On buying a house, part 1
Part 4: http://gmp.livejournal.com/513155.html
Part 3: http://gmp.livejournal.com/510360.html
Part 2: http://gmp.livejournal.com/508979.html
I'm still sick, so you get more LJ posts!
We've learned several lessons about buying houses. One of them was a $900 lesson that could have been avoided with a simple 5 minute conversation. I'm still mad about that. I have to try to forgive those involved every time I think about it.
However, our current status is that we have an offer in on a short-sale and we're just waiting on word from the bank. (A short-sale is a compromise between bank and house owner to sell the house, avoid foreclosure and save credit ratings.) If you wanna know how we got here, then hit the jump.
So, our first offer on our first house was what I'll call the Wolverton house. Why that? Because it's on Wolverton street, duh. We went looking one weekend. We looked at 7 or so houses and settled on this one. It was cute and in a good neighborhood. It was valued at $115ish and they wanted $85ish. 30 grand off a house? Yes, please! So, we looked at it. There were foundation problems, but as long as they didn't add up to over 30 grand, we'd still get a bargain. (Side note: north east Texas has the equivalent of Yazoo Clay. SideSide Note: Yazoo Clay is a clay in Mississippi that is very responsive to moisture and will cause foundation problems if not properly watered.)
We got the inspection, $400. The inspector said the obvious, "You have foundation problems, you need carpet, some gutters, etc..." We decided that we could deal with that. Since there wasn't carpet to rip up, getting foundation work would be that much easier. We weren't ecstatic with the results, but we could deal with it for that house.
We got the appraisal... Here's where things start to go wrong. I'm gonna back up a minute and explain something that neither of us understoond at this point. We're getting an FHA loan. They require significantly less down payment. They're insured by the government. You have to be a first time buyer. I thought that was the only difference but I was wrong.
Again, we got the appraisal, $450. Normally, an appraiser drives by the house to make sure it's actually there, then compares the lot with the lots around it and computes a value based on the property and the neighbors. Sounds simple, right? Yeah, but that's not what this guy did. What this guy did was another inspection. His so-called appraisal report came back with things like "You have foundation problems, you need carpet, you've got a faulty electrical switch upstairs" and other things. We already knew all this. What was the point of all of that?!
The point was that the lender would not give us money until all of that was fixed. WHAT?! Yeah, we'd have to pay for the foundation work, get carpet installed, and get an electrician out there before they'd even consider giving us the money to buy it. So, at this point, we'd have to sink $20,000 into a house that we don't own. Not. F***ing. Happening. After some anguished deliberation, we cancel the contract.
So, at this point, we're out $900. This could have all been prevented. I'm really mad at my lender regarding this. Had we known that the FHA loan such stringent house condition requirements, we wouldn't have bothered. Any idiot could see that the foundation was bad on that house. There were some cracks that were so big you could shove a pencil in them. However, the order would have to be: (1) Foundation Fixed (2) Money loaned and there's no way we could do that. If she had said, "By the way, the house has to be livable without any serious foundation problems before we can lend you the money" then we wouldn't have bothered. It would have been obvious.
We're out $900, but some lessons were learned. This is house number 1 of 3. I'll talk about number 2 next time. It's shorter and not as bad. Number 3 is ongoing and horrendously stressful, but there's a chance it could work.
PS: The song I'm listening to is actually good if you like techno and One Night in Bangkok. http://www.youtube.com/watch?v=6f30PxyNfSA
Part 3: http://gmp.livejournal.com/510360.html
Part 2: http://gmp.livejournal.com/508979.html
I'm still sick, so you get more LJ posts!
We've learned several lessons about buying houses. One of them was a $900 lesson that could have been avoided with a simple 5 minute conversation. I'm still mad about that. I have to try to forgive those involved every time I think about it.
However, our current status is that we have an offer in on a short-sale and we're just waiting on word from the bank. (A short-sale is a compromise between bank and house owner to sell the house, avoid foreclosure and save credit ratings.) If you wanna know how we got here, then hit the jump.
So, our first offer on our first house was what I'll call the Wolverton house. Why that? Because it's on Wolverton street, duh. We went looking one weekend. We looked at 7 or so houses and settled on this one. It was cute and in a good neighborhood. It was valued at $115ish and they wanted $85ish. 30 grand off a house? Yes, please! So, we looked at it. There were foundation problems, but as long as they didn't add up to over 30 grand, we'd still get a bargain. (Side note: north east Texas has the equivalent of Yazoo Clay. SideSide Note: Yazoo Clay is a clay in Mississippi that is very responsive to moisture and will cause foundation problems if not properly watered.)
We got the inspection, $400. The inspector said the obvious, "You have foundation problems, you need carpet, some gutters, etc..." We decided that we could deal with that. Since there wasn't carpet to rip up, getting foundation work would be that much easier. We weren't ecstatic with the results, but we could deal with it for that house.
We got the appraisal... Here's where things start to go wrong. I'm gonna back up a minute and explain something that neither of us understoond at this point. We're getting an FHA loan. They require significantly less down payment. They're insured by the government. You have to be a first time buyer. I thought that was the only difference but I was wrong.
Again, we got the appraisal, $450. Normally, an appraiser drives by the house to make sure it's actually there, then compares the lot with the lots around it and computes a value based on the property and the neighbors. Sounds simple, right? Yeah, but that's not what this guy did. What this guy did was another inspection. His so-called appraisal report came back with things like "You have foundation problems, you need carpet, you've got a faulty electrical switch upstairs" and other things. We already knew all this. What was the point of all of that?!
The point was that the lender would not give us money until all of that was fixed. WHAT?! Yeah, we'd have to pay for the foundation work, get carpet installed, and get an electrician out there before they'd even consider giving us the money to buy it. So, at this point, we'd have to sink $20,000 into a house that we don't own. Not. F***ing. Happening. After some anguished deliberation, we cancel the contract.
So, at this point, we're out $900. This could have all been prevented. I'm really mad at my lender regarding this. Had we known that the FHA loan such stringent house condition requirements, we wouldn't have bothered. Any idiot could see that the foundation was bad on that house. There were some cracks that were so big you could shove a pencil in them. However, the order would have to be: (1) Foundation Fixed (2) Money loaned and there's no way we could do that. If she had said, "By the way, the house has to be livable without any serious foundation problems before we can lend you the money" then we wouldn't have bothered. It would have been obvious.
We're out $900, but some lessons were learned. This is house number 1 of 3. I'll talk about number 2 next time. It's shorter and not as bad. Number 3 is ongoing and horrendously stressful, but there's a chance it could work.
PS: The song I'm listening to is actually good if you like techno and One Night in Bangkok. http://www.youtube.com/watch?v=6f30PxyNfSA