Can someone with less than one year work experience with $28,000/year income be approved for $168,000 home?

I was – with Wells Fargo Home Mortgage. They said my excellent credit helped 730 and because I was preapproved with MidAmerican Home Mortgage. Now, for the dilema. I signed a contract to buy a house for $ 168,000 and was approved for the loan pending my financial situation doesn’t change (this was in Feb. 07) The house finished build date was about Oct. 07. I locked into a rate at 6.125 using 1% non-refundable down. I am not making enough money now to afford this place, so I told them I want to back out. THEY WON’T let me! The builder wants me to pay for the upgrades even though I notified them of my status before the upgrades were put into place. And, I can’t get any of my 1% down back even though I can prove I cannot afford the place. HOW DOES A BANK EVEN APPROVE SOMEONE IN MY FINANCIAL SITUATION FOR 168,000 in the FIRST PLACE?
IS THIS LEGAL? Do I have legal recourse if they try to sue me for the upgrades or “breach of contract?”
—–Please HELP!

My friend has signed up for this program with Wells Fargo, but she said that she had to miss August payment so she could be 30 days late, have her credit report reflect delinquent and then she would be eligible. Her husband’s income changed, but in 3 years she has never been late. She has suggested I try this program due to my income changing, but I told her no because I have never been late on my mortgage, and I was told that your account stays in delinquent status for 7 years even if you are current that delinquent indicator will still stay there. If there a way around this?

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