I have a question ! We put an offer on a home that started at $499,000 and we viewed the home when the owners did very little home improvements but decided to raise their price to $525,000 . I think our lenders didn’t do a great job explaining the cost for a loan at this price because everytime we asked them, the “estimate” always kept going up . It has gotten to a point that we can’t afford the monthly payments on this $525,000 house . When our lender had given us multiple estimates of mortgage payments. So I’m wondering if we have already placed our EMD payment is there still time to re-negotiate the asking price?
Hey Baja Chick! Thank you for sharing with us. In short, OUCH! So let's get to the point. Your lender should've absolutely been able to give you a very good estimate of what your payments will look like at the different prices. Since the price is higher, of course, it will cost more. That's the common sense part of this that you already know. Given the price difference, here are a few other factors that come to mind: 1. Mortgage interest rates - Please note mortgage rates are pretty volatile right now and can change several times over the course of a single day. So you'll want to gain insight into what your lender is watching to help you get the best rate possible for your loan type. 2. Your Loan Type - When the price was 499k your home loan would be within "conforming loan limits." Any amount above $510,400 (for 2020) is higher than the conforming loan limit and now enters the world of jumbo home loans (depending on the size of your down payment.) Please note, that jumbo mortgage rates are on a spectrum all their own compared to the conforming loan limits. 3. Down Payment Amount - If your down payment isn't enough to drop your loan amount below the conforming loan amount, then it will change how your home loan works. The best case is that you have enough funds on hand to reduce the overall mortgage to offset what could be a jumbo loan back into a traditional conforming loan amount. Next up... Depending on when you opened escrow (the closing process), you may still be within your buyer due diligence period. If so, you can cancel and get your EMD back, depending on how the terms of your contract were put together and agreed upon. If you are beyond your due diligence period and truly are unable to qualify for the new higher loan amount, then the lender will have no choice to financially disqualify you. In such a case, (again depending on the terms and contingencies in your contract) you may be able to cancel under the financing contingency time period and get your EMD returned. Speaking of... I'm not sure if you watched the video about making an offer on a house yet? In that video, I provide a high-level overview of offer strategy, factors, and contingencies. Here's the link: ua-cam.com/video/pxZKe4Nhsao/v-deo.html Check the timeline in the show more description to quickly jump topics of interest to you. Lastly... You might be able to re-negotiate your agreement based upon the inspection results and/ or appraised value of the property. That said, I wouldn't hold my breath banking on those potentialities. Best Practice: 1. Consult with your real estate agent and ask him/ her to provide you with an outline of the contingencies and time periods of each within your agreement. A top agent will be able to send that information the same day and depending on their schedule, pretty quickly. Side Note: This is something that I'm starting to do for my client's in Las Vegas - providing them, upfront when their offer is accepted a list of their key contingencies and time frames so they can better follow along the closing process in addition to the constant emails I send them about what's going with the closing process between our texts/ calls. 2. Get with your loan officer to gain clarity on what type of loan type you have. Conforming loan vs Jumbo and the details of your loan program. Ask them directly why the estimates are constantly changing. 3. Based upon this information and your conversations with your home buying team, make the most well-informed and best decision that is right for you. Please let us know how it plays out for you. Sending you positive mojo everything goes your way! What would you like to watch next?
Hey, Andrew! Back to an earlier video..... We finally have a buyer for our house. But she wants to assume “early occupancy.” She has it all spelled out in her contract (assuming utilities, paying us rent, insurance, etc), and our agent feels confident that it’s all legit. Even though the “early occupancy” is only 4 days prior to closing, I have concerns. Actually, have had concerns since she made her offer a week and a half ago (having to do with her financing), but they’re based on “gut” feelings. We have dealt with an unauthorized “early occupancy” in the past, although that worked out in the end. Now, I’m going to have to go back and re-watch your video. Edited to add: Buyer understood our concerns against “early occupancy,” and decided to go on and schedule closing. This was after our agent recommended a non-refundable deposit and some more stringent requirements to be put in place - I think that’s what changed her mind, LOL!
Such good content, thank you Sir!
Great video thanks
Hey Andrew, im 26 from Quebec, Canada and looking to buy my first home, your videos are great. They help me to learn the basics. Thank you
Pay in full in Cash. No mortgage payment.👍👍👍
this is a general question...when negotiating offer how much does all cash factor in. ?
Hello, I would like to know if you know of any trusted realtors in the southeast Pennsylvania area for a first time home buyer?
I have a question ! We put an offer on a home that started at $499,000 and we viewed the home when the owners did very little home improvements but decided to raise their price to $525,000 . I think our lenders didn’t do a great job explaining the cost for a loan at this price because everytime we asked them, the “estimate” always kept going up . It has gotten to a point that we can’t afford the monthly payments on this $525,000 house . When our lender had given us multiple estimates of mortgage payments. So I’m wondering if we have already placed our EMD payment is there still time to re-negotiate the asking price?
Hey Baja Chick! Thank you for sharing with us. In short, OUCH!
So let's get to the point. Your lender should've absolutely been able to give you a very good estimate of what your payments will look like at the different prices. Since the price is higher, of course, it will cost more. That's the common sense part of this that you already know.
Given the price difference, here are a few other factors that come to mind:
1. Mortgage interest rates - Please note mortgage rates are pretty volatile right now and can change several times over the course of a single day. So you'll want to gain insight into what your lender is watching to help you get the best rate possible for your loan type.
2. Your Loan Type - When the price was 499k your home loan would be within "conforming loan limits." Any amount above $510,400 (for 2020) is higher than the conforming loan limit and now enters the world of jumbo home loans (depending on the size of your down payment.) Please note, that jumbo mortgage rates are on a spectrum all their own compared to the conforming loan limits.
3. Down Payment Amount - If your down payment isn't enough to drop your loan amount below the conforming loan amount, then it will change how your home loan works. The best case is that you have enough funds on hand to reduce the overall mortgage to offset what could be a jumbo loan back into a traditional conforming loan amount.
Next up...
Depending on when you opened escrow (the closing process), you may still be within your buyer due diligence period.
If so, you can cancel and get your EMD back, depending on how the terms of your contract were put together and agreed upon.
If you are beyond your due diligence period and truly are unable to qualify for the new higher loan amount, then the lender will have no choice to financially disqualify you.
In such a case, (again depending on the terms and contingencies in your contract) you may be able to cancel under the financing contingency time period and get your EMD returned.
Speaking of... I'm not sure if you watched the video about making an offer on a house yet? In that video, I provide a high-level overview of offer strategy, factors, and contingencies. Here's the link: ua-cam.com/video/pxZKe4Nhsao/v-deo.html Check the timeline in the show more description to quickly jump topics of interest to you.
Lastly...
You might be able to re-negotiate your agreement based upon the inspection results and/ or appraised value of the property. That said, I wouldn't hold my breath banking on those potentialities.
Best Practice:
1. Consult with your real estate agent and ask him/ her to provide you with an outline of the contingencies and time periods of each within your agreement. A top agent will be able to send that information the same day and depending on their schedule, pretty quickly.
Side Note: This is something that I'm starting to do for my client's in Las Vegas - providing them, upfront when their offer is accepted a list of their key contingencies and time frames so they can better follow along the closing process in addition to the constant emails I send them about what's going with the closing process between our texts/ calls.
2. Get with your loan officer to gain clarity on what type of loan type you have. Conforming loan vs Jumbo and the details of your loan program. Ask them directly why the estimates are constantly changing.
3. Based upon this information and your conversations with your home buying team, make the most well-informed and best decision that is right for you.
Please let us know how it plays out for you.
Sending you positive mojo everything goes your way!
What would you like to watch next?
Thank you for sharing
Hey, Andrew! Back to an earlier video..... We finally have a buyer for our house. But she wants to assume “early occupancy.” She has it all spelled out in her contract (assuming utilities, paying us rent, insurance, etc), and our agent feels confident that it’s all legit. Even though the “early occupancy” is only 4 days prior to closing, I have concerns. Actually, have had concerns since she made her offer a week and a half ago (having to do with her financing), but they’re based on “gut” feelings. We have dealt with an unauthorized “early occupancy” in the past, although that worked out in the end. Now, I’m going to have to go back and re-watch your video. Edited to add: Buyer understood our concerns against “early occupancy,” and decided to go on and schedule closing. This was after our agent recommended a non-refundable deposit and some more stringent requirements to be put in place - I think that’s what changed her mind, LOL!
I like your videos. Wish you were in Montana. I was terribly taken advantage of in my house purchase.
Do you think making two offers on two different homes is a good idea? Can you talk about this?