GFE changed

[Anonymous]

Hi there, I signed a purchase agreement in May on a condo unit in a community still being built. My unit isn't ready for occupancy and won't be until October (closing is scheduled for early October). In the meantime, my lender has issued me two new GFEs. Because of the mortgage situation, the terms of the original GFE (that motivated my purchase agreement) are not possible. The new GFEs (she gave me two possible scenarios) stretch my monthly payment to something I'm uncomfortable with. I'm wondering if, regardless, I'm still bound by the purchase agreement with the builder/seller? I'm way past the five day window when I can get my earnest money returned ... I'm more worried about being locked into an agreement under these new GFE terms. Thanks for any opinions!

[Anonymous]

Hi, one of the things I made sure to do when I signed the PA is to set a cap on my interest rate.  If the rate was over the cap I could get out of the PA.  I noticed that the two PA's I've signed (one didn't work out) said something about being able to obtain financing at "market rate" or if unable to obtain that financing, you could get out of the PA.  I changed both my PA's manually to 6.5% max interest rate and they were accepted.  I'm sure glad I did that.  I review contracts for a living so I went through those PA's with a "fine tooth comb" and what I found is that they are pretty one-sided (in favor of the Seller) but with there's nothing that says you can't change them.  The Seller may not like it but they accepted all of my changes because they were reasonable.  Check you PA for the "Financing Addendum" or something similar and it should have a provision that states that if you're unable to obtain financing, the deal is off.  

Message Edited by SuzieQuzie on 08-07-2008 07:50 PM

[Anonymous]

Was there a contingency upon financing?? My guess would be to get an out from that.

[Anonymous]

My question for the Shane or Dallas is if a Buyer can get financing but doesn't like the interest rate and if there's not a cap on interest rate in the PA, is the Buyer still locked into the deal?

[DallasLoanGuy]

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SuzieQuzie wrote:

My question for the Shane or Dallas is if a Buyer can get financing but doesn't like the interest rate and if there's not a cap on interest rate in the PA, is the Buyer still locked into the deal?

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that is a realtor question. i dont lend there and am not familiar with their contracts.

post it on trulia.com and provide a link here so we can see the answers.

i do know, that a lot of contracts hve a finance addendum. it is an addendum, and NOT a part of the regular contract. so i guess it could be possible that you are stuck in the agreement.

just curious, cjscott, was the more favorable terms on an fha loan?

[Anonymous]

Thanks everyone for the feedback.

There is a financing contingency but it is deemed waived if the agreement is not terminated within 14 days of signing. This same section of the agreement does also specifically state if 14 days passes without termination of the agreement, should there be a change in loan conditions or terms that causes the purchaser not to close then the purchaser's earnest money is retained by the seller. And while I hate to lose the earnest money, I'm hoping that's all I'll be on the line for because later in the agreement under "purchaser default" there are dire predictions about how the seller could hold the purchaser to the terms of the agreement.

Clearly I'll have to pursue this with the builder tomorrow, but I just wanted to get a sense of the opinion before I went into that meeting. Again ... thanks!

Dallas: Actually the FHA loan is one of the new options the lender gave me. But under that loan type the closing costs are higher with the prepaid property taxes, and the monthly payments are much higher (due to a higher interest rate than I was originally locked into and the monthly property taxes). My original GFE was conventional 95% financing with the MI factored into the monthly payment (tax advantage) but it seems that is no longer an option on condos in this area. Thanks again!

[Anonymous]

All I know is the everyone should really READ their purchase agreements and don't sign unless you either completely understand it, really REALLY trust your realtor or better yet, get a real estate attorney to review it before signing.  My realtor told me I was the first person that she every known that actually sat down and went through each provision until I completely understood the deal.   I don't review real estate contracts so some of the terms were foreign to me.  If I remember right, I was in the realtors office for at least two hours.  I'm sure she loved that. 

[WhirledPeasPlease]

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SuzieQuzie wrote:

All I know is the everyone should really READ their purchase agreements and don't sign unless you either completely understand it, really REALLY trust your realtor or better yet, get a real estate attorney to review it before signing.  My realtor told me I was the first person that she every known that actually sat down and went through each provision until I completely understood the deal.   I don't review real estate contracts so some of the terms were foreign to me.  If I remember right, I was in the realtors office for at least two hours.  I'm sure she loved that. 

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Exactly.  That's what we pay them for -- their time AND their effort.