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after talking to few lenders i was told that i should be able to buy a home in the range of $450K.

im putting $100K as down payment. about two months ago I found a home that was listed for $429K and my agent advised me that we must make a high offer if we want to get this house. so we made an offer for $450K and they accepted it. two months later Im still with no approval based on my down payment. however yesterday I was informed by my broker that he has a lender that would get me approved but I must put another $36K down payment.the lenders are not accepting this year income because I got a big rise early this year and they are going off my 1012 and 2013 income which was good but due to my divorce in dec of last year I started paying alimony which made my ratio not meet the requirements. my question is: I can do a total of $120K for down payment, is it ok to ask the seller to lower their price by $16000 so I can budget for the payment since i was paying them $21000 over asking price nd later added $5000 to the price for them to give me an extension  
  • June 05 2014 - Lynnwood
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Answers (6)

If the seller has no others no harm to ask for a price reduction. The listing agents often pitch it 
with a reduction in their commissions, if they want the deal close,
 
You have valid reason that you are not qualified for the home thus they need to give you back the deposit,



Sam Shueh
  • June 20 2014
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It's a tough time ( June 2014) for buyers right now and your agent is absolutely correct that the competition will drive the price higher then asking for a good property right now. You can ask the seller to lower their price, however, you might end up losing the property to another buyer.
  • June 20 2014
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Greetings, 

I hope that you're not still in this sticky situation but if you are I have a few questions.  1) Did you submit a high offer or did you submit a full price offer with an escalation clause that brought you up to 450K?  The reason I ask is because you would have only reached the 450K purchase price if there were competing offers.  If you reached 450K through an escalation then you said that you were willing to pay 450K if and only if there were other offers.

All that being said, you should have a finance contingency (unless you waived it which is a whole other can of worms) which states that if you are unable to obtain financing after your best effort that the contract is terminated and you are entitled to your earnest money deposit.  It sounds like you need your agent to contact the listing agent to explain the situation and ask if the seller would be willing to sell at your lender approved purchase price.  The seller may have some conditions such as releasing the earnest money to the seller If not, then you will need to go back to finding the right house for you.

I do wonder why you putting more than 20% down on this purchase since it has a marginal effect on your monthly payment.  It may be time to look at a different lender and see if you have any other options. Depending on your increased income structure you may very well be able to use it to determine your debt to income ratio. I work with a great local lender if you would like to at least have them give you a second opinion.  All the best.
  • June 19 2014
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If the seller has no other offers suggest for a price reduction on the basis the offer will fall through. 
Your choices will then to look for a lower priced offer or wait for 2015. Good luck,

Sam Shueh
  • June 05 2014
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What loan program is the lender trying to get you in? conventional or FHA? If you are looking to buy in the Lynwood NJ area, they normally allow for high balance mortgages there. That being said it is possible in light of the current financial situation that you look at different programs that allow a lower down payment and higher dti.

Yes there may be mortgage insurance involved initially but you can always refinance out of that in a few years to a conventional but in light of the situation this MAY be a short term solution. Don't feel pressured to be in a program if it doesn't work for you.

Good luck and best wishes!
-Scott
  • June 05 2014
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First of all, these are questions you should be asking your agent, although perhaps you don't trust them at this point.

Second, to change lenders you likely need to ask for the seller's permission or risk losing your financing contingency and your earnest money.  Again, consult your agent (or an attorney) about your particular contract.

Third, I don't see what their motivation would be to lower the price.  Why would they lower the price to get you a lower payment?  If your lender hasn't done the appraisal yet though, that might get you an indirect way to lower the price (at the risk of the cost of an appraisal).  Form 22A does have provisions in it regarding adjusting the price if the appraisal is low, and although the seller can still say no, it would give you a clear out, and they are more likely to lower the price based on an appraisal than they would be just to lower your payments.  Again, consult your agent (or an attorney) about the terms of your particular contract and whether the appraisal provisions are still in place.  Note Form 22A was recently amended on this issue and you are probably under the older form were waiver of the appraisal provisions is more likely.  Your agent could have used Form 22AA to preserve such rights, but that is unlikely.  Again, consult your agent (or an attorney).
  • June 05 2014
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