Hello Everyone! Looking for some input in regard to money down on my primary. With a crazy competitive market most offers without 20% aren’t even being reviewed. My pre-approval is almost double the amount of the homes I’m looking to buy (I’m pre approved for $800K, I’m looking at home around 450) , so I’m pretty frustrated but it is what it is. I don’t hold much cash generally because I buy rentals. Anyway, that’s life, but my question is this: My lender said we can write the offer for 20%. She’s considering all cash, assets, 401K, anything liquid that can be used for that 20%. If we really wanted to, yes I have the 20%. It isn’t like I have 30K in assets and am saying I’ll put down 90, that’s not the case at all. But What are the risks associated with this? If the offer is accepted, can the seller say no way if I decide to change to 10% down? Is the money in escrow gone? I’m in NJ if that helps. I basically am just trying to cover all my bases & be very cautious about following the law. Thank you!
Daniel, you're saying the seller sees how much you're putting down when getting the loan from the bank? I've never heard of that, I thought all the lending was between you and the bank and you only negotiate the price and type of financing (conventional, FHA, VA, etc) with the seller?
@Daniel Sabato No....the 20% verses 3-10% simply affects the amount of financing you need, your financing contingency amount, and the seller’s comfort level. You can close with whatever down payment you want, the seller has no say so or control. They may however, ask for proof that you Actually have the 20% down plus closing costs in cash that you are proposing and either acceptor reject the offer based on that.
@Daniel Sabato it certainly depends on the seller- I have had clients win bids in this market by having the best terms, not highest price, and down payment is a key factor. Regarding down payment - keep in mind your offer of X% down is in the contract presented and accepted by the Seller and their Attorney; And the attorneys will expect to see that 20% check shortly after Attorney Review period. Changing that could in fact risk losing the deal but you should discuss with your attorney and agent on how you plan to explain it and still keep the seller confident in your ability to close. For me as an agent it would send a message that your financial strength as a buyer may not be as good as indicated per the offer and raise a red flag.
Have you looked at HUD homes? You can find good deals that typically give owner occupants first bid.