Sounds like you have a pretty terrible agent.

Anonymous wrote:

Anonymous wrote:if you (a) can't qualify for a loan with a second trust and/or (b) needed that much help to come up with a downpayment, you should have never been putting that offer in the first place... how did you expect to pay your family back? if the bank sure thinks you can't afford anymore in monthly payments, than you probably cannot.

This happens frequently (family loan part of the down payment). The reason it isn't an issue is that there is no official loan or loan payment. If the borrower has cash problems, the mortgage is the only official loan and hence has priority. Even in a bankruptcy, a family loan with no documentation will have no standing until after all official creditors are paid off. So, the mortgage holder has more leverage than such a loan.

A little help from parents is 1 thing, but needing 10% to get a downpayment together when most banks would lend you that 10 on a second trust is telling. Yes, the bank will want to see the source of the money, and the irs will surely want to see the gift tax paid on such a large gift as well (because that's what it is, a gift, not a loan). I guess mommy and daddy will be paying for all the repairs and maintenance on the house as well. I smell some entitlement generation here trying to buy a house that is way out of their price range. Sadly, the seller gets screwed and loses valuable time and money.

No, you are free and clear to kill the deal under the financing contingency if you are still before the deadline. You will get your earnest money back and NOT owe any realtor fees to either side.

Anonymous wrote:You just ruined your family relationship by borrowing money you can't pay back. You will need to disclose this money to the bank

Who says you can't pay the money back? That is an assumption you are making out of nowhere. Ever hear of income growth potential? Nobody is advocating making irresponsible financial decisions that could jeopardize relationships, but borrowing money from family can be very smart and also can help build generational family wealth.

And of course you need to disclose the source of those funds to a bank. But you usually have to get the family "lender" to sign something that states there is no obligation to repay. That is the point - it isn't a legally binding debt obligation as far as the mortgage lender is concerned.

Anonymous wrote:There is more to ths story if the bank requires such a high downpayment

Maybe the OP was using a lender like ING Direct or USAA that only has max 80% LTV products. Or maybe they have options with that lender but there is a communication breakdown. If you apply based on 20% down and subsequently tell the bank you can't come up with the 20%, they don't automatically approve you for a different product - you have to reapply. Quite possible the loan officer might not be all that helpful in explaining different options.

There is more to ths story if the bank requires such a high downpayment

You just ruined your family relationship by borrowing money you can't pay back. You will need to disclose this money to the bank

I would also suggest you talk to a few different lenders to see if there is a 10% down payment option that works for you.

Anonymous wrote:if you (a) can't qualify for a loan with a second trust and/or (b) needed that much help to come up with a downpayment, you should have never been putting that offer in the first place... how did you expect to pay your family back? if the bank sure thinks you can't afford anymore in monthly payments, than you probably cannot.

This happens frequently (family loan part of the down payment). The reason it isn't an issue is that there is no official loan or loan payment. If the borrower has cash problems, the mortgage is the only official loan and hence has priority. Even in a bankruptcy, a family loan with no documentation will have no standing until after all official creditors are paid off. So, the mortgage holder has more leverage than such a loan.

Anonymous wrote:if you (a) can't qualify for a loan with a second trust and/or (b) needed that much help to come up with a downpayment, you should have never been putting that offer in the first place... how did you expect to pay your family back? if the bank sure thinks you can't afford anymore in monthly payments, than you probably cannot.

You don't know all the details so save your financial advice, as the OP didn't ask for it.

To the OP - you should be fine and able to walk away. Whatever you do, don't let any agent tell you that you owe them any commissions.

if you (a) can't qualify for a loan with a second trust and/or (b) needed that much help to come up with a downpayment, you should have never been putting that offer in the first place... how did you expect to pay your family back? if the bank sure thinks you can't afford anymore in monthly payments, than you probably cannot.

Sorry not downpayment I meant to say deposit.

As far as I know, you are not responsible for anything until all contigincies are lifted - including financial. That means if for some reason you do not qualify (and it seems that you no longer do), then you can walk.
There are a few contingincies that need to be lifted before you are in danger of losing your downpayment:
1) Inspection
2) financial/loan

talk to your realtor to confirm but I think you're ok

I have a question about our contract. last month we finally found a house that we very much liked. We signed a contract an dstarted th eloan process. Our original plan was to put down 20% and borrow the rest. We really didnt have the 20% in cash, but our family agreed to loan us the other 10% and we would pay them back in time. What happened was that we can no longer rely on the 10% we were supposed to burrow from parents due to some health conceren with my father-in-law. Our loan consultant doesnt give us loan unless we put 20% upfront. What do we do now? If we use the "financial contingency" of the contract to break the deal are we going to be responsible for the real state agent fees? At this point we are not even concerned about our ernest money deposit compared to what we may end up loosing. ANy comments? Thanks.