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Son and Fiance made offer on house, now what

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Son and Fiance made offer on house, now what

Old 05-02-2011, 05:11 AM
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Default Son and Fiance made offer on house, now what

My son and his fiance have made an offer on a house, now it has been a WHILE since I have done this.

We went a couple of weeks ago to my small hometown bank and he mortgage processor ran credit and income and "pre-qualified" them. In fact I was SHOCKED at how much they were qualified for, almost DOUBLE the amount they are looking to spend.

These are two very responsible young adults with not a lot of credit but his score was right at 800 and hers was over 700.
The only debt either one has is her car loan for which she makes two payments a month

We looked at the house and did the offer and the owners countered and back and forth until they settled on a price. The house has been vacant due to transfer and on the market for over 300 days. The owners have also agreed to throw in $5K for closing costs and a home warranty

Now I assume it is compiling all the information for the underwriters, any or what snags could pop up here

My secretary used to work for a mortgage broker and said the underwriter goes through every thing with fine tooth comb and will look at bank statements for several months to make sure no money has been gifted or they are hiding something which we all know they are not

I also understand it will hinge on the appraisal, termite inspection and house inspection but what else could pop up

Realtor seems to think appraisal will exceed purchase price with no problem
Old 05-02-2011, 05:21 AM
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Make sure you get title insurance
Old 05-02-2011, 05:25 AM
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If you think interest rates are going up (as I do) then grab a fixed rate. ARMs may be the wrong play at this time. What do you/they think?
Old 05-02-2011, 05:42 AM
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An issue may be what the bank appraisal says it's worth vs. what they want (or need to borrow). Maybe the price reflects the 35-60% drop from it's peak value (depending on region, etc). But if not, that may force them to come up with more down payment...
Old 05-02-2011, 06:42 AM
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Have you just made an offer or a formal contract offer? You need a contract that details what has to be done like inspection, financing, etc... You want to get the inspector and not the friend of the realtor if one is involved. Meet the inspector and follow them around on the inspection.
Old 05-02-2011, 06:49 AM
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Step 1 - Hire an attorney..... Step -2 Listen to them......

Kidding aside - read the contract and make sure you comply with the inspection period,,, and application times for mortgage.... Also, make sure you re-trade the deal for a few $$ after inspection...

Good luck
Old 05-02-2011, 07:08 AM
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Originally Posted by triplenet View Post
Also, make sure you re-trade the deal for a few $$ after inspection...

Good luck

re-trade? whassat?
Old 05-02-2011, 07:23 AM
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Originally Posted by bamaboy473 View Post
re-trade? whassat?
Price reduction due to repairs or whatever.... Once the seller feels the closing is close and before the end of the inspection period - ask for a reduction in price..... Just enough so they dont get pissed but u pocked a few $$...
Old 05-02-2011, 08:10 AM
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My father a long time ago told me to not trust just a home inspector. When we bought we had a heating/cooling guy, and electrician and a plumber come look as well. Cost us about $700 total but the electrician found some stuff the home inspector wouldn't have ever found that we got the po to fix (saved us a few grand) and the plumber being there helped us to plan for some water issues that we knew would come in time by warning us about challenges down the road.

Nothing against home inspectors, but they aren't going to dig into everything as much as you might think. For us, knowing that we wanted the house regardless, the $700 was worth spending.
Old 05-02-2011, 12:48 PM
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Thanks, got ALL the above items covered

More or less wondering what if anything else could pop with underwriters.

Neither have any outstanding debts or hidden "secrets" but I understand the underwriters can be pretty picky
Old 05-02-2011, 01:26 PM
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Things that can come up in underwrting on a purchase:

-verifying down payment (has it been in the account for a few months)
-verfying income (if they have w2 salaried jobs this will not be a problem)
-has the house changed ownership in the last 6 months
-will the appraisal show any water damage or plumbing issues
-any other repairs that show up that would make the house unlivable
-can the appraiser find comps that have sold in the last 12 months
-does the house appraise for as much or more than the sales price
-make sure they are getting the best deal available from an experienced Loan Originator.
Old 05-02-2011, 07:08 PM
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I have bought three homes and sold the first two so gave what little advice I had to my son who just bought a house last year.

My first advice was to buy a fixer. Sweat equity is free, a large mortgage is not.

Secondly I advised him to make sure his monthly mortgage payment is 25% or less of his monthly net income and to put a good down payment. His monthly payments fall in this spread so it is comfortable for him.

He had a really good broker who went to bat for him and got the seller to pay closing costs and even ended up with extra dollars to put toward the down payment. The broker even talked to my son's bank and got him an even lower interest rate that was already a good rate! This broker was referred to him by "word of mouth", not the yellow pages (see my thread on contractor quality).

Good luck to them!
Old 05-03-2011, 03:04 AM
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Originally Posted by the good life View Post
I have bought three homes and sold the first two so gave what little advice I had to my son who just bought a house last year.

My first advice was to buy a fixer. Sweat equity is free, a large mortgage is not.

Secondly I advised him to make sure his monthly mortgage payment is 25% or less of his monthly net income and to put a good down payment. His monthly payments fall in this spread so it is comfortable for him.

He had a really good broker who went to bat for him and got the seller to pay closing costs and even ended up with extra dollars to put toward the down payment. The broker even talked to my son's bank and got him an even lower interest rate that was already a good rate! This broker was referred to him by "word of mouth", not the yellow pages (see my thread on contractor quality).

Good luck to them!
Thanks, kind of what we have been looking for is a fixer upper since there are a lot of foreclosures on the market however this one is walk in condition and the owners have been transferred and the house has been sitting for almost a year. Needless to say they are anxious to move it

I agree with the payment amount, I am amazed at how much they were pre-approved for. I can see now how so many folks got so far over their heads with house payments.

They also have a good Realtor and he really helped them get the price down and the extras thrown in(closing costs, warranty and home inspection)

Guess all the paperwork starts now

Their income is very simple, both are W-2 employees and nothing else and very stable
Old 05-03-2011, 03:11 AM
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Triple net. Great advice until you run into the wrong seller. It's also unethical, but no one really cares about that these days.
Old 05-03-2011, 05:36 AM
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Surprised no one has mentioned this, but have they considered waiting until after they are legally married?

Not trying to throw water on a happy time for them, but life unfortunately throws curveballs....trying to undo a house purchase because something went wrong at the last minute and the two of them decided not to get married would be messy.
Old 05-03-2011, 08:10 AM
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Originally Posted by Parthery View Post
Surprised no one has mentioned this, but have they considered waiting until after they are legally married?

Not trying to throw water on a happy time for them, but life unfortunately throws curveballs....trying to undo a house purchase because something went wrong at the last minute and the two of them decided not to get married would be messy.
I understand completely but they will be fine on this aspect, TRUST ME on this one
Old 05-03-2011, 09:02 AM
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Originally Posted by Parthery View Post
Surprised no one has mentioned this, but have they considered waiting until after they are legally married?

Not trying to throw water on a happy time for them, but life unfortunately throws curveballs....trying to undo a house purchase because something went wrong at the last minute and the two of them decided not to get married would be messy.
I found out from my attorney during my divorce proceedings that in California, seven years is the magic number, married or not. After seven years together, common property.

No one can foresee the future so good luck to them!
Old 05-03-2011, 10:15 AM
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not sure you can get a price reduction based on home inspection, but you can ask for items to be fixed, or for the cash payment. small difference, but will avoid some confusion on what sounds like a good deal.

Also, having been on both ends of 8 home inspections in 8 years, I would insist on getting the cash, or contracting the work myself if possible. some of the fixes made to satisfy an inspection can cause more problems then they fix.

I see no ethical issues with asking for legitimate recourse on issues that arise from inspections.
Old 05-03-2011, 10:20 AM
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Originally Posted by cjd View Post
Also, having been on both ends of 8 home inspections in 8 years, I would insist on getting the cash, or contracting the work myself if possible. some of the fixes made to satisfy an inspection can cause more problems then they fix.
Great point.
Old 05-03-2011, 11:48 AM
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Originally Posted by mz06907 View Post
Triple net. Great advice until you run into the wrong seller. It's also unethical, but no one really cares about that these days.
How is it unethical to renegotiate a deal? and what is a "wrong" seller?

You have a contract, you inspect in accordance with the terms and then ask for a price reduction before the deal goes hard,,, the seller has an opportunity to say yes or no,,, and the buyer has an option to go hard or not...

Its "standard" practice...

Cheers

Last edited by triplenet; 05-03-2011 at 12:31 PM.

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