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Ok, so, the finacee and I found a house we wanted to buy a while back after getting preapproved for our loan. We put in an offer and it was accepted by the seller. We had set the closing date at July 2nd. We did all the home inspection stuff, termite inspection, etc. The sellers fixed all of the repairs needed as noted by the inspector. During all of this, I convinced our landlord to let us end our lease 2 months early on July 5th so we could move into the house we bought. So seeing how it is about a week from closing and about a week and a half from my lease ending, I figured we were all set and ready to go to move in. Wrong. Got an email from my lender yesterday saying the appraisal just came through and it appraised for $6000 less than the contract price. Well, this is a problem as the listing agent said that the sellers can't sell for $6000 less right now (I think the sellers probably owe about what the contract price was because their realtor says they don't have the extra money right now to make up the $6000 difference). She said they would probably sell for the appraised price, but it would take them a month or two to come up with the extra money but that wouldn't work because my lease will end on the 5th. All of this crap one week before we were supposed to close and before my lease ends. To make matters worse for us (fyi this is our first home buying experience), I didn't know that if the house falls through, I will be responsible for paying for the appraisal and all the other fees associated with the loan. So it would be like me just flushing $1,000 down the toliet for no reason. I don't understand how I can be responsible for all of the fees and such when I'm not the one backing out of the contract or not responible for the appraisal coming in so low. To make things even more worse, I will no longer be eligible for the loan we are using after september 5th. I am completely lost now, and have absolutely no idea what to do. :wallbang:

I'm sure the sellers are in a worse situation than we are, they just bought another house and are having to pay 2 mortgages.

What would you do?
 

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Start looking for another rental.
-or-
Ask your landlord if you can go month to month for a little while.
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Sell your Lotus.
 

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You were willing to pay the contract price, so option 1 is to come up with the $6,000 yourself and accept the fact you're underwater right out of the box.

Option 2; have the contract re-done at the lower price. Then execute a promissory note between you and the sellers that says they'll pay you back, with interest, over 3 to 12 months.

Steve
 

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normally you only have to pay just the appraisal fee. Did you sign a document saying you will pay these fees ? I always grill the mortgage company about if the deal fails before hand.

You are likely stuck with the fees. I would promise the mortgage company alot of bad press.
 

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If you really want this house, and your landlord was already willing to be flexible on your lease date, I don't see why they couldn't reverse the changes and move your lease date back to the original date. Thats what I would try first.

Also, who's responsibility is it for the appraisal coming in low? Its certainly not the seller's either... the appraisal is done to protect the buyer (in this case the bank) from overpaying.
 

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Discussion Starter #6
Start looking for another rental.
-or-
Ask your landlord if you can go month to month for a little while.
-and-
Sell your Lotus.
1. I'm sick of renting

2. It either end the lease july 5th or stay til end of lease in sept.

3.I don't have a lotus yet.

You were willing to pay the contract price, so option 1 is to come up with the $6,000 yourself and accept the fact you're underwater right out of the box.

Option 2; have the contract re-done at the lower price. Then execute a promissory note between you and the sellers that says they'll pay you back, with interest, over 3 to 12 months.

Steve
1. I don't have the extra $6k and don't want to come into the house that much under.

2. Trying to work out a lower contract.

normally you only have to pay just the appraisal fee. Did you sign a document saying you will pay these fees ? I always grill the mortgage company about if the deal fails before hand.

You are likely stuck with the fees. I would promise the mortgage company alot of bad press.
I just talked with our lender, and he said just appraisal fee and the other fees associated with pulling my credit and such. He said we have to write in our final offer that if the seller declines, they have to pay all home inspection fees.

If you really want this house, and your landlord was already willing to be flexible on your lease date, I don't see why they couldn't reverse the changes and move your lease date back to the original date. Thats what I would try first.

Also, who's responsibility is it for the appraisal coming in low? Its certainly not the seller's either... the appraisal is done to protect the buyer (in this case the bank) from overpaying.
I think we might do that.

The other realtor came up with an idea if we still wanted to move in on the original closing date, that we could "rent" the house from the owners until the new closing date possibly at the end of august. Of course this wouldn't happen until a new contract was signed. Kinda iffy about that idea, but I dunno.
 

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I'd avoid taking them up on that idea too. Imagine you start renting the house, get all moved in and something else comes up. Now you're really in between a rock and a hard place because you've spent the time and money moving in. The seller either can or can't sell the house... if I were you I'd be looking for other homes while you wait. YES, you will lose some money if you find a different house, but that may be better than going two more months and discovering the seller still can't sell the house. Don't cut off your nose to spite your face :)

I think we might do that.

The other realtor came up with an idea if we still wanted to move in on the original closing date, that we could "rent" the house from the owners until the new closing date possibly at the end of august. Of course this wouldn't happen until a new contract was signed. Kinda iffy about that idea, but I dunno.
 

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"other fees associated with pulling my credit and such."

That is crap. most lenders do not do this. it is a rip off that most lenders do not do.

when i get mortgage i make sure I only pay for appraisal if it fails. This way he is motivated to get deal done

Your way he does not care and he gets money either way.
 

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I'd threaten to walk away. Even money says they miraculously come up with the difference. If you're already financially tapped out, the last thing you want to do is overpay for a house.
 

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This should not be a deal breaker issue.

The value of a house is what someone is willing to pay for it, not what it appraises for. The appraisal is just to cover the lender from lending significantly more than the asset is worth. The $6,000 is only a small percent difference from the selling price, for the following example lets says it is a 3% difference. Assuming you are planning on putting 20% down, you are now only putting down 17%. Most lenders will still lend at less than 20% down but require you to pay mortgage insurance if you are under this amount. Talk you your lender about this. It will increase your monthly payments by $100-$200 a month until you reach 20%. If you can afford to overpay your mortgage by $250-$500 a month you will cover the $6,000 in 6-12 months.

If you or your fiancee are in the military you can qualify for a VA loan, which lets you put down less than 20% without having to pay any mortgage insurance. I just went this route with my wife, who was in the Air Force.

If your lender does not agree to lend with mortgage insurance I would find a new lender.
 

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I'd avoid taking them up on that idea too. Imagine you start renting the house, get all moved in and something else comes up. Now you're really in between a rock and a hard place because you've spent the time and money moving in. The seller either can or can't sell the house... if I were you I'd be looking for other homes while you wait. YES, you will lose some money if you find a different house, but that may be better than going two more months and discovering the seller still can't sell the house. Don't cut off your nose to spite your face :)
Yeah, we definitely decided against it.

If you or your fiancee are in the military you can qualify for a VA loan, which lets you put down less than 20% without having to pay any mortgage insurance. I just went this route with my wife, who was in the Air Force.

If your lender does not agree to lend with mortgage insurance I would find a new lender.
My dad was, but neither of us are or thats the route we would have went with.

I do believe we will put in our final offer today and probably lose the house :(
 

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1. To be clear, as you've described the scenario, it is *you* who is backing out of the contract and not the seller. You don't sign a contract to purchase at the appraised price, you sign to pay a specific price. You are now balking at paying that agreed upon price.
2. You should only be responsible for appraisal with your lender and no other fees. It's nobody's fault that the appraisal doesn't match your contract price. The idea of an appraisal is that it's independent of anything else (in theory) to protect the lender. The process is working as it is supposed to.
3. All inspections should have been written into your offer in terms of who pays for them. Whether you buy the home or not is immaterial - if your contract stated that you would pay for the inspections, it's your bill to pay.
4. If your ability to follow thru on the purchase is dependent on the appraisal matching your offer, you should have that written into your offer as a contingency. Most people write it in as a contingency based on ability to get financing which is slightly different. It's a subtlety but you may still be eligible for financing even if the appraisal comes in $6k too low.
5. If you don't have an extra $6k available or something close to that, you better be careful as you enter the wild world of home ownership. A new roof will cost you more than that in a heartbeat and you'll no longer have a landlord to call when something goes wrong. Owning a home can be expensive and not having some backup funds can be dangerous. Sounds like you'll be a layoff away from losing your house in short order.
6. Related to #3, I hope your status of *elise coming soon* is referring to years from now and not months.
7. Please don't follow Steven's recommendation. It would most likely be viewed as mortgage fraud.
 

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I don't really understand what is going on since all I see is a huge wall of text (ever hear of paragraphs?) BUT how did it go this far even until an appraisal was done? The appraisal generally should happen when the house is listed!

Was the listing appraisal and then your lenders appraisal done and it's WAY off? (seems odd).

And I will whole heatedly agree that 6k is pretty much pocket change when it comes to owning a house. It's not even funny how fast stuff adds up! I "burned" somewhere near 25k within a year of buying my house, which was brand new when I bought it.
 

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normally you only have to pay just the appraisal fee. Did you sign a document saying you will pay these fees ? I always grill the mortgage company about if the deal fails before hand.

You are likely stuck with the fees. I would promise the mortgage company alot of bad press.
if you mean the appraisal fee then the mortgage company has nothing to do with it. the appraiser is a totally separate entity.
the other closing fees are only if the loan closes.
(except inspections, of which the bank doesnt collect those fees, hence they dont give it back)
 

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"other fees associated with pulling my credit and such."

That is crap. most lenders do not do this. it is a rip off that most lenders do not do.

when i get mortgage i make sure I only pay for appraisal if it fails. This way he is motivated to get deal done

Your way he does not care and he gets money either way.
it costs the bank 22 bucks to pull your credit, thats it.

how about splitting the 6k with the seller?
done.
 

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Both my mortgage and then a refi ~4 years later had credit checks rolled into the closing costs alone with a bunch of other fees. It's SOP.
 

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We recently sold my mother-in-law's house. The buyer wasn't quite able to come up to our lowest selling price.

After a short debate with the two realtors involved, and hint at walking away, we convinced them both to reduce their commission. The house closed shortly after that.

Have you explored this pathway? Might be worth a try.
 

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We bought our first house in 1985. Offer accepted at 125k. Appraisal came back at 114k. Sellers wouldn't move. I sold the only car my fiance and I owned and borrowed a car from my parents. Our goal was to have 20% down payment to avoid PMI. We did. So we took the loan on 80% of their appraised value of 114k. I drove my wife to the train and we saved till we could pay our way back in.
 
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