Pre approval for a mortgage

[Hyacinth Bucket]

Hi can anyone help me.

I am not familiar with the banking regulations in Florida, if I am pre-approved for a mortgage, put money down on a house based on my pre approval - can the pre approval be revoked?

Second part of the question - if the pre approval is revoked, and I can not get my mortgage, will the monies I put down on a house in TV (based on my pre approval for a mortgage) be returned to me?

HB

[Donna]

HB...

From what I know..They can revoke a pre-approval any time they choose, if they have grounds..

You will loose the down money, unless you can get a mtge from another bank...

I believe these facts are correct...Just ask Kathi or me...LOL

[Hyacinth Bucket]

Donna, what type of grounds are you referring to?

HB

[Donna]

One example...the appraisal on the house being too low to support the colateralization of the loan.

There are many others, today is very difficult to get a loan..

[Fourpar]

Writing a contract with The Villages' agents "based on a loan approval letter" is an anomaly. The standard Villages contract does not contain a "contingent on loan approval" clause. The Villages write contracts that commit you to close on X date. So if you need a mortgage to do that, you should make darn sure you will be able to get one, 'cause The Villages are expecting to close on the appointed date. period.

At least that is the way they were when I contracted for our purchase in May, '07. I couldn't believe how arrogant they were about that. Even talked to the manager of the contracting division about it before I signed our contract. The manager told me that they wouldn't allow that kind of a clause, and were willing to let me walk away over the issue!

I have been in the real estate business in Florida for 18+ years, and this is the first contract I have seen that did not (and they would not accept) a Financing Contingency clause. It is pre-printed on every contract I have seen, be it a BAR Association, REALTOR Association or Office Depot form. But not The Villages!

[Donna]

If you don't get the mtge by closing date, there are also penalties..Can't catch a break...LOL

[Hyacinth Bucket]

fourpar, question - what happens if you get the pre approval letter from a bank other than TV banks?

Do you know if all the banks and mortgage lenders follow TV in this?

I am not in real estate and am baffled by what I have been learning.

Thanks,

HB

[Hyacinth Bucket]

Donna what do you mean?


If you don't get the mtge by closing date, there are also penalties..Can't catch a break...LOL


What kind of penalties - I assume you mean financial ones.

HB

[Donna]

Yes HB..financial penalities...They have you right where they want you...

[Hyacinth Bucket]

Donna, are the financial penalties just related to not being able to close on a specific date or are there others?

HB

[Donna]

I would have to read the contract..I think thereare others..

[KathieI]

If you don't get the mtge by closing date, there are also penalties..Can't catch a break...LOL


OK, let me chime in, since its so fresh in my mind....

This comment is taken from one of the forms I received about my closing date.
"If you obtain your mortgage from a financial institution outside The Villages, please make sure your lender can meet your closing date so you can close on time and without penalty.....

It goes on and on and in the interest of space and my time typing it, if anyone is interested, pm me and I'll be happy to type it for you.

Bottom line they do penalize the buyer if the closing date established by The Villages isn't met on time.

[Fourpar]

Hyacinth,

It is a matter of contract, actually. Regardless of the lender you use, the contract terms (between Buyer & Seller) are the same. And if it is a Villages contract form, the term mortgage or loan is not (at least it wasn't in 2007 when I bought) addressed at all. Now, there is a closing date on the contract, and that is when you agree to close. If you cannot, because of financing or other reasons, then it may be considered a breach, and there are penalties.

Again, on Villages contract form, it matters not a whit to them if you are borrowing the funds to purchase. So any lender you use had better be able to close...on time! And with reputable lenders, that isn't a problem. They know what they have to do and when. And unless there is a credit issue, or some other factors they need information or documentation on, it should not be a big deal.

If you shop (online particularly) about for the absolute lowest rate, I caution you to be sure you know who you are dealing with. Many of the online shops are 1 person shows and merely brokers as opposed to bankers. There is a big difference. Some are better than others, but its often hard to separate the good and not so good long distance. My advice is do business with who you know, and be very "questioning" about progress with loan application and underwriting.

Hope this helps, rather than adding more confusion to the mix...

[Hyacinth Bucket]

Thank you everyone for all of your help.

Not to sure what we will do but at least I have more knowledge.

HB

[GatorFan]

Just get your mortgage through The Villages owned mortgage company and you should not have a problem.

[redwitch]

HB, in reality a pre-approval letter is worth about the paper it is written on. If you read the letter carefully, it will have enough contingencies to choke a TV bison. The loan will "depend" on the appraisal being satisfactory, that nothing has changed financially since the date of the letter, that the facts given by the borrower are correct, that the interest rate has not gone up, etc. Pre-qualifying letters are even better jokes -- the paper is worth more than those letters.

The advantage to a pre-approved letter is that a reputable lender will stand by it so long as the property appraisal is satisfactory and nothing major has changed since the date of the letter (some will actually state that the letter is good for X amount of days regardless of anything but appraisal value). If you buy a pre-owned home from someone other than TV, the pre-approval letter is a good negotiating point since it should enable the loan to go through faster. Most pre-approvals have already done the groundwork (credit check, employment/income and bank verifications, etc.). TV doesn't care. If you close on time, great. If you don't, penalties will be affixed.

If you have any questions about your letter, give me a shout out. I used to do mortgages.

[Donna]

Red... :agree:

You are right on the money..Just because TV has their own mortgage company, does not mean you are going to get the loan..

[captain1202]

For those of us used to making "real" contracts that protect both parties, this was good enough reason for me to stay away from buying from TV directly. You won't have these problems with a re-sale.

Good thing too as we had a minor glitch with the lender's paperwork production and had to extend the closing by a few days. No telling what TV would have imposed for penalties. Forfeiture of deposit maybe?

The thing that really turned me off with TV was the no negotiation, no refund deposit issue.

I've never heard of a retail realty contract without the financing and inspection contingencies, etc.. Perhaps it's just a comfort level but I prefer "win-win" contracts, not " I win - you lose" contracts which is what the TV contracts are IMHO.

[Fourpar]

captain1202,
:agree: 100%

[The Great Fumar]

Capt. 1202 and fourpar...

I don't agree...........I think TV are fair in their dealings.....
Four years ago when I purchased a home the closing date was firm......I was told at that time that to miss a closing for any reason was a $200.00 a day penalty and if TV missed a completion day , they had to pay $250.00 a day plus your lodging and meals for every day they were late ,,And they said we are "never late".
They were almost late with us but worked all night to finish it in time for the closing at 9:00 the next morning............Naturally I told them to take their time but they laughed and said "we'll be ready " and they were. the house was beautiful .....I knew what I was dealing with and made plans accordingly..............

fumar

[Donna]

Fumar,
I think $200.00 per day is outrageous! I was supposed to close on my new home this past Monday, so far I owe TV a $600.00 penalty, as of tomorrow..My closing will probably take place next week..

The delay is not my fault, but the fault of the lenders..Do you still think this is fair?? We are buying one of TV's new homes, the least they can do is take the circumstances into consideration, and go from there..Everything is black and white, no grey areas..

I think it is very unfair!

[l2ridehd]

Everyone should compare the contract on a new home from TV and a contract for a resale home. There are significant differences that could have severe financial implications to you. This is why I would never buy a new home from them. Resales are fine and the contract can be done to protect both parties. Contracts for new homes only protect TV. I guess if I had people lined up to buy I would do the same thing. But for now I will only buy resale.

[Fourpar]

Fumar,

The point is TV contract is a one way street, and the buyer cannot make any changes to their terms and conditions. If you accept that, and make your plans accordingly, there isn't a problem. But if there is a hiccup caused by a third party, it becomes your problem. And those who do not fully understand contracts (which is probably more than half the buying public) you may be in for a big (expensive & unexpected) surprise. And that sets a little on the south side of fair to both sides of a contract.

I (like you) accepted the terms of TV's contract. But I (and You) did so understanding exactly who was doing what to whom. I suspect most do not have that perspective, and that is less than most consumers expect, and deserve.

[Muncle]

Fumar,

The point is TV contract is a one way street, and the buyer cannot make any changes to their terms and conditions. If you accept that, and make your plans accordingly, there isn't a problem. But if there is a hiccup caused by a third party, it becomes your problem. And those who do not fully understand contracts (which is probably more than half the buying public) you may be in for a big (expensive & unexpected) surprise. And that sets a little on the south side of fair to both sides of a contract.

I (like you) accepted the terms of TV's contract. But I (and You) did so understanding exactly who was doing what to whom. I suspect most do not have that perspective, and that is less than most consumers expect, and deserve.


Gotta go with the great one on this. The issue is that it is your 3rd party that is causing the problem, not TV's. The problem is between you and that party. Now if the 3rd party that failed to deliver was the builder or one of his suppliers or subs, the problem would be TV's and he would be at fault and in default. You would be entitled to the damages and expenses Fumar specified.

[zummy]

We bought in April on our 3rd lifestyle visit, but only after we got pre-approved from Bank of America on line. We used the approval which was .5% less than offered by the Villages bank to have them match it. Do you banking ahead of time and have your proof to give them for their consideration.

[captain1202]

Donna...

My point exactly! What if it was a 20 day delay?

[Frangyomory]

Since we used our bank up north, Bank of America and declined to deal with the developer's bank, Citizens, I read the contract word by word. There are penalties on both sides but you can guarantee that the developer will have your home ready on the date the contract says it will. The penalties are all on you as the buyer.

Given the financial issues today, I would, before I signed any contract, contact my bank to get confirmation that my preapproval was still in good standing. The sales rep kept telling us that if BofA didn't have every piece of paperwork done on the date required that we would be in default. A bit of a scare tactic but actually true as well. Now BofA was going to be on time but we were in contact just about every day because the penalties were financial and big time financial.

We had friends who had their home equity loan decreased out from under them which proves that loans are only as good as close of business on the day you sign the papers.

I don't know what bank the pre approval is with but if I were the borrower, I would be in touch constantly with this bank getting assurances that the paperwork would be done well before closing. Best of luck to all in this case.

[Sidney Lanier]

12ridehd: This is yet another reason that makes buying a resale more favorable--no issues like this. In fact, we ended up leaving the elderly, infirm sellers in our house for a week+ after the closing (only after we had been in communication with the movers working with the assisted living facility that the sellers were moving into; we did have to have some idea of what was happening in terms of arranging for delivery of our furniture...) based on a handshake between honorable people; and the sellers did agree to pay for certain things after they were gone again based on a handshake, which they did (carpet cleaning, two minor repairs). People may think we were a little crazy to do this. Not that I would ever expect it, but can you imagine TV (or in truth any major developer) doing anything like this based on personal issues? Ha!

Another really major plus with a resale has to do with closing costs. With new construction, it's my understanding that the buyer pays for everything. With a resale, the sellers pay for virtually everything, including costly items like title search and insurance, deed recording stamps, and so forth, while if I recall correctly our only closing cost was half (shared expense between buyer and seller) the cost of the actual recording of the deed, which I think was $25 for each of us. Having bought and sold homes in New York over the years, I was flabbergasted at how reasonable and simple it was with a resale at TV!

[KathieI]

IMHO:

I can't say enough good things about Citizens Mortgage, both the mortgage broker and the underwriter I worked with. In my very difficult situation, being retired, going through a divorce, having a house in LA and another in PS, they worked so well and coordinated all their efforts to be sure I could qualify for this mortgage.

I think my mortgage rate is very fair given my circumstances and they understood my requirements both financially and emotionally. Yes, this is a new home construction and yes they wanted to sell the house, but they went out of their way to be accommodating and reasonable and extremely efficient.

Thank you Citizens Bank for allowing me to move into my dream home!!

BTW, they are all invited to the housewarming party too!

[Sidney Lanier]

Kathie, that's great that you had such a positive experience! Congratulations again!!!

The first time I ever had a new house built for me, it was a real challenge in many ways, but not insofar as the builder himself was concerned. We invited him and his wife for the first dinner ever prepared in that house; he and his family were terrific!

But I still wouldn't build or buy new again....

[Fourpar]

Gotta go with the great one on this. The issue is that it is your 3rd party that is causing the problem, not TV's. The problem is between you and that party. Now if the 3rd party that failed to deliver was the builder or one of his suppliers or subs, the problem would be TV's and he would be at fault and in default. You would be entitled to the damages and expenses Fumar specified.


Fumar & Muncle,

Let me clarify...It becomes the Buyers problem when a Lender can't/doesn't make closing possible. Lender is a 3rd party (not a party to contract). And when TV contract is used, with no financing contingency, that may be a real possibility....

Suppliers, subs etc. default, you're absolutely correct. That is TV problem, not consumer's.

Regret any confusion I may have caused,