26 August 2010
But still there are many other legal rights and obligations that buyers should understand.
First of all, there are usually additional conditions that have to be satisfied before they will give you the money.
The main thing is that the lender has to see that the appraised value of the house is equal or greater than the sum the buyer agrees to pay for it. Of course, in this case the bank uses its own appraiser.
Let’s imagine, for instance, that you sign an agreement for $400,000 for a home and you are approved for $300,000 of financing (75% of the value). If the bank’s appraiser values this property at only $375,000, then the bank will not lend you $300,000. They may only lend you 75% of $375,000. It means you’ll get only $281.250 from the bank and may end up with extra expenses to close the deal.
It’s always necessary to consult a mortgage broker or lender first to see how much they can borrow.
Another important fact is that even in case of conditional offer you still have certain obligations.
In case you can’t obtain the necessary financing, you need a legal prove of it. Otherwise, the seller can decide not to return you the deposit or even sue you.
In other words, it’s very important for buyers to understand all their legal rights and obligations concerning financing condition and the requirements they’ll have to meet.