In contract / got laid off

I think it depends what stage you're at in the financing process. Obviously, don't make any false representations regarding your income or employment status on any application materials. On the other hand, you don't have to go out of your way to share information regarding a change of status, post-commitment, if the bank doesn't request it and your paperwork doesn't obligate you to disclose it.

Good luck. I hope the new opportunity works out for you.

Thanks West81st

Right now, I just go the paper work from the bank to sign so I am at a really early stage. And I should say that I just go the contract from the seller also.

I need to sign both contracts and send them out.

Are you going to have a mortgage contingency in your purchase contract? That way you're protected if the bank doesn't give you financing (assuming you don't have the cash to make an outright purchase and cover carrying costs for 6 - 12 months).

Also, if it's a coop, the board may reject you, again assuming you don't have a large cash cushion.

KISS

No I dont have mortgage contingency. Its a coop but its a sponsor unit.

So if i dont have a mortgage contingency and sign contract with the seller, and I dont get financing, what happens?

Then you to have to make the purchase without financing, assuming you have enough cash, or you lose your deposit.

Yes I just reread the contract and forgot about the contract deposit.

Thanks!

Johnside- Why would you add this type of stress to yourself. If you haven't signed the contracts yet you should really consider letting this one go. Don't let people talk you into something that is a foolish move. The only exception is if you can pay cash for the place or have at least 2 years living expenses ( this varies depending on your stomach ). I guess everyone is different I wouldn't even think about buying a place being out of work.

If you knew that you couldn't find a job for months or even a year ( the same pay as the old one ) would you still buy this place? If the answer is Yes then great and good luck, if it's NO then you should consider walking.

If u in finance then i would take a step back and think

Banks these days are not stupid and are aware of the wall street layoffs so the risk of loosing your deposit is not as low as you think

Also looking for a job with a new mortgage may force you to make rash decisions

What are your expectations for the unit ? Flip , sell in two years ?

Thanks guys. The contract is not signed and I think there is a mortgage contingency on it (I need to ask again). If with mortgage contingency, would I get contract deposit back if it doesnt go through?

Its a crappy situation because my current lease runs out in 3 months and I wanted to buy a place since I will be paying similar payment.
I was thinking living there for about 4-5 years.

"If with mortgage contingency, would I get contract deposit back if it doesnt go through?"

Theoretically, yes, but you hear all sorts of stories where the seller tried to keep the deposit, including cases where the seller sued the buyer after failing a co-op board interview, claiming the buyer deliberately blew it to get out of the deal.

I would be very careful that the seller can't make some sort of a claim against you for signing the contract w/ a financing contingency while unemployed. Others here have more legal experience and can perhaps offer something with more foundation.

You'll find no shortage of differing opinions on the state of the market here, though even many of the more bullish contributors think things will be soft or flat a year from now. It may not be a bad idea to rent for another year and jump back in with a more stable situation. I have no idea what's going to happen to mortgage rates within a year, but a bank would probably look on you more favorably with a stretch of solid employment behind you than they would after you're a few weeks into a new job.

Good luck with both work and home.

John, why do you want to sign the contract? Unless you are getting a ridiculous deal, I would back out. If you read streeteasy, people are painting a pretty ugly painting in the upcoming year. Even if you are getting a great deal, I would be very careful. I work in finance, and hear the horror stories from my friends/ex-colleague that got laid off. It is a bloodbath right now, and nobody is hiring unless it is an absolute necessity. You need to consult with your lawyer if you want to proceed. You might have to advise your buyer. If you misrepresent your employment status, there might be cause for them to retain your deposit. I don't know about getting a mortgage, but I figure it would be somewhat difficult without employment. My recommendation is a short-term rental, say 6 months. If you get a job, then buy at that time. Why take the risk?

I've held off, but dude, if you sign this, you will be in bankruptcy court next week. Get a new job, find out how much money you make, and then pull the trigger.

In the meantime, why did you sign a contract w/o a mortgage contingency? First step you fail - never buy something you don't know how you'll be able to afford. Already I know that you don't know what you're doing.

Back out. Or ask Suze Orman to approve or deny you.

Guess what?

DENIED!

Steve, you are getting awfully nasty in your old age.

johnside - no bank will give you financing without a current job. email me and let's discuss your situation in detail as far as when you think youll find work, loan amount, etc. We might have some available options for situations like this. Layoffs happen and the bank is mainly concerned with solid work history and they want to make sure you get another job. sunny_hong@countrywide.com

John: If I were you, I'd be more concerned with securing a new job than worrying about whether or not to go into contract on a new apartment. This is an awfully uncertain environment to take anything for granted. The job market is weak but luckily for you, so is the real-estate market. If you are so confident about getting a new job soon, chances are the apartment will still be there. First things first.

John, I'm generally an optimistic person, but you are treading on thin ice here. Don't sign that contract. Get a new job, rent for another year, and see how things turn out. Doesn't matter what the market is doing or what you can "qualify" for, there is a lot more risk here than you realize.

will, I didn't take steve's statement as nasty. Sometimes you need to be direct and brutally honest when people are in situations like this. People have a tendency to fall in love with bad ideas and need a shake now and then.

I say ask Suze Orman. I have feeling I know what she's going to say. "I am not letting you sign your life away and buy an apartment that you don't even say how much it costs, when you don't have a job, when you 'think' you can get another job in a year, when you'll have to commit mortgage fraud to get a loan, when you have no idea what the future holds, when you may have to move to find another job and then be saddled with an apartment that you can't rent out for even half of what it costs you to carry and you can't afford to carry two apartments in two different cities and pay all the tax on them...."

Is that not nice?

"Layoffs happen and the bank is mainly concerned with solid work history and they want to make sure you get another job."

Countrywide: what a corporate culture!

"Layoffs happen and the bank is mainly concerned with solid work history and they want to make sure you get another job."

translation, we don't give two shits about you, we just want to sell you a loan that you probably can't afford and that you probably shouldn't qualify for in the first place.

Well with that I can only agree, JM.

Steve - Isn't this one of the reasons why Countrywide and others got into trouble in the first place. I guess they never learned their lessons?

I only know what I read in the papers, but it seems like some guy is mostly interested in getting application fees.

What Im trying to say is that even if he lost his job and he finds another one he should be fine. Obviously, if he cant get out of the contract he's going to have to find financing or lose his deposit. He asked how he should deal with the bank and Im telling him that he will be okay as long as he finds a job. Of course he has to qualify with that income.

"if he cant get out of the contract he's going to have to find financing or lose his deposit."

Losing a little money is better than losing a lot.

If "he finds another one he should be fine."

Duh.

thank you so much for clearing that up for me.

Thanks all

I just talked to my lawyer, I didnt sign the contract yet, and she said that it has financing contingency. She is telling me to go ahead with it (maybe just trying to get the full fee).

I am still torn about it since, even with all the interviews it would take at least a month to start my full time job but I can do freelance in the mean time, which doesnt really mean anything to the bank when they are reviewing my application.

My next question is.. where does the contract deposit go to? It says that it goes to the seller's lawyer. Does the seller's lawyer hold the amount in trust until closing or does it go straight to the seller?

I want to know if I do go ahead with it, what my chances are with getting the money back?

And special thanks to stevejhx for straight answer. Its a honest advice which everyone needs from time to time.

Yes I am still debating...... if I could guarantee that I could get the deposit back, I think I would go ahead with it.

as FYI = johnside = jifjif = me

I thought I had to make new account cause I didnt pay for the subscription. Well, stupid me, I have two paying accounts now...

jif, its a tough call, getting your money back in today's mkt, is going to be tough, i think most sellers will fight for the deposit, worst case they keep something, they will try to argue that you didn't make a true attempt or deliberately tried to fail. also some developers have their own brokerage companies or affiliate companies they work with, and will probably try to force you as a last resort to provide the financing.I wonder if they find out that if you signed the contract without work if they have some argument to keep some or all of deposit? not sure, but i would be careful, i just don't understand why the rush to jump into the Contract ASAP, today on a purchase you could go to closing in 2 weeks from the time the application is in. why not wait it out and make sure you have the new job then move forward, if timing is an issue you could always be a holdover tenant in your current apt.

another good advice. the sentiment is the i hold off on buying. thank you dledven

This entire thread sounds insane to me. The OP is clearly unversed in and naive about the RE buying process. How on earth can you be about to sign a contract for the most expensive thing you have ever bought and somehow not realized that an attorney is supposed to look at it first. You don't sign until you understand it. All this back and forth about not even knowing at first if it contained a mortgage contingency and forgetting about the 10% deposit. Come on. You don't buy an apartment because you don't know what else to do when your lease expires in 3 months. This should be a studied, informed decision assisted by a financial advisor and attorney. You don't just figure this out on your own. You'll end up getting very hurt. And "Should I reveal that I'm about to be unemployed?" How about the employment verification letter the bank will require! You can't get one. This is nuts. Dear OP, you had trouble managing your Streeteasy account for goodness sake--take the time to find a new job, get settled, learn about NYC RE in the meantime by reading this board, wwww.curbed.com , www.urbandigs.com , the NYT Real Estate section on Sundays, go to open houses. Don't go into this half-cocked.

agree w/kyle. This sounds risky to me give your current situation. You are not missing anything by waiting for another year or 2.

People are missing one OUT this guy has.

If he bought at a price that is today below market he might be able to sell (assign) his right to the condo to another person for the full deposit or at least a portion of it.

was this a serious question, John?

We need relative data to make an honest assessment. What is the amount of the down payment versus potential mortgage? in reality, is the deposit $10K, $100K or more? I know no-one wants to lose 100K, but as per other posts, it only makes sense to try to close if you feel the property is well above your deposit number in terms of equity, and the property is (in your bet judgment) in an appreciating area. If the purchase is mediocre, or potentially can depreciate, then why try to close at all?

Just as a reminder, OP hasn't actually signed a contract so nothing is at risk UNLESS he signs the contract. That seems like a bad idea until he actually has a job.

The contract of sale would have the specifics of when you can claim the deposit back and when it would be forfeited in favor of the Seller. Your lawyer should go over this with you carefully. We just signed a contract of sale where the 10% deposit was placed in an escrow account in favor of the Seller. The terms were similar to what Dlevden described, a limited financing out- we could only get the 10% back if their related lender refused to give us financing. We were very uncomfortable with that and delayed signing until we were able to get a commitment from another lender with better rates. The contracts of sale differ, but your lawyer should have reviewed it carefully and should take the time to go over it carefully with you. Have your lawyer work for his/her fee!

JohnSide, if BOTH JuiceMan and SteveJHX tell you the same thing, you should listen.

Those two would never agree on the same thing unless it is painfully correct to do so.

Secure a new job first- it ain't worth the risk.