ARTICLES & NEWS

REAL ESTATE FINANCING ARTICLES

stack of cash

Contract Contingent on Buyer Qualifying for Financing

By Christopher Combs | February 4, 2024

Question: My husband and I signed an offer to buy a home in east Mesa, but the seller wants $30,000 earnest money. If we don’t qualify for the mortgage, will we lose our $30,000 earnest money? Answer: Probably not. Under the standard AAR purchase contract, the purchase of the home is contingent on the buyer qualifying for the mortgage. Two other important contingencies in the purchase contract are the approval of the title report and the approval of the home inspection by the buyer. Bottom line: If you do not qualify for financing, or approve the title report, or approve…

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A New House. Some Old Debt. What Takes Priority?

By Christopher Combs | May 8, 2022

Question: We want to buy a Phoenix home for $800,000 with a $640,000 mortgage loan. During the Covid catastrophe two years ago, however, our art framing business was ruined. The result is that two credit card companies now have judgments against us for more than $50,000. Our mortgage broker told us that we should still be able to qualify for the $640,000 mortgage loan without paying off the two credit card judgments because an Arizona statute (A.R.S. §33-705) says that the $640,000 mortgage loan will have priority over the two earlier $50,000 credit card judgments. The title company, however, is…

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Issue With Home Equity After Refinancing First Mortgage

By Christopher Combs | May 23, 2021

Question: We bought our Glendale home in 2008 with a first mortgage loan of $200,000. At the same time we got a $100,000 Home Equity Line of Credit (“$100,000 HELOC”) from the same mortgage lender. We have never borrowed any money on the $100,000 HELOC. Last year we refinanced the first mortgage loan with a new $350,000 mortgage loan, which was used to pay off the $200,000 first mortgage loan, and the remaining $150,000 we used for landscaping and an extra bedroom. Everything was fine, and we have made several monthly mortgage payments to our new $350,000 mortgage lender. We…

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Wife Has Lien On Home Husband Purchased Before Marriage

By Christopher Combs | May 9, 2021

Question: I purchased a home in Casa Grande. My wife and I were married a year later. All of the monthly mortgage payments and repair costs since our marriage have been made from our joint checking account. My wife says that she is unhappy, and that she talked to an attorney who said she has a lien on our home now even though she was never added to the title. Does my wife have a lien on our home now? Answer: Probably. Although the title to the home is in your name only, the monthly mortgage payments and repair costs…

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seller-carryback-financing

Will Seller Carryback Financing Be Jeopardized If Buyer Is A Drug Dealer?

By Christopher Combs | April 4, 2021

Question: We are selling our Carefree home. A young man has made us an offer to purchase our Carefree home for $600,000. There will be a down payment of $250,000 cash, and financing by a $350,000 seller carryback loan from us. This $250,000 cash is apparently from the young man’s successful real estate investments, but the young man cannot qualify for a $350,000 mortgage loan. We think that this young man could be a drug dealer. If we sell our Carefree home to this young man and the FBI seizes the home for drug dealing, will we lose our $350,000…

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Carryback loan on land

Weighing Options for Seller with Carryback Loan on Land

By Christopher Combs | February 28, 2021

Question: In one of your columns a buyer had purchased forty acres of land in northern Arizona (“Forty Acres”) with financing for the purchase of this Forty Acres by a seller-carryback $200,000 five-year mortgage loan. After five years, however, there had been none of the anticipated development in the area, and the Forty Acres was only worth $100,000. In your column you said that the seller could choose not to foreclose on the Forty Acres, but could file a lawsuit against the buyer for the failure to pay the $200,000 promissory note. In my opinion, however, after the seller sues…

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Home Remodel

No Anti-Deficiency Protection for Home Improvement Loans

By Christopher Combs | January 31, 2021

Question: Last March we bought a home in the “Arcadia Lite” area of Phoenix. We borrowed a high-interest $250,000 second mortgage (“Second Loan”) to “fix and flip” the home. We tore down two of the smaller bedrooms to make a large covered patio surrounding the swimming pool. We completed this construction six months ago and listed the home for sale. We have not had any serious buyers, and last week we reduced the list price again. If we don’t sell the home in the next few months, however, we will be unable to continue making payments on the Second Loan.…

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open land

Mortgage Lender Generally has the Right to Either Foreclose or Sue

By Christopher Combs | November 15, 2020

Question: We bought forty acres of land in Coconino County five years ago for $200,000. We made a $20,000 cash down payment, and the seller did seller carryback financing of $180,000, plus ten percent interest, all due in five years. Although the forty acres of land in Coconino County was to be part of a large development of homes, five years later the forty acres of land is basically worthless. We have tried several times to negotiate the balloon payment of $180,000 with the seller. The seller has refused to negotiate with us, and now has filed a lawsuit against…

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