I am trying to purchase a foreclosed house with a homepath loan, but I do not qualify for a homepath loan despite excellent credit. Apparently a conventional loan will not work for the current condition of the home. Can you help me sort out my options in Virginia?
I am trying to buy this house: cute starter house
, and am currently under contract for it. I have signed a buyer's agreement with my realtor, and I have signed the intent to get a mortage with my mortgage lender and signed the forms that show my monthly payment and escrow costs and everything. The home inspection checked out with a couple big fixes needed--the furnace and the roof. The home is in forclosure and has been vacant for about 3 months. I am in Virginia.
I was supposed to close March 14th using a homepath loan, which is a conventional loan that allows you to make a small down payment and not pay for mortgage insurance (PMI). An appraisal was also not needed with the homepath loan, so I didn't do one. But, my lender is now saying that I do not qualify for a homepath loan because I do not have 3 open lines of credit. I have EXCELLENT credit history and have shown alternate means of credit-worthiness. I was pre-approved for twice the amount I would need for my mortgage. I could do another type of loan, but they are saying that a bank will not loan me money because the furnace was red-flagged/condemned, and it is inhabitable with the furnace as-is.
So, they are saying that it is the bank's decision if they want to make the repairs to the house so that I can purchase it with another type of conventional loan. They are also saying that the house now needs an appraisal for the loan, and that the bank will likely raise the price significantly once the appraisal is done, because it is likely to appraise much higher than the contract price.
I do have an attorney working with me for the home, but have not spoken to them directly. (They are researching titles, etc. on the house.)
I feel like I am getting the run-around from my realtor and lender. They have contacted the listing agent of the house to ask for authorization to make furnace repairs and/or install a heat pump in the house. But, they could drop me and go with someone who can pay for the house with a homepath loan. They could also increase the price of the house a lot more than the cost of repairs.
I think this sounds fishy, and I feel like they may have a higher bid and they are trying to force me out. I also know, however, that contracts on forclosures often fall through.
I think this is a well-priced house, it is great timing for me to buy, it is right down the street from where I am renting so I can fix it up as I go without rushing, and I have a cushion to make repairs and/or put down a bigger down payment if I want to.
Do you have any tips or resources for me? Should I talk with my attorney for the house? At this point, do I have the option of going with another bank if they would give me a loan, even though I have signed the intent to purchase a mortgage with a lender? I don't want to lose this house! Many thanks. (First time home buyer if it isn't obvious.)