There is a popular series of books in the stores which tell the reader how to survive everything from an airplane crash to defending yourself from a harrowing shark attack. I found myself perusing the pages noting that I guess I should know what to do if I am ever trapped in a sinking car or if my parachute fails to open. I figure its good information if really needed.

Being I am in the business of helping people buy homes or make the transition from renting to owning, I started to apply my own unique perspective and created a Worst Case Scenario for the home buyer. Although the following tips won’t be much help should you find yourself stranded in the Antarctic, they might give you some tips to consider should the need arise in overcoming those heart-stopping unexpected calamities during your home purchase. I really hope that these tips and the shark-fighting techniques are never needed. But you never know....

Scenario One: The Buyer Loses Their Job

• Most mortgage loan programs allow for a borrowers gap of employment of up to 60 days maintaining eligibility. If you can regain employ within the same industry or vocation, most mortgage banks will accept a first paycheck and verification of employment from your new employer as proof of continued financial responsibility.
• Getting an official job offer letter for vocations such as teachers, nursing, police and firefighters are also sometimes accepted as if the commencement date initiates within 30 days of your first house payment.

Scenario Two: The House Does Not Appraise For the Sales Price

• This happens. Return to the seller or their agent and renegotiate the sales price.
• Have the seller carry a private-held second note for the discrepancy between the appraised amount and contract price.
• Secure 103% mortgage financing, allowing you to increase the loan 3% over the appraisal amount.

Scenario Three: The Inspection on the Home Comes Back with Significant Issues

• Return to the seller to renegotiate the necessary repairs since the matter will only impede the sale to another buyer.
• Get another corroborating inspection report and let your Realtor negotiate with the Sellers Agent.

Scenario Four: Your Credit Score Drops Losing Your Loan Approval

• Pay down credit card balances and order a rapid credit rescore.
• Have a friend or family member add you to one of their credit cards with good established payment history and low balance, and then order the rapid credit rescore.
• Another option in some cases is to ask your mortgage professional to investigate credit score blending. Blending is averaging the scores as opposed to using the mid-score only and there are still mortgage banks that allow this averaging as opposed to just using the mid score. This works when you have one score significantly higher from the other two.

Scenario Five: You're Short of Funds for Closing

• Waive your escrow account and use the prorated property tax credit from the seller to help pay your closing costs.
• Increase the sales price to the appraisal limit and increase the seller contribution to pay your closing costs.
• Get a gift from a family member.
• Get your home insurance provider to write a policy with higher deductibles thus lowering your policy and out of pocket expense.

Scenario Six: Couple Splits

• Qualify on your own.
• Get a “stated income" or “no income verification" loan. If your credit score supports the loan program, you may qualify without the significant others’ income if you are comfortable making the payment or you plan to have a roommate that pays you rent.
• Find a friend to cosign your note.

© 2005 Rentbusters. All rights reserved.

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