Hello all, thanks for the help.
My girlfriend put in an offer for a house for $192,500 & offered to pay all closing costs (~2 weeks ago). She had to pay a 1% "earnest" money up front. She would get this money back if she backed out within 7-14 days (forgot how long it was, but it's passed this period).
Anyway, the bank she planned to get a mortgage loan from (Chase - which the Chase agent is our realtor's boyfriend) took about ~$500 from her for initial closing costs. Yesterday, our realtor said that Chase officially evaluated the value of the house (3rd party company apparently) and the property is actually worth only $187,500. This is $5,000 short of the offer.
Chase is now telling her she has to pay the difference in cash, because the loan will only cover $187,500. She doesn't have $5,000 (she'd have to borrow it from me).
If she backs out of the deal, she's going to lose the earnest money (1%, or $1,925). I feel like something very fishy is going on since it seems like Chase is holding her earnest money hostage - if she doesn't put more money down.
This is what I suggested to her, am I missing something?
- Tell her realtor to ask the home owner to meet her half way (taking $2,500 off the price of the home). If they don't then move on to the next step;
- Tell our agent that we're going to apply for a mortgage through another lender (Wells Fargo) with the hope their evaluation is at $192.500 (therefore she doesn't have to come up with $5,000 more to buy the house).
- If Wells Fargo comes back with the same valuation on the property, then she'll have to consider backing out. If however they evaluate the house at $192,500 (or close to it), she'll get the loan through Wells Fargo and we'll proceed with getting the house.
Thanks for reading! Any advice/comments are appreciated.
EDIT: Thank you everyone. This is indeed an FHA loan in the State of Georgia. When she gets home, we'll review the contract to look for an appraisal contingency. Really appreciate all the advice so far. Completely on board with walking away - the seller initially got upset because we were 1 of 7 offers they accepted. I suspect they won't take the "we'll buy it at the appraised value" offer seriously.
I'm actually not sure what the full amount of the loan would be (& type). She was going to put 3-5% down though (I believe that means FHA).
Submitted September 06, 2019 at 06:46PM by CayucosKid https://ift.tt/2PSY2F0
