What happens to my deposit money if I am turned down for a mortgage after signing a Sales Agreement?

adamald · Joined: 19 Oct 2009 Posts: 2 1.55 Dollars($)

OK...here goes:

My wife and I were pre-approved for a mortgage. We found a house, and signed a Sales Agreement. This was on Sept 23. We filled out the mortgage application...got the home inspection...and put down $10,000 as a deposit on October 13.

Now, today, my wife got laid off from her job. Our mortgage has not been completely processed yet. I immediately called our mortgage guy and let him know that the information has changed, and my wife's income can no longer be a factor for our mortgage. He said he would make the changes, and re-submit for underwriting.

My main question is this: If we are denied a mortgage, can we get out $10,000 back? We are in Pennsylvania and going through FHA. Thank you.

gmakerley · Posted: Mon Oct 19, 2009 8:36 pm Post subject:

you should have no difficulty in retrieving your deposit. it is standard practice that a borrower who cannot obtain a mortgage approval can be given back the deposit once the loan is denied. your real estate contract indicated that you would act in good faith and attempt to obtain a mortgage by a certain date. if you're unable, your presentation of a decline letter should suffice in your efforts to get your money back. actually, your realtor should have discussed this with you initially.

adamald · Joined: 19 Oct 2009 Posts: 2 1.55 Dollars($)

Thanks for the reply! I think the reason my realtor didn't bring it up is because we were well qualified, and had no issues with the mortgage size we were looking for. We are in a gray area now...we can still afford the house on my salary alone, but we may not qualify for the mortgage.

gmakerley · Posted: Tue Oct 20, 2009 10:31 am Post subject:

you're welcome...and i just have to share this: right now, there are 81 ladybugs on the screen outside the window where i sit. yes, i counted them.

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