenses incurred by seller for extras, options, upgrades or special items and thereopon the parties hereo shall be released from all liability.

2. MORTGAGE LOAN. Purchaser and seller agree that this agreement is contingent upon purchaser obtaining financing secured by property. Purchaser agrees to apply within three business days from effective date of this Agreement with UMAC or another qualified mortgage lender for a Conventiona, FHA insured or VA guaranteed mortgage loan in the amount of 282,490 at prevailing interest rates and terms.

The terms and conditions of the loan are a matter of concern solely between purchaser and the lender and shall not in any way effect the rights or obligations of purchaser or seller hereunder. Failure to make timely application or to pursue the loan in good faith shall be deemed a breach of Purchasers obligations hereunder and the remedies for Purchaser's default under this agreement shall apply.

If purchaser is unable to provide seller a copy of a wrtten loan commitment satisfactory to the seller within 30 days, from the effective date of this agreement, or purchaser is at any time disapproved for such loan, Seller may require purchaser to immediately reapply for a mortgage loan with anohter lender designated by seller or seller may elect to terminate this agreement. If purchaser then fails to obtain a loan commitment within 30 days from sellers notice to reapply, either purchaser or seller shall have the right to terminate this agreement whereupon the payments made by purchaser to seller shall be returned to purchaser less expenses incurred by seller for extras, options, etc. and thereipon the parties hereto shall be released from all liability hereunder.

**A: the answer to your question is yes, based on the contract language, you are obligated to take any loan. Next time figure out how much down and what the highest interest rate and points you want to pay. Then write that into your contract as a financing contingency.

[passingby]

HomeGuRu is right...according to contract language you have agreed to take any loan.

However, I'm assuming you want out of the purchase contract and want to be able to get back your earnest money deposit. (?) As a former real estate agent, maybe I can help.

If so, what does your contract say about your purchase being contingent on the sale of your current home?

Do you owe a mortgage on your current home? And if so, would you qualify for the horrid loan while still holding a mortgage on your current home?

Have you agreed in writing to sell your current home either within the purchase contract or via listing it with a realtor?

What does your purchase contract say about the earnest money deposit? I mean, is it an earnest money deposit or is it a nonrefundable downpayment?

[HomeGuru]

Writer, where is your Realtor?