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Options if financing falls through late

By ERIC P. FEICHTHALER - Real Estate Law | May 25, 2023

Eric P. Feichthaler

Dear Mr. Feichthaler:

I intended to close on a new home next week. A friend of mine had promised to loan the money I need for the purchase, about $200,000. Yesterday, he called to advise a family member had a serious medical issue arise, and that he no longer could fund the loan. I already sold my existing home (also closing next week), but I won’t have enough money to purchase the new property. I have already moved most of my items into a moving truck. I don’t see any way I can come up with the money, so what can I do to still make this happen?

–Matthew P.

Dear Matthew:

Your issue is more common than it should be. Usually, it is a bank that, for various (and sometimes ludicrous) reasons, will not fund a loan. My answer will not cover the possibility of exiting both contracts, as you have indicated a desire to continue with the purchase. You do have a few potential options.

First, you could check with the seller to see if they will offer you seller financing, at least in the short term. If they have sufficient equity, and you offer an attractive interest rate, they may be willing to loan you the additional funds. They would hold a mortgage against the property to secure their loan, and you would likely refinance with a lender once you have time to do so. If your credit may not allow for such a refinance, your seller may agree to loan you the funds for a longer period. If your seller needs the money now (perhaps they are making a new purchase as well), then this option will not work.

Another option would be to ask the seller to allow you to move in now on a short-term lease, until you can obtain financing from another source. That would allow you to still make the move, deliver your furniture and other items and complete your sale of your existing home. If this is an option, you should aggressively seek a loan from multiple lenders and determine who can meet your needs most quickly. If you are having issues with obtaining financing, an inquiry can be made to a mortgage broker.

Issues arise on a daily basis where both sellers and buyers have unforeseen issues. When these issues do occur, the key is to consider ways to proceed and meet the goals of all parties involved. I hope one of the above options works for you.

Eric P. Feichthaler has lived in Cape Coral for over 35 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Museum of History, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 20 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator. He can be reached at eric@capecoralattorney.com, or 239-542-4733.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.