27 March 2009

A Real Life Pickle Jar For Pickles

$8000

I'm glad I got your attention now. That's what the government is prepared to give you if you are a first time home buyer and you buy a house for more than $80000, before the end of the year. Thank you Obama. Why wouldn't you buy a house with that kind of deal? Did I forget to mention that prices for houses and interest rates are the lowest they have been since... I dont even know how long!

As many of you already know, that is the plan for me and the newly forming family of mine. I am here to answer that question of why you wouldn't want to buy a house: It has been the most frustrating month I have had since finals time in college. In all honesty, this will pay off and be a great decision, but right now (in the thick of things) it's very stressful.

My journey started at the end of February. This is when I was looking at houses on Realtor.com. This was exciting to see nice looking houses and seeing the estimated monthly payment. Don't let that estimation fool you. I found a plethora of homes that looked fantastic! I says to myself, "Picklez, it looks like the monthly payments are less than what you pay for rent and parking put together! Buy an effing house!"

After I left the Shire, I started to contact some real estate agents (based off of referals from co-workers). This was pretty cool. These guys are your own agent to help you out in this frustrating process. All of these agents took down information on what I was looking for and did searches for me. Turns out that they all draw from the same deck, and returned the same listings that I've already looked at on Realtor.com. They weren't very helpful with that part, since I could do that myself. I had a pretty good idea of what homes I was interested in so I asked the real estate agents for refers to lenders. This opened up another can of worms.

Before my appointments to talk to some lenders I decided to go to this Home Buying Seminar, put on by the company that owned the building that I am renting from. I thought that it would be a very good informational seminar, preparing me for the real world of buying houses. Unfortunantly it was not that. I ended up being the only person that showed up for the "seminar". So it quickly turned into a one on one conversation with a real estate agent at that company. He started asking questions about the type of home I was looking for and drew up a contract. He told me he was ready to work for me and lookg for my dream house in my price range. Then he slid the contract in front of me and told me where to sign. ... Really guy? I did not come here to enlist your help on finding houses I've already found (as well as 5 other real estate agents have found). I told him that I will think about it and bring the contract home. Haven't talked to him since.

After that disappointment for knowledge I had my first meeting with a lender. I brought all of the documentation she asked for and I was all prepared to get pre approved. My assumption, walking into her office, was that she was going to show me a couple of "zero down" options. Turns out that there are no more zero down options available now-a-days. So she basically spat in my face and said that I couldn't get a loan unless I had more money.

"Hows about investing in my future?" I asked my parents. They said that they would be willing to loan me the money I needed to hit the total that the first lender gave me as a rough estimate. I thought that was groovy and continued to meet with other lenders.

I finally decided on which real estate agent to go with. We was refered to me by one of my good buddies, Weeks. He works at the same company I do and has been doing real estate on the side for 6 years. The biggest thing that made my desicion clear was that if I purchased a house though him I got a free TV. It seems like all real estate agents are the same... and they get like 6% of the final price of the house... why not try to get something free (even though I just bought a new TV)?!

He showed me around 3 listings last weekend. The first to were foreclosed homes and the last home was a short sale. The first house basically looked like a giant took a big number 2 and tunneled out a little doorway in it. The previous owners essentially got frustrated with getting kicked out of their home, that they ended up destroying the property before they moved out. They had the mentality that, "if I can't have it, no one can". It also had cracks in the foundation. Foundation work usually costs thousands of dollars to fix, if it can be fixed.

The second home was much better, but that's not saying much. Everything looked like it was straight out of the 60s. The basement also had water damage all along the walls. This water damage could easily have (or will) created mold. Mold in a home is also not a good thing. Other than the basement of this house, it would have been an ok choice.

Door number three was the winner. One story, cute little home with a full basement. 3 bedroom / 2 bath. So many good things about it. Perfect for a starter home! It also had a 2.5 HUGE garage! The lady and I, instantly, fell in love with it. We wanted to make an offer right away. Unfortunantly, I was not pre approved yet.

I eventually talked to my bank and they had a program that the other lenders didn't mention at all. They had a fixed rate, 30 year, conventional loan where you only put 3% down (lower than the 3.5% that FHA makes you put down) and there was no PMI!

That program interested me the most so, a few days ago, I gave the lady at my bank all of my documentation and had my parents fill out a Gift Certification (proof that they were going to gift me x dollar amount). She told me that she was going to pull a late shift and get me a letter of approval, hopefully, by the next day.

Two days rolled around, and I still had no letter of approval. I contacted her and asked her what was up. She told me that I didn't have enough money in my savings account. My savings account had more than enough for 3% down and closing costs (which are probably going to be $1500 ish). She told me that wasn't the issue. The issue was that the bank wants to be comfortable with the fact that I will be able to make monthly payments and live my life. I think that is the stupidest thing... I know that I have enough to pay you and start monthly payments... why won't you give me the loan?! She eventually was able to get me a letter of approval but with the stipulation that I have $2K more in my savings account at the time of final application for a loan. She also said that the money couldn't be gifted to me. That is stupid. Why couldn't my parents give me the cash to put in my savings so the bank will have a warm fuzzy about giving me money?! Stupid!

So this is my fair warning out to all of my friends. If you think you are going to buy a house in the future... borrow the money you need from your parents now... and borrow more than you think you need. I think if the money gets deposited in your account at least 3 months before you apply for pre approval they dont care.

That's where I am at now. I am pre approved but I still need $2K more in my savings account before I can put in my final application for a loan. I will be working with my real estate agent, today, to draw up an offer on that house I fell in love with. Hopefully, things will go a little more smoothly from here on out.

Wish me good luck!

7 comments:

CoachingByPeter said...

By knowing your local real estate investing market, you're able to keep your finger on the pulse of your local community and to stay abreast of changes in trends, sales prices and rental rates. Knowing immediately about these changes is critical to your investing future.

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