Can someone with less than one year work experience with $28,000/year income be approved for $168,000 home?

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I was – with Wells Fargo Home Mortgage. They said my excellent credit helped 730 and because I was preapproved with MidAmerican Home Mortgage. Now, for the dilema. I signed a contract to buy a house for $ 168,000 and was approved for the loan pending my financial situation doesn’t change (this was in Feb. 07) The house finished build date was about Oct. 07. I locked into a rate at 6.125 using 1% non-refundable down. I am not making enough money now to afford this place, so I told them I want to back out. THEY WON’T let me! The builder wants me to pay for the upgrades even though I notified them of my status before the upgrades were put into place. And, I can’t get any of my 1% down back even though I can prove I cannot afford the place. HOW DOES A BANK EVEN APPROVE SOMEONE IN MY FINANCIAL SITUATION FOR 168,000 in the FIRST PLACE?
IS THIS LEGAL? Do I have legal recourse if they try to sue me for the upgrades or “breach of contract?”
—–Please HELP!

My friend has signed up for this program with Wells Fargo, but she said that she had to miss August payment so she could be 30 days late, have her credit report reflect delinquent and then she would be eligible. Her husband’s income changed, but in 3 years she has never been late. She has suggested I try this program due to my income changing, but I told her no because I have never been late on my mortgage, and I was told that your account stays in delinquent status for 7 years even if you are current that delinquent indicator will still stay there. If there a way around this?

  1. Reply
    February 8, 2011 at 7:37 am

    You signed a contract and put down a down payment, the only thing you can do now is sell it when it gets done. They should never have approved you for it but YOU should have known that you could not afford it also. In the end it is your responsibility to figure out how much you can afford.

  2. Reply
    February 8, 2011 at 8:04 am

    What does your contract say? Whatever the contract that you signed says, that is what you have to do.

    They approved you for the mortgage because someone along the way committed fraud. Even if you BROUGHT HOME $ 28000/year you couldn’t have made that payment. You only have about $ 600/month to allocate to rent/mortgage.

    In the future: DO NOT sign a contract (not even with a cell phone company) until you have READ and UNDERSTAND the contract. If it is a contract for more than a few hundred dollars, CONSULT with an attorney!

  3. Reply
    H. A
    February 8, 2011 at 8:20 am

    You are not approved any longer. Explain to the lender that with the current crisis in the mortgage industry the government and others are looking to tighten credit to prevent what is about to happen to you, making a loan where the borrower cannot afford to pay for the mortgage. Point this out to Wells Fargo, and Mid American Home Mtg. and they will have to issue you a declination letter, which when you take to the builder he will be forced to refund you your earnest money provided your sales contract stated that the sale was contingent on financing, which most have. If you are unable to obtain financing you cannot be compelled to close the transaction.

  4. Reply
    robert w
    February 8, 2011 at 8:33 am

    legal, yes unless ur under 18.
    sorry to hear ur learning hard lessons now.
    suggest u get 2 more pt/tm jobs to make the bills until u can sell. don’t fill the house with stuff u have to move later. use nice bed sheets as curains infront window , keep ur utlities, low car bills low. save ur cash for the sale.
    suggest u check with ‘legal aide’ in ur area what ur options are. as for the down – forget it.
    visit to learn ur hard lessons by others mistakes.
    OH banks will finance undocumented ‘illegal’ foreign nationals for a buck.

  5. Reply
    Mildred S
    February 8, 2011 at 9:25 am

    you need to look at the contract

    if you have not closed / you have not signed the loan

    can’t you ask the bank for a letter that says they will not fund

    isn’t the purchase of a home usually contingent upon mortgage financing ?

    i would ask your banker for help … a turn down letter would help

    if you close on the house, you will lose it anyway if you can’t afford

    banks will always approve for more than you can afford . this is a business for them . they are money saavy . this is their job.

    the whole ARM mortgage product was sold and they knew upfront that people would go to foreclosures

  6. Reply
    February 8, 2011 at 10:23 am

    You DO NOT have to be delinquent!!! I repeat DO NOT!!! Now when working directly with the bank they will reject your loan modification proposal from jump, if you have never been late. It is not impossible to get a modification accepted but it is not as easy as someone who has been late. I know of a loan modification company that works with people that have never been late but are now experiencing financial hardships. You must prove that you are close to the point that you are not going to be able to pay and will then become delinquent. You also have to pay anywhere between 1k – 5k depending on the company to get this done and a lot of private modification companies will not guarantee a payment reduction. In fact, I have come across people that their payments actually went up!!! You need to call your lender/loan servicer to see if they will work with you first. You may want to get a Forensic Loan Audit (FLA) done. A FLA examines all your loan documents to make sure that you loan was completely compliant and that all “i’s are dotted and t’s are crossed”. If the loan is found to contain violations then this can be used a leverage tool to kind of “twist” the lenders arm into negotiating the terms of your current loan.

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