hand money question

[prplegal]

What is the name of your state? PA
Pre-qualifed buyer
Offered accepted 4/22
Home inspection done 4/27
Appraisal to be ordered by 5/17
on 5/15 buyer found the interest rate to be too high for his budget- could bring the rate down by paying points, but doesn't have funds to do that and cover closing costs and down money. Buyer wants out of deal.
Sellers agent said buyer is acting in an "unethical manner" and is "not acting in good faith" because the appraisal wasn't ordered before 5/17 and is refusing to return hand money of 1k.

Does the buyer have any entitlement to the hand money?

 

[moburkes]

What is the name of your state? PA
Pre-qualifed buyer
Offered accepted 4/22
Home inspection done 4/27
Appraisal to be ordered by 5/17
on 5/15 buyer found the interest rate to be too high for his budget- could bring the rate down by paying points, but doesn't have funds to do that and cover closing costs and down money. Buyer wants out of deal.
Sellers agent said buyer is acting in an "unethical manner" and is "not acting in good faith" because the appraisal wasn't ordered before 5/17 and is refusing to return hand money of 1k.

Does the buyer have any entitlement to the hand money?

Is hand money earnest money? What does the contract say if the buyer cannot get financing?

 

[prplegal]

The contract states : Interest rate 6.75% however, buyer agrees to accept the interest rate as may be committed by the mortgage lender, not to exeed a maximum interest rate of 8%.

The buyer has been approved for 100% financing at 10%
buyer can get financing at 8% but needs more cash which he does not have.. Therefore the lender will not provide a "turndown" letter.

 

[nextwife]

The contract states : Interest rate 6.75% however, buyer agrees to accept the interest rate as may be committed by the mortgage lender, not to exeed a maximum interest rate of 8%.

The buyer has been approved for 100% financing at 10%
buyer can get financing at 8% but needs more cash which he does not have.. Therefore the lender will not provide a "turndown" letter.

Who wrote this contract? Wasn't the "interest rate" specifically stated to be APR? Payment rate is a bogus number - APR is the only consistant, quantifiable rate that should be used for a loan continguency maximum rate.

 

[HomeGuru]

Who wrote this contract? Wasn't the "interest rate" specifically stated to be APR? Payment rate is a bogus number - APR is the only consistant, quantifiable rate that should be used for a loan continguency maximum rate.

**A: I disagree that the payment rate is a bogus number. There is no law that requires a financing contingency to be an APR rate. The contingency could be based on a fixed rate, ajustable rate and based on simple interest, no declining balance, a negative amortization deal or even just a fixed payment amount per month.

 

[prplegal]

contract

Howard Hanna wrote sellers agreement.

 

[HomeGuru]

Howard Hanna wrote sellers agreement.

**A: so how does that help the thread?

 

[moburkes]

**A: so how does that help the thread?

Nextwife asked, in post #4, who wrote the contract.

 

[HomeGuru]

Nextwife asked, in post #4, who wrote the contract.

**A: who cares who wrote the contract. Let's talk about the real isue here and the most important question that has not been asked yet; that being on what date was the appraisal ordered?

 

[PghREA]

**A: so how does that help the thread?

It helps a lot if you're a PA Realtor! LOL

 

[PghREA]

In my neck of the woods in PA, the appraisal is generally not ordered until close to closing.
The lenders generally order the appraisal after all the other paperwork is in and accepted.

Just because the Buyer dosn't like the interest rate is not a valid excuse to get out of the contract. Apparently the new interest rate is less than 8%. What does the date the appraisal was ordered have to do with the interest rate?

 

[prplegal]

appraisal

"Just because the Buyer dosn't like the interest rate is not a valid excuse to get out of the contract"

I think this is the answer I'm looking for..

The interest rate and appraisal have nothing to do with each other. The sellers agent is focusing on the date for the appraisal to be ordered so that she can keep the earnest money by saying buyer was not acting in good faith.

Buyer's inital pre-approval rate was 6.75- when it jumped to 10 and then the inspection report was poor and the seller didn't want to fix anything.. Buyer saw a money pit and wanted to bail..

He should have walked when the inspection came back and the sellers refused to make some repairs....

Stupid hurts.

 

[Gadfly]

I'm not sure I agree with that. I thought the interest rate max was established in the contract, expecially if a $ amount or payment was included. What does the contract say about all this?

 

[prplegal]

The contract states rate not to exceed 8%.

 

[Ozark_Sophist]

It wouldn't exceed 8% if the buyer went with a standard mortgage. Does the contract say anything about financing 100%?