I spoke with a loan officer, and he mentioned that they can pre-approve my new loan application, but I have to show proof that I’ve rented my current house before closing on the new house. What happens if I can’t rent my house out before the closing date on the new house? Would there be some penalty if I end up backing out of closing in this scenario? Just looking for some personal stories. I’ll probably ask the housing agent the same question tomorrow. Thanks!
READ YOUR CONTRACT. Pay attention to any ‘financing contingency.’ It’ll explain what happens if you can’t secure financing and whether there’s a time limit to use that contingency. If you don’t have a financing contingency, check the part of the contract that covers ‘buyer default.’ No one here can answer your question about penalties for backing out since no one here has your contract. If you’re still unsure, consult a local real estate attorney.
Will your loan close without your home being a rental? If it won’t, then your financing contingency will likely help you get out with your earnest money.
Just get a renter. List your property with a real estate agent, offer a fair market rent, and focus on finding a good tenant rather than maximizing rent. When you find someone good, have them apply, check their credit, pay stubs, and assets. When you find a good match, have them give you a one-month deposit and sign a lease for the first of the next month. Then get into contract! If it’s delayed, you can stay in an Airbnb and put your stuff in storage. It should work fine, but sometimes you have to improvise.
Why do you treat people like this?
Your answer isn’t accurate. It sounds like you’re just making stuff up. Are you using a chatbot to respond?
@Farley
No, I’ve done 1500 deals. I’m just telling the guy to get a renter. If he’s backing out because he can’t rent it, then just get a renter!
Dexter said:
@Farley
No, I’ve done 1500 deals. I’m just telling the guy to get a renter. If he’s backing out because he can’t rent it, then just get a renter!
What part of my answer is inaccurate? Let me know, but stop being so angry. I’m not a robot.
@Farley
If you don’t get a renter in time, you’ll get denied, show the denial letter, and the other side will let you out of the deal and give you your down payment back, as long as you have a mortgage contingency in your contract.
@Dexter
It’s irresponsible to suggest that interested parties apply without knowing the loan type. You failed to address the actual question. Must be a loan officer.
Loan Officer here. The lease agreement can start after closing, depending on the loan program. But you’ll need to gather the first month’s rent and security deposit and show proof via a bank statement or ledger.
@Zhen
You both failed to read or answer the question correctly. Expectations met.
You would likely lose your earnest money.
Jai said:
You would likely lose your earnest money.
Lose earnest money? Because it’s not ‘tight’?
Jai said:
You would likely lose your earnest money.
If there’s a financing contingency (which there usually is), you won’t lose your earnest money.
Jai said:
You would likely lose your earnest money.
Yeah, pretty much. Why are others trying to make a sale to someone who isn’t even their client?
This is usually spelled out in the terms of your offer and pre-approval. Pre-approval will require that your existing home be rented out per agreed terms. If that condition isn’t met, the pre-approval won’t be valid. If you need further help, let me know. TY, Matt
You should ask your loan officer. Every bank has its own rules, and no one here can give you a definitive answer. Some banks may require you to rent the house for two or more years. Others may just need a signed lease, even if it’s just started.
Talk to your attorney. They can explain your options based on your contract.