"Whatever can go wrong, will go wrong"
Not to say that the loan process isn't already stressful and time consuming and a royal pain in the rear end. Just... we apparently got more than our fair share of butt pain. :(
After your offer has been accepted you can break the next 30 days down into general main points:
1. Interest Rate Lock
2. Home Inspection Contingency
3. Home Appraisal Contingency / HOA Contingency
4. Financial Contingency/Loan Approval
In our case we had another point to add that caused some difficulty:
4.5. Post Occupancy Agreement
^ Just going to put the disclaimer now.... I'm not responsible for me language when we discuss #4.5.
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Interest Rate Lock:
To give perspective of our first unfortunate occurrence. When we started looking at houses in April 2013 the interest rates were around 3.6%...... between late April to when we won our house early June, that rate had gone up to 4.125%. (Ouch...the pain..... *cries*)
When we started looking our realtor told us that they doubted it was going to go above 4% by the end of the year......... riiiiiiiiiiight..... The current Interest rate as of today, this minute (looking at USAA) is: 4.625% OR 4.5% (depending on if you want to take on points or not)
Points are basically when you pay more money at closing to get a lower overall interest rate but depending on how long you want to live in the home....that may or may not be worth it.
So in just 2 months the rate went up 0.525%, which is hefty. BUT I'm so happy we locked it in! We were both a little cautious of locking in our rate and were very close to letting it float for a few days to see if it would drop. (THANK GOODNESS WE DIDN'T!!)
I'm not saying for you to rush in buying a house or to rush in locking in your rate. I'm saying, for the 2 month housing market we were buying in.... the economy started doing better, houses were going up in prices, and interest rates were following. By no means is 4% bad.... remember.....they used to be 10-18% a few years ago. (I would cry if we had that rate....)
And to further explain how well the market is doing here in Northern VA. Our realtor informed us on our closing date (early July) that as of end of June 2013, they had already matched their profit from previous 2012 year......and 2012 was a record year for them.
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| Realty is looking pretty good right now...... (All rights reserved Joseph Mollohan/flickr) |
House Business is boooooooming......... and we just threw our money at them haha :D
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Home Inspection Contingency
So we closed on a Friday and had our Home Inspection schedule on Monday (High fives for no lag time!!) We were feeling great and on time for this and started the loan process with our lender. Our lender was happy with the schedule and even wrangled our appraisal for the Tuesday. SO day 1 we had offer acceptance and by day 2 and 3 we were going to have Inspection and Apprasial done.
We felt pretty awesome.*takes a bow*
Until the lender asks for any and all information on your life including but not limited to:
3 years of W2s, past 3 months of bank statements, 401K, proof that you pay rent on time at your current place (EVEN IF YOU LIVE WITH YOUR PARENTS....must be a signed form confirming that you paid on time <---- that happened to my coworker), they charge you again to check your credit, they need to know a bunch of information that unless you're OCD (which I am), still get paper statements (which I do), and keep any and all information about yourself (...at this point I'm just anal retentive...).... it's going to be a stressful and long process for you (..it still was, even though I was prepared).
However, our Home Inspection went off without a hitch and we only had 2 major concerns that the seller confirmed quickly that they'd fix. (Wood rot and sump pump issues) *victory dance*
Most sellers are understanding about fixing issues found during the home inspection. This is due to the fact that if you utilized your contingency and back out of the purchasing contract........ they still have to fix the issues cuz the next buyer will want them fixed as well.
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| (ARR, MyLOLCats) |
Everyone Wins~~~
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Home Appraisal Contingency / HOA Contingency:
This whole 30 day closing/loan approval process is about contingencies and providing more proof to one entity than you ever have in your life.
So since our Home Inspection went well, we moved onto the appraisal and HOA information.
Our Appraisal WAS completed on Tuesday...however it can take up to 2 weeks for the report to be available and the price of your house to be confirmed. (If you're house is under asking, you can back out of the contract. If it's over asking, you better be SUPER happy and do a victory dance cuz you already have equity.)
So while we waited for the Appraisal report, on Wednesday we received the HOA documents. For those who are not aware, HOA stands for: Homeowners Association. Per Wikipedia "a corporation formed by a real estate developer for the purpose of marketing, managing, and selling of homes and lots in a residential subdivision." What they don't say?
HOA, while a good and long standing practice, can technically evict you from your home if you don't follow the rules and are willing to be as harsh as possible if you are even a millimeter out of line. (so...no pressure)
When I say we 'received the HOA documents', I don't mean 1 or 2 forms. I mean, the seller actually had to pay for us to get this electronically (I think it was around $250) and I proceeded to print off binders of information.
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| *cracks knuckles* we got this!!! (ARR, pjohnson7591/flickr) |
We had 3 days to review these. 3....days..... 3....
I'll be honest. We didn't get through all of the reading. We read the main points and the addendums (because if it's been updated 3 or 4 times, you want to know why).
So even though you have the option of within 3 days of recieving the HOA documents, that you can back out of the contract. I doubt many people use it. Just because you have to mull through pages upon pages of information.
And I like to read...... O.O
Either way, our Appraisal did come back 2 weeks later for the exact amount that we were paying for the house. Which is a common thing that happens. So in this we were lucky.
Let's take a moment to reflect on the bad things that happened by this time:
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Murphy Playlist:
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| (ARR, Thomas Hawk/flickr) |
+Your lender will not accept anything in email that is other than .pdf. No screen shots, no png files, no picture jpg files. PDF PDF PDF
+ Your lender/processing agent does not pick up the phone when you call
+ Your lender does not confirm when she receives documents from you via email or fax
+ Your lender takes 2 days from you emailing a question to respond
+ You have called your Processing agents manager twice because she is so unresponsive and you need to sign documents
+ Your agent doesn't tell you what she needs till the last minute then won't pick up her phone, won't explain things, and won't email you the information needed.
These are just a few, we are about to hit the fun number here with all the others...our wonderful 4.5 *Bangs head on desk*
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Post Occupancy Agreement
How innocent this sounds. It just means the seller will be in your home after you buy it for a bit. They'll even pay a prorated version of your mortgage, including insurance and escrow.
Our lender did not like this agreement.
When dealing with our lender, I didn't LIKE this agreement.
Our lender half way into our loan approval/closing process tried to deny our loan saying that 'since you are renting after purchase, this is not your primary residence and we can't give you the interest rate based on a primary residence".
Exsqueeeeeeze me?
They wanted to give us an interest rate based on it being rental/investment property, which is around 2 points higher.
Over my dead and chilling body.
I emailed back in a flurry asking what I needed to do as it WAS OUR PRIMARY RESIDENCE. They just needed time to pack up their children and move out of state. Of course, our agent didn't respond. I called.....no response. I left messages, no response.
I called our realtor who was shocked "Unfreakingbelievable, I've never heard of this happening" (So happy we could start the trend). He mentioned that there should be a rule/law saying we have 60 days to prove primary residence. aka. move into our new home.
I latched on to that hope.
I called our agent again, no response, left another message. I finally ended up calling her manager who confirmed that we have 60 days to prove primary residence. (Thank goodness!!) She then tells me she'll personally look into it and let me know.
*2 hours pass*
I receive an email from our agent, and how do they respond to my frantic cry for help that I sent 5 hours previous in regards to the 'we will have to deny your loan' statement?? "Please talk to your realtor". What? Huh? Why??? Why would he know, you're the one with the loan rules?!?! (Not to mention, I already had talked to him....thankyouverymuch.....youthinki'manidiot??)
So I responded back as calmly as I could informing her I HAD spoken to our realtor
Well lookie there???? I immediately got a call.
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| I didn't argue...accept and make it work. |
Our agent began to profusely apologize saying it wasn't her that needed it but the underwriters request and that she didn't mean to make me stressed and worried and that she didn't mean we'd lose our loan and that I should take it that way. "You said the words, not approved for a loan" "no no that would be the last resort". Fine. Whatever. I. Don't. Care.
Fix it.
By this time it's around 3pm and I'm completely stressed out from this personal experience and work and want to go cry in a corner or eat a million cookies. Or both. At the same time. Sugar cookies if possible. Maybe with donuts. :(
Anywhoooooo
I get a response at 430pm telling me it was all a huge misunderstanding because we had the Post Occupancy Agreement and that they just need a Letter of Explanation and Intent from us.
I was not happy. Not. Happy. BUT this was progress and I could write what was needed to make sure we get this approval.
I spoke with the realtor who was laughing in pain from this ridiculous situation and said he would talk to the sellers to find out EXACTLY why they needed to stay. I received that response by 5pm. By 530pm I was home and googling templates for this....only....they don't exist. There is no "Template for Letter of Explanation and Intent for Primary Residence". There's one for moving out, why your rent is late, etc.... none for this situation.
What the heck, we were already trend setters... let's make our own template.
I spent 3 hours writing an all encompassing, beautiful letter of explanation and intent, had both of us sign and initial the pages, and sent it.
It wasn't till 2 days later that they even confirmed receiving it and they never really officially confirmed that underwriting was okay with it. *pulls hair*
Moving on
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Financial Contingency/Loan Approval
So at this point we are 6 business days out and they are re-asking for documents they already got and re-verifying information and I've become such a pain in the neck for my agent that her manager assigns a Senior Mortgage Processor to help them out with our account.
I feel special.
So, around 5 business days before closing our realtor sends us a 'Howdy email' saying we need to release our financial contingency. I calmly reply back letting him know that we can't as we have not gotten approval from our lender for the loan yet.
Apparently it's common for lenders to have final approval on loans till day of closing just hours before.
Homie don't play that. (If you know what show that's from....you're old like me!)
So, instead our Senior Mortgage Processor who is amazing and her job and just a fountain of information and help, provides a commitment letter, saying that we will get final approval as long as A, B, & C are met and they receive X, Y, & Z. Our realtor receives this to pass on to the sellers.
That was on a Friday.
So Monday roles around and I get an email for 'virtual signature' a contingency release form. Oh no. Nope. Nope. I won't go verbatim of my email response but the summary is: Unless he could assure me 100% that if we signed that form we would NOT be on the hook for hundreds of thousands IF our loan fell through then sure....I'd sign it."
He ignored my email and sent another asking me to sign. I said "When you confirm, I'll sign"
He couldn't give me that assurance, he couldn't tell me that we, as freaked out new home buyers, wouldn't be straddled with the possibility of bankruptcy if we signed this and our loan fell through.
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| *facepalm* (ARR, Laurel714/flickr) |
P.S. All this stuff above ^....all that unnecessary stress happening up there. WOULD BE MOOT IN 3 DAYS WHEN WE CLOSE. Why did it have to happen now?? Why??
Well, because the seller currently bids on a home and has to put in their contract "We will buy your home if our home sells". If we, as buyers, sign the contingency release, they can remove that little clause cuz we then would have to buy their house loan or no loan.
So, in my frustration and OCD confrontational manner - addressed a very nicely worded email to our lender asking when we would get approval. When I KNEW 4 people at work that bought houses recently (one of them closed just the week before us), didn't get final loan approval till day OF closing.
Guess what? A miracle occurred.
4:45pm 3 days before (so really 2 days before) we got an email response saying we HAVE be given final approval and that the corresponding documents would be sent over the next day. So then we signed the financial contingency that night and sent.....no problem now.... we had the funds.
Another to note though:
Since we were refusing to sign this contingency, we were technically in default - which means the sellers could sue us (up to the cost of the house) or void the contract and look for another buyer.
Here's the thing - to void the contract they had to give a full 3 days notice....so they couldn't do that at this point, there was no time. They're only other option was to sue...which still wouldn't sell their house when all they want to do IS sell their house.
I just wanted to point out that we weren't not risking things by not signing, we were. We just risked weighing the options as well. If we had signed and the loan fell through, we would be responsible IMMEDIATELY for the full amount of the house. Which would cause bankruptcy, which you have to report to your place of business, can cause you to loose your clearance (if you have one), and then your job if you can't work without a clearance? So do you see the things we were and weren't risking?
Make sure to always do your research. ALWAYS.
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We still had a few other bumps before closing and day of closing. We had never received the receipts proving that they fixed the things in the home inspection. Oh...no worries..... I got them.
And then day of closing....not all of our money wired successfully *sweats* and if they didn't have it within 24 hours of signing all those closing documents.....everything would be void as it's not a valid transaction without the money..... *sweats*
We got this *fist pump* with a few hours to spare even LOL
We now own a house.
Let the money spending continue~~~ and remember "Whatever can go wrong, will go wrong..."
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