Welcome back to Curbed's Horror Stories where we hear about a true tale of things gone horribly wrong. This is another first time homebuyer who ran into trouble when the strict rules of the condo association conflicted with Bank Of America.
Originally the process was a lot easier than I had expected. I clicked with the first real estate agent I met and narrowed down my search to one building in a matter of a couple weeks. After another couple of weeks the perfect unit in the building opened up—about $40,000 cheaper asking price than the others I was considering for not much less square footage, a closet nearly as big as the bathroom and a kitchen with an honest to goodness dishwasher. Not to mention with my lucky number 315. It was made for me and I probably deliberated for less than a day before I knew I had to make an offer, which the seller accepted without batting an eye a few hours later.
It was the end of September and I was bidding summer farewell on a beach trip, so I happily agreed to the deal while sitting in my bikini on a piece of driftwood.
It couldn’t have gone better. I couldn’t believe that buying a home was really this easy.
My realtor had set me up with a few lenders at the start of the process, and I’d checked with all of them to see who would give me the best deal. They were kind of all over the place in terms of my preapproval, which my realtor found really odd. Usually the same rules apply, so why one thought I could afford a $250,000 place, another 225,000 and the last no more than $200,000 was something of a mystery. I figured $250k was probably more than I could really swing, but why not keep my options open? Plus that lending agent, at Bank of America, had been the most friendly and helpful to me, calling me up and spending plenty of time answering all my questions. Even suggesting that rather than paying those hefty mortgage insurance fees that come along with an FHA loan, I had the option of doing a conventional loan with only 10% down!
So when it came time to sign on with a lender, Bank of America was my guy. I didn’t even hesitate when my realtor asked me if I was sure I wanted to go with a company that had been in the news so often for their layoffs and cutbacks. It’s a huge corporation, I said, they’ve got to be able to handle one simple loan. It’s not like mine will be complicated!
But when it came time to sign the contract and choose a closing date, Bank of America got a little ruffled in the feathers. A month was just simply not going to be enough time, he needed at least 45 days to get his team together with the commitments they already have. Alright, I thought?what’s an extra few days?
I originally had a rate of 4.35% with less than $20,000 down. There was still some mortgage insurance necessary because it wasn’t the full 20% downpayment, but it was included in the rate, which was still historically low. Pretty sweet deal.
I sent the biggest fax of my life with all my info, probably pissing off numerous coworkers in the vicinity of the fax machine, and then kicked back. It was being taken care of.
I got some documents from the condo association and read them over. Some things I wasn’t thrilled about (you have to come in the freight entrance if you’re wearing workout clothes? What is this, communist China?). Also, if I ever wanted to move and rent out my place, I’d have to get the board to approve it, and it sounded like they’d be unlikely to, since they didn’t want more than 40% of the units rented. It makes it hard for new buyers to get loans, they said.
That’s about when things started going to shit, about a month into the process at the end of October. That’s when Bank of America’s “guy” got back to him, informing him that 40% of the units in my building were being rented. Uh?.so what? I said. Well, as it turns out, in order to be able to put 10% down, no more than 30% of the building can be rented.
Get air traffic control on the horn because we are going down.
We were two weeks away from our closing date, and suddenly the loan isn’t possible. How in the hell did no one check on this sooner? The listing agent lived in the building. Surely he had read the same condo bylaws I had. Hell, even I knew about this before Bank of America’s guy did. Why didn’t you just ask me?? Or like, ever even mention that this was a potential CATASTROPHIC problem?
Now, I should mention, I wasn’t exactly rolling in cash. The only way homeownership was even ever a possibility was that I have a very generous mother who wanted to help me get into this market while it was at a low(ish) point and mortgage rates were at rock bottom. But she wasn’t exactly an unlimited cash fountain either. And now, two weeks from closing, our options were: come up with another $20,000, get the building FHA approved (using magic instant-FHA approval fairies or something) or drop the whole thing.
My dad had recently retired and now had access to his retirement fund. But this whole home purchase thing wasn’t his idea and while he supported it, I hadn’t expected to need to beg for his help. Luckily, he was understanding and willing to help, and somehow after a few days I had managed to scrape up the money by being a mega-mooch as well as digging up every penny I could find and tapping into my IRA.
On the plus side, I’d now be getting a nice 4% rate with a little shaved off the top in lender credit. Least they could do, literally.
But even though I’d gotten the money together in what I considered record time, we still weren’t looking very on track for our November 14 closing date. It seemed like every step that was supposed to take two or three days was taking more like eight, and Bank of America could never really tell me what the status of any of my paperwork was.
Finally we had to ask the seller for a little more time, which they weren’t thrilled about doing, but they understood there was nothing I could do. The Thanksgiving holidays were coming up though, which was only going to slow everything down even more. Bank of America was making a lot of promises, but I was starting to wonder if we’d even close by the end of the month, and starting to be really glad I’d hesitated to put in my notice with my current apartment. I’d heard of another friend who’d broken her lease and packing her moving truck only to find herself with nowhere to go when the mortgage company couldn’t deliver. Luckily her seller let her move in early, but I wasn’t counting on any such luck.
As we passed deadline after deadline with no real progress from Bank of America, my agent started to go into crisis mode. One of the lenders he’d originally suggested, the one who’d offered me a meager $200,000 pre-approval, had been his friend for years. He knew that armed with a small team at his local office, with a lot more knowledge of the inner workings of the DC market and no giant corporate machine halfway across the country to report to, he would be much more likely to finish up my loan before the seller really lost it.
He put us back in touch, and the lender drew up a new offer for me. The problem was, rates had edged up, and I was looking at paying 4.25% instead of 4. It was still low, I knew, but I’d put so much effort and stress into justifying every minute detail of my finances to the Bank of America people that I really didn’t want to start over when we were so close to the finish line (I thought). Especially not if it meant another $30 bucks a month in mortgage interest. I told him I would hold off for now and cross my fingers that B of A could get it done.
Of course, they couldn’t. Another few weeks passed? we were still getting the runaround from B of A and there was no indication if they could even ever finish my loan. My agent was calling the lender daily, but still there was no progress. The third potential closing date came and went, this time with particular sting because a friend I’d convinced to look into buying after I was under contract closed that day. My loan had taken a month more than hers and it wasn’t even done yet. And she had used Bank of America too! B freakin S, I thought.
That’s when it happened. My agent forwarded me an email from the listing agent. The seller’s patience was at an end. They had tried to be patient, but this was ridiculous (I agreed!!!). The system at B of A seems to be broken (again, wholeheartedly in agreement). But the bottom line was I needed to switch lenders or they were taking my earnest money deposit and running.
Basically, I needed to start all over, at a higher rate, or risk losing my money AND my place.
There was no other choice, so I did it. It was the first week of December, more than two months after I’d gone under contract. I filled out all the new paperwork. I paid for a whole new appraisal and credit check (#%$$#^#$$#@#%). And I prayed to God we could finish this shit before my Christmas flight home on December 24th.
It was close (we closed on Friday, December 23). But we did it. It cost more (a WHOLE LOT more) than I thought when we started, but it was done. I was a homeowner and it was the best Christmas present I could have gotten, just to have the whole thing finally off my back.
I had to get my parents some really bitchin Christmas gifts (and probably also for birthdays and father’s days for like, the next 20 years), and it took me a while to relax and settle in, but now I’m really starting to love my place.
I just wish the process didn’t take so many years off my life?.
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