Down Payment for a San Francisco property
A reader asks:Can a down payment be borrowed or does it have to be my "own" money? (for example any available means through bank accounts, etc.)
Our reply:
Yes a down payment can be borrowed as long as the lender is aware of where you are getting the funds and approves your loan with that knowledge. Lenders have different underwriting guidelines so be sure to have lender approval for your loan if you are borrowing funds before you remove the loan contingency.
In a deal several years ago, we made an offer on a condo for a client. The offer had a loan contingency. He was pre approved and qualified to pay the loan payments. And he told me the down payment was available and did not hint that there would be a problem so I did not make this part of his contingency.
What the client neglected to tell me was that he planned to borrow the down payment from his parents in order to buy this property. Once we were in escrow, his parents decided they would not loan him the money after all.
The sellers were very upset when he did not remove the loan contingency and contested the return of his deposit. He had to hire an attorney and fight to get his money returned and finally ended up losing a portion of his downpayment.
The moral of the story is, before you make an offer on a property be sure the funds you are borrowing are really available or it may cost you more than you anticipated.
- Janis Stone
posted by SFResidence.com @ 7:18 AM
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