At McMurter & Associates, we are seeing more distressed buyers than in recent years with increased interest rates and the stress test that buyers must go through with their lender. This also applies to buyers purchasing a home or condo that is not yet built or in the planning phase of development.
Can a real estate lawyer help with the purchase of a new build?
Although it is not a legal requirement, many people consult with a real estate lawyer to review the lengthy and complex contract that you will need to sign when you buy a new build.
What if you were pre-approved for a mortgage for a new build two years ago, but your lender is not approving you today?
You’ve been patiently waiting for your new home to be finished so that you can move in. Unfortunately, the economy is not the same as it was when you first bought your new build. You were approved for your mortgage one or two years ago, but now your lender is not agreeing to fund your mortgage today.
What happens next?
Your real estate lawyer will negotiate with the builder on behalf of our client at any time throughout the process.
You can ask your builder for an extension. You might need an extension to consult with another lender or find a way to make up the shortfall between your approved mortgage amount and what you can be approved for. An extension from your builder will come with a fee, but often this fee will be less than the amount of money that you will lose if you walk away from the deal.
In other less favourable circumstances, the builder will refuse an extension and you will potentially have to walk away from your deal which comes with other consequences such as legal action from the builder.
But doesn’t a pre-approval guarantee a mortgage?
Your pre-approval is the first step when buying a new build. Unfortunately, a pre-approval doesn’t guarantee that your lender will provide you with the funds upon closing. Your financial situation can change from your pre-approval to closing and your lender’s stress test can change making it more difficult to be approved.
If your lender is not going to provide with you a mortgage, you do have options. Working with a trusted team of real estate professionals will make all the difference if your deal goes awry. McMurter & Associates can help you with your next steps.
This article is intended as an informative piece about the subject. It should not be taken as legal advice. We recommend you connect with a real estate lawyer about your specific legal issue.
McMurter & Associates in Whitby has been providing real estate and estate planning services throughout the Durham Region for more than 30 years. We have the experience needed to provide you with expert advice for any of your real estate and estate planning needs.