WARNING: This is long and probably boring. But for my records, it is here.
I hope that when you buy your house, it's not as stressful as when we bought ours. The past two months have been a roller coaster. When we began looking into houses and I called our lender to get pre-approved for financing, she advised me that there was no way we would be able to buy a house right now. We either needed to make more money, pay off our van and/or have a lot more cash to put down, and/or look for a house in a much lower price range. As none of those things were really an option, I advised our realtor that we might have to stop looking at houses and wait a little longer to buy. He suggested that we contact a lender that he works closely with as she has been able to get a lot of people loans when they were told no elsewhere. I called her. She didn't blink an eye. She said we could get a loan NO PROBLEM! She guaranteed an FHA loan requiring only 3.5% down and she actually second guessed as to why my lender said there would be an issue.
I'll give you a little bit of our scenario:
We purchased our duplex 3 years ago. We have rented half and lived in the other half. Lenders will only qualify rental income as part of your income if it's been rented out for a year and is on your previous year's tax statement. So basically, on paper for the lender, it looks as though we are losing $1200 a month on that duplex (after paying the mortgage payment, taxes and insurance.) In actuality, we are cash flow positive with the duplex but like I said, the lenders have to do what their guidelines say and because we've been living there for the past 3 years and not collecting rent for the upper unit, we can't include that as income.
We have an FHA loan for the duplex. We were advised by our first lender that you are not allowed to have two FHA loans at the same time. The second lender advised us that we are an exception. FHA allows two FHA loans 1.) if your family outgrows the home, (which ours most definitely did,) and 2.) if your first FHA loan is an investment, (which ours most definitely is.)
We proceeded on with the lender that didn't blink an eye, has 25 years experience (as compared to the first lender having 5) and put in an offer on a home. After some negotiating we came to an agreement on price and negotiated a budget for the builder to pay for our choice of appliances, our choice of window coverings, our choice of landscaper (thanks Uncle Dean!), granite countertops and wood floors. All this was good but it required a $5000 non-refundable deposit in order to continue with our choices. This deposit would go towards our down payment at closing. Before signing the dotted line and writing the check, I checked with the lender, she said we are golden. She re-ran credit checks, re-looked at all of our info, we were golden. So, we took the jump and 4 weeks later, the house would be done and be ours...so we thought.
Once signing the dotted line, we put our duplex unit on craigslist. The first person to look at it wanted it and they met all of our qualifications so it was set. We were to close on 6/24 and they were to move in on 7/1. That would give us a week of buffer to move and clean the old place out. Well, time passed and all was well. The house was done. We called Nora (our lender) daily to check and see what the progress was, ask if any info was needed and if we would close on time. The answer was always yes. Until 6/24 came along and there was a hiccup. The underwriter had a problem with us having 2 FHA loans. Nora assured us that we should be closing the next day. We are fine. We can TOTALLY have two FHA loans! Basically a week went by and we heard the same thing every day. We moved out of our duplex, on 6/29, as agreed and moved our stuff into our new garage to allow our new tenants into the duplex. HOWEVER we weren't allowed to move anything in the house as our builder's bank will not allow it. So, we spent the night with my folks.
On 6/30 Nora called and said not to be freaked out that everything is still going to be fine. There's nothing wrong with our file, we were just in the stack to be underwritten and they were extremely busy. Most likely it would be the next day. Oh, and that we may have to go conventional but that's a worst case scenario thing. (This meant more $ down and more time for a new application.) I freaked out. What?! Are you serious? How can this be? Oh, and she was leaving for 6 days for the 4th of July weekend. Stephen flipped. He called the regional manager and gave him a piece of his mind. He was helpful and responsive and he said that he would do everything in his power to speed up our loan process. Also, he said he was pretty certain that we would NOT be able to have a second FHA loan. But we'd have to wait until the underwriters get to it. Oh, and did I mention that our underwriter also went on vacation? Yep. She did. And left us homeless.
7/7 came around and we were still homeless everyone was back from vacation. The regional manager advised us that morning that we heard back from underwriting and we were going to have to go conventional. Nora advised us that this process would be much faster and we would be able to get it hopefully within a week. That is... if we could come up with the extra cash. Praise God and thank Uncle Rick! Otherwise we would've been out the countless hours and thousands of dollars invested in this house. And we still would've been homeless! So, on the path of conventional loan.
We were given an underwriter with cancer and was out sick for a couple of days. (Bless her heart and I do have pity, but please, can't you give us someone that is actually in the office?) So our file sat there. Once approved by her, it had to be approved by another set of underwriters. A week went by and NO progress. Another weekend. Another week and we were finally beginning to see light at the end of the tunnel but no! They now required us to refinance our van (to get our debt/income lower because they couldn't count our duplex income!) So, we rushed to get that done and of course, the loan officer that started our process Thursday morning, left early that day and then was out on Friday! So, we proceeded with the office manager who normally doesn't do loans! But we got it done so that we could move onto the next phase of our loan. (I'm not going to go into the detail of that afternoon. It was one of the worst days of my life.) Nope, we still couldn't close yet. It had to clear underwriting again. Monday came and oops, the underwriting manager who had to sign off on our file WAS ON VACATION! Are you serious? Yep. I am. Another week and still homeless. Monday came and I told Nora that we had better be signing because Stephen has lost 10 lbs in a month, I am going crazy and my kids have slept on the floor long enough. Not to mention the inconvenience we put our families through for the past month! "I know, I know." is what she said. I have never been so frustrated with someone in my life! The reason I was so frustrated with her is because we trusted her as a professional and she failed us. Big time. We could have been out a home and not had any $ to put towards another home. She promised us something and fell way short.
To end this long story it was not until the following Monday, 7/25 that we officially closed on our house. We were finally allowed to move in on 7/19. I love my new home! That wretched, stressful month is over and I will never go through that again, (please God!) Our family was so gracious and helpful. I owe you all! My kids woke my parents and siblings up at 5:30 am for far too many mornings. We emptied your refrigerator. We put Stephen's brother out of a room for a few days. We were stressed and most likely grumpy most of the time but alas, it's over!