Or rather, not our mortgage lender as the case stands now. Backstory follows;
My SO and I have been looking at buying a condo. Housing around here is rather expensive so I really didn’t think we could pull it off, but we found out that LA has a program to assist with downpayments (city and state combined will contribute up to 98K). Downside of the program is that you have to give them a portion of the proceeds when you sell; the amount they contributed plus a percentage of the increase from your purchase price. We figured it was better than nothing and would at least get us in the home ownership game.
So, we had them run the numbers based on my SO’s income and credit score and found out that we just barely came in under the income limit to qualify for the program. His credit is immaculate, so getting approved wasn’t a problem. We were running everything in his name only because my credit score needs work and my income would have put us way over the limit to get the assistance. The lender advised based on the numbers, his income and so forth that we could get a place up to $350,000, factor in the down pay assistance and we would need $10,000 cash at closing and end up with an affordable payment. (mortgage, taxes, HOA fees and insurance) So far, so good. We have the $10,000, can afford the payment and life is looking good. So we get to shopping, a very nice real estate agent shows us a number of properties. Most of them suck, because $350,000 doesn’t get you far around here, but we finally find one we LOVE. It’s perfectly located for our needs, 1200 sq ft, in great condition and the current owner is leaving the country.
We are getting ready to put in the offer, so we get ahold of the mortgage guy to make sure everything is set and that’s when it falls apart. He goes over the rest of the paperwork he needs from us and says that everything looks set. The catch now is that we need $30,000 cash at closing. What the hell?? All of a sudden our share of the closing costs have TRIPLED. Where in the fuck are we supposed to get another $20,000 in 45 days? Long story short…ok not short but coming to a close…we lose the property because we now have to offer $20,000 less so of course that offer was rejected. We’ll keep looking, but with the market the way it is there really isn’t much else available in anything remotely resembling decent areas.
So screw you mortgage dude for waiting until the last damn minute to tell us. It may not mean much to you, but for us this was owning our own property and you can be damned sure that we won’t be coming to you in future.
Antinor, we had the same thing happen to us before our closing. The extra 20K is probably for down payment. See if the current owner is willing to let you slide, as the mortgage company usually will. If not, ask your RE lawyer to make a very special request.
Consider yourself lucky that you didn’t find out about the extra $20,000 in closing costs during closing, while sitting in the escrow agent’s office, after having already put down a $20,000 non-refundable deposit, because of an incompetent and unscrupulous mortgate agent, which is what happened to us when we bought our house. We spent 2 hours phoning everyone who had a fee on our closing statement, getting them to lower their fees wherever possible, though the lying, greedy mortgage broker naturally refused to reduce or waive a single penny of his fees (including a whole point of more than $5,000. Prick). We were just lucky that not only was everyone else we were dealing with, extremely accommodating and flexible, but that we were able to track down my boss wherever he was that day, and secure a wire transfer loan from him for the difference we needed to close, or we’d’ve lost more than the house (see non-refundable deposit above).
We got ripped off by the next mortgage lender when we refinanced last summer, too. I hate these fuckers. When we refinance again (and we’ll have to sooner than we wanted because of the bait and switch game of the 2nd guy), we will conduct every single, solitary conversation in writing. Period. And if the closing statement they present to us at closing doesn’t match the “Good Faith Estimate of Closing Costs” (Good Faith, my ass), we’ll get up and leave.
That really sucks Shayna, sorry to hear you went through that. Is it ok that it does make feel a little better though?
We’re going to keep looking, hopefully something else will come up. I’m still holding out a little hope since prices are starting to come down. Maybe something else decent will come up in our price range in the next year or so. But we are absolutely finding a different lender, this guy pissed us off too much.
I could point to my own home buying hell thread, but instead I’ll just let you know that the SDMB pretty much unanimously agreed that Mortgage Guys are somewhere just below plankton on the grand scale of things.
Damn, we must have been lucky. I’m wondering whether the mortgage lender y’all dealt with was affiliated with a financial establishment that you already knew and trusted. I ask because we did our house through the bank we’ve used for many years, and while the mortgage broker was not an employee of the bank per se, she does have an office there and is associated with the bank in people’s minds. Anyway, she got us a low interest loan, helped us every step of the way, attended closing with us (where there were no surprises), and gave us a nice gift: a flower for our parlor.
Tough break. But honestly, if you can’t save enough for even a 10% downpayment, can you truly afford this condo? I wouldn’t even consider buying a house unless I could put 20% down for no other reason than to avoid PMI. But another really practical reason is that if you can’t scrape together 10%, then you are probably being unrealistic about what you can afford. Putting $30k on a $350k house is not unreasonable, IMO, especially one that is being subsidized to the tune of $100k.
Mortgage lenders are notorious for approving MORE than you can realistically afford. It seems they don’t build in things like clothes and eating and emergencies, such as car repair bills. Or, SO could lose his job for a few months.
My advice is to take another look at your budget to make sure that you are being absolutely realistic about what you can afford. If your budget doesn’t include putting a percentage into a savings account, then you’re being unrealistic. Because “little things” crop up all the time and you certainly don’t want to overextend yourself. If you do think you’re being realistic, then take the next few months to sock away as much as you can for the next buying opportunity that comes along.
Yes, we can absolutely afford it. The financing is being approved solely on his income and credit score. The total payment is only about $500 a month more than we pay in rent now and we both are putting money into savings every month. I appreciate the concern, but making the mortgage payment would not be a problem at all.
My issue isn’t with getting $30K together at some point in the future, it is that he told us we could do it for 10 and then tripled that number the same day we were putting an offer in.
I think the market will still come back to “nromal”.
These lax lending standards have helped pump the housing market for years, and it’s all coming home to roost.
Used to be you had to present yourself to a lender, have money down, have good credit, etc etc etc.
You sound like you were about to take on debt that would have been very difficult to work with. I’d consider it a blessing. Condos, in particular, are crashing hard in places, like DC.
Wait until you get a proper down payment, and a salary that lets you put 30% of monthly income into the mortgage payment.
good buddy of mine is a mortgage broker (which is different than a mortgage lender).
And not to say anything bad about him, but it really blows my mind how much he clears on each deal, and how much leverage he has on the people with sub-prime credit that come through his door. As long as you’re willing to do business, he can charge pretty much whatever he wants as closing costs and make it look like a legit fee. Plus, the lenders he sells mortgages for give him a piece on the back-end for each loan he sells. All he does is the paperwork.
Frankly he would not even be in business if the large lenders didn’t seem to want to give their money away to anyone regardless of credit score or financial condition. I certainly recognize that just about everyone who wants a home will need a home loan, and not everyone has great credit…but you would not believe how much money these organizations are willing to lend to just about anybody - I’ve seen him close deals on $500K loans with individuals whose credit is in the gutter - all they had to do was provide a pay stub to demonstrate that they were employed.
And default=shmefault…most mortgage loans get packaged up as securities and sold to foreign investors. The lending organization makes $$$ regardless of the outcome, unless the investors begin to realize they do no due diligence on their loans (search the news for “New Century”)…I think the whole industry is going down the toilet and is going to take the economy with it.
Anyway, I digress…
He simply brokers those deals and does the paperwork and makes as much if not more than the real-estate agent on each deal. After seeing how his business works, there’s no way I would work with any independent agent or broker unless you have a personal relationship - my advice is to work with a larger bank that funds their own loans and has some incentive to treat you fairly if they want the deal.
He brokered my loan and made a big production about how good of a deal I was getting. Frankly he made a decent profit on it (and it entitled to it) but was only marginally better than my local bank…if anything it proved the banks can be more flexible and cutting out the middle man will save most people money.
You definitely have a gripe, but I’ll second Trunk’s advice to get together a sizeable downpayment and THEN look for property. The main advantage to buying vs. renting is the ability to pocket the appreciation when you sell. You didn’t say what percentage of the increase in value you’d be on the hook for, but if it’s a sizeable portion, after years of paying on this you may not end up with anything of value.
Another point is that you keep mentioning that everything will be in your SO’s name. If you’re responsible for half the bills, this means that if something should happen to the relationship, you’ll be SOL on getting any of the proceeds. That’s puts you in a pretty vulnerable position. If I were you, I’d work on two goals in the next year or so: 1) work to improve my credit rating; and 2) Save up $ for a down payment on a home. Then I’d look for property that would be deeded in both of our names.
The creative financing that’s been going on lately (e.g. interest only loans, teaser intro rates) has done a big disservice to folks, IMO. We’d all love to drive a nicer car or live in a nicer house. But if you get in over your head, you’ll not only end up losing that house, you’ll ruin your chances of getting a decent interest rate for years to come.
Oh, absolutely! That’s precisely why I told you our story; so you’d at least feel a little better about yours.
And maybe this will make you feel better, too. . . We “lost” more than one property we fell in love with, mostly by being too late on the draw, as things were selling fast when we were looking 2-3 years ago. And now I thank Og we didn’t get any of the ones we thought we wanted at the time, because none of them – condos every one – even hold a candle to the amazing single family home we ended up with after a long, exhausting year of stopping at every real estate sign we drove by.
And don’t worry about the down payment issue. Again, if it makes you feel better, we only put down 5% of the sale price at the initial closing. It’s ridiculous to infer that you can’t afford to buy a house just because you aren’t currently sitting on a pile of cash the day you decide you want to enter the market (unscrupulous mortgage lenders jacking up your closing costs notwithstanding).
That doesn’t mean it’s a bad idea to do a thorough and accurate budget. Assuming the monthly mortgage figure you’re working with doesn’t already include property taxes and insurance, which some lenders do build into their loans, don’t forget to include those items when determining how much more you’ll be spending towards your home vs renting on a monthly basis. A good figure to use to closely estimate Property taxes here in SoCal is 1.1% of the purchase price, so a $350,000 home will cost you around $3,850 a year in taxes, which is another $320/month you may have to set aside. Homeowner’s insurance will be about another $20-25/month, so it may actually cost you more in the neighborhood of $850 a month more than you’re paying for rent right now, again, assuming the lender didn’t build taxes and insurance into the monthly payment you’re comparing against already.
Buying a home is a tedious, emotionally draining experience. But it’s all worth it in the end, when you finally own a piece of property that’s yours and not some landlord’s. Very, very best of luck to you!
Yep, we factored all that in. The actual mortgage payment quoted to us is less than our current rent. I researched the taxes so we could factor that in. I’ve worked in insurance for a dozen years now, so that was actually the first thing I thought of. We’re going to absolutely keep saving and keep looking. The way the market is dropping, I’d rather wait about another year anyway and that gives us time to put away quite a bit of money.
To PunditLisa…
Thanks for the advise, but I quite honestly have already thought of and been working on all of that. I’m getting a lot of my old debts cleaned up, so it will be easier soon. A lot of the reason we’re running the financing in his name is because of the income limits to qualify for the first time buyer programs. If we add my income we’re at around double the limit. Like I said earlier though, the difference in rent/buy costs from a monthly payment standpoint wouldn’t be that much more, so even if I did get screwed on the property if we broke up, I really wouldn’t be out a lot more than I am already. (A strange outlook on it, I readily admit)
I totally agree about the bizarre financing that’s been going on, which is why we are only interested in fixed rates. Actually, one of our next steps is to start looking at foreclosures which we’ve been advised by a number of people in the real estate industry are increasingly becoming available because of those interest only loans and the like. People are getting hit with the real payment and losing the properties.
Wow, I am so glad I went with lenders recommended by someone I knew. A friend of our had refinanced her home twice through this guy (she now as an interest rate of 4.7%) and so we went with him. The cost was low and exactly as he projected it to be.
