In part 1 we covered the first 6 subsections of the FINANCE section of the Arizona Purchase Contract. In this article we will address the remaining 5 subsections.
Please note that this article applies only to the Real Estate Purchase Contract in use in Arizona. For information on Real Estate Purchase Contracts in use in other states please check with the Association of REALTORS in each state.
2g. Type of financing – this is the subsection where the buyers indicate what type of financing they are planning to use. The type of financing here should be the same one identified in the Loan Status Report (LSR) discussed in part 3. Common types of financing are:
– Conventional – a conventional mortgage is any loan that is not guaranteed or insured by the federal government.
– FHA – these are loans insured by the Federal Housing Administration (FHA) and made by approved lenders following FHA specific guidelines.
– VA – these are loans guaranteed by the Veterans Administration (VA) made to a qualified veteran (according to VA criteria) and made by an authorized lender on an approved property.
– Assumption – these are loans that allow buyers to take the sellers place in the loan. Instead of obtaining a new loan, the buyers will be assuming the existing loan the sellers have.
– Seller Carryback – these are loans where the sellers agree to finance the whole or part of the purchase.
2h. Loan costs – defines who (buyers or sellers) will pay for the different loan costs and fees, including Private Mortgage Insurance (PMI); discount points; A.L.T.A. Lender Title Insurance Policy; Loan Origination Fee; and Appraisal Fee.
2i. Other loan costs – defines the maximum amount the sellers agree to pay in addition to the amounts already defined in subsection 2h above. This will limit the sellers’ financial exposure to the amount included here. Also, for VA loans, sellers agree to pay the escrow fee. And lastly it states that all other costs to obtain the loan shall be paid by the buyers.
2j. Changes – buyers are required to get written consent from sellers prior to making changes in the loan program, financing terms, or lender described in the LSR. However buyers are not required to obtain prior consent from sellers if the changes do not (1) adversely affect buyers’ ability to obtain loan approval; (2) increase sellers’ closing costs; and (3) delay close of escrow.
2k. FHA Notice – this subsection applies only to buyers using an FHA loan. It states that the Department of Urban Development (HUD) does not warrant the condition of the property. It also requires FHA buyers to attach a signed copy of the form HUD-92564-CN, “For Your Protection: Get a Home Inspection”.