We had that with the 1st lender we were working with. Not with lender #3. This has all happened within the last few days.
We got the inspection done two days after the offer was accepted. The contract stated we would have a preapproval with 4 days which we did on day 1. From 2 different lenders. I don’t see anything in the contract about having an application and fees paid within a certain amount a time.
And technically we we didn’t get “denied” from original lender. She just said we would get approved only at at least 13% down which we don’t have. She gave us the disclosures and gave us time to decide.
There was a formal application with the first lender. That’s how we got a full commitment letter.
Ive looked over the contract and see nothing about a formal application. Just the preapproval. But That doesn’t necessarily mean we have to proceed with the original lender? And since it wasn’t a a full denial LO decided we needed 13% instead of 5% as she preapproved us before.
Why would my agent contact the bank directly instead of talking to us to see how things are going? We have the standard purchase agreement that’s typically used. Canyou tell me what line it’s stated we need to have an application in?
Also closing is on or before July 1 so if we start the process Monday that puts us at 45 days to close. All we need is for them to accept our emplyment gap explanation. We are DEFINIETLY scrambling to make this work ASAP!
Thank you you for your knowledge!
So we are in tough predicament right now. I have another thread about being preapproved twice and then denied a week later after our offer was accepted. We don’t want to lose this house. We have set to close by July 1 so we are going to give it some time to straighten things out.
I contacted another lender yesterday who said they think this loan sounds doable and is trying to make it work for us. I’m pretty much going down the list of lenders trying to see someone who can help us. It doesn’t seem impossible. All the numbers and factors say we qualify but the automated underwriter says risky.
Is it ok to just keep finding someone who’s willing to take the risk? We don’t want to lose out on this perfect home for us. We are also working on things to make it better like paying off a credit card which will boost scores and lower ratio a bit.
First, I want to say that JVille has given you solid advice and I want to give you some more but I'm going to try and not scare you to death but ask you to consider where you are right now and the Seller's predicament.
Second, JVille is absolutely correct about this point -- when the seller finds out, not only will he/she go ballistic, he/she will also go ballistic on the Realtor because the Seller is paying the Realtor (and on top of that paying one Realtor double commission!) Also, the seller's home has been off the market!!!
So here goes:
1. When your entered into the contract with your preapproval letter, the seller accepted your contract based on those financing terms. The buyer cannot then go back (without the Seller's knowledge and acceptance of any new terms) and decide, oh well, since lender #1 can't approve me for the FHA loan, let me try lender #2 and go the USDA route, or try lender #3 for a conventional loans (these are hypothetical). Each type of loan has its own set of rules and for this reason, a Seller may prefer to deal with a cash buyer over say a FHA buyer, or a FHA buyer vs. a USDA buyer.
2. Since you are not notifying the Seller and/or the Realtor of your inability to get a loan (and yes, you have been denied if you cannot fulfill the requirements of getting a loan) -- more on this in #3 below -- you will most likely lose your Earnest Money Deposit because you are not fulfilling the terms of the contract.
3. In order to get loan approval, many factors are in play -- do you have the funds readily available or a letter from your 401K stating that you have those funds? Is your DTI within the guidelines? Are there any derogs that need to be addressed, etc. These are not questions I'm asking you to answer, these are just all the variables that come into play on whether your loan will be approved or not. Any one of these will cause a loan to be denied. Matter-of-the-fact, NFCU would not even give me a pre-approval (only a prequal) because I didn't have all the funds in my bank account. Once they received documentation from my 403b that I had the funds available to close, then and only then, did I get the approval.
4. I ask you to please put yourself in the seller's shoes. His/her home has been off the market (they could have found a qualified buyer). It is a professional courtesy to notify the seller and Realtor of your impending and dire situation. At least this allows the Seller the choice to extend and/or change the terms of the contract to work with you if they so desire. However, if Seller believes deceipt is taking place (even if it isn't), they will not want to work with you. Period. Communication is always the best policy.
5. As JVille said, there are time limits and I don't know what they are in your state. But I'm in VA and once my contract was ratified, I had 7 days to get final loan commitment. I had 10 days to get a home inspection. And, I had 22 days to get an acceptable appraisal.
6. Oh, and yes, my Realtor most definitely was in contact with my Loan Offer, the listing agent, the home inspector, the appraiser, the HOA, and the settlement attorney, and vice versa.