Altered Financing Terms
Can Ruin Property Deals

Question: I am purchasing a second home and have made a $2,000 deposit and signed contracts for an agreement that includes a "neighborhood gold" program -- $7,500 in incentive money that the builder will apply to my down payment instead of upgrades. But the builder's lending department just informed me that the bank is no longer offering this program and isn't able to complete the contract to which we agreed. The home is framed and should be completed in the next few months. How can I purchase the house under the original terms?

-- Michael, Phoenix

Michael: Financing problems are the No. 1 cause of deals falling through, so your problem isn't exceptional. Assuming that the builder is still willing to come up with $7,500 in incentive money, my suggestion is that you switch lenders. You don't have to use the lender that the builder recommends, so contact a good mortgage broker in your area and see what he or she can work out. There are many programs that allow a seller to pay some or most of the buyer's closing costs or down payment. You can find out about some of these options through Freddie Mac.

On the other hand, the real problem may be that the builder has decided not to offer the incentive and is trying to weasel out of the deal by claiming that the loan is no longer available. Have your real-estate agent confront the builder to find out. Then go back to your original purchase agreement to determine what your options are. You may need a lawyer to help you with this.

Mr. Irwin has more than 25 years' experience as a Los Angeles-area real-estate broker. He is the author of more than two dozen books about real estate and is recognized as one of the most knowledgeable writers in the real-estate field. Mr. Irwin's most recent book is "Tips and Traps When Renovating Your Home," (McGraw-Hill, 2000).

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