Loans to watch out for when reviewing a potential buyer

Currently, there’s no 90% financing for a loan approximately $650K and above. What does this tell you as a seller? If you plan on selling your property, you’ll need to identify the actual percent the potential buyer has available to put down on their mortgage – that is if they’re going for a “jumbo loan”.

Examples from my past experiences: Two different lofts, one worth 2.4MM and the other 1.3MM, both had potential deals fail because the buyers couldn’t secure financing. The first loft worth 2.4MM, the bank wanted a 25% down payment and the second loft worth 1.3MM, the bank wanted a 20% down payment. On both occasions, the deal failed because a proper financial background check wasn’t performed.

Note: On any potential deal involving a “jumbo loan” above $650K, a seller needs to make sure:

1) That the potential buyer has funds to put down at least 20% AND as the amount of the loan increases, more money to be able to get approved for a larger “jumbo loan”.
2) That the potential buyer has liquid cash available after the down payment or they won’t be able to pass the Co-op board review.
3) That the potential buyer has a solid source of income – many banks aren’t counting the total sum of banking bonuses currently as total income.

In order to feel truly secure with a potential buyers offer, get a pre-approval letter from the bank and a detailed financial statement documenting their income history.