Advice please - Possibly making offer on house!

[hypersloth]

Greetings folks, been awhile.

Anyway - finally got my credit a bit better. My credit scores are 674,674,675. My fiancee's are 715 around.

She has a 100k house in her name and TWO vehicles. One is actually mine as I didn't have the credit at the time to purchase one.

So here is the issue. We found a house that we love. We are not searching for anything else. It's this house or we are staying put for another 5 years. It has everything we want, where we want it, and the $$$ is very good. The seller is offering a $5 toward closing costs and the house is $219,000 without negotiating $ yet.

We contacted lending tree. One person immediately called us but requested an $85 processing fee through paypal.

We decline.

So I talked to the agent, she recommended a mortgage broker, who we called later today and was nice enough to call us back and run our information.

Basically this is what he said. With the current house being an FHA, and MY credit being just a few points shy of what they will allow for mortgage insurance, the only thing we can do is make an offer on the house contingent on the sell of her old house.

He recommended asking the seller to knock another 6k toward the closing and putting the 3.75% down.

How does this all sound? We can afford the house, we have already figured out that if one of us loses our job we can afford to keep afloat for 6 month minimum.

One of the vehicles is 1.5 years old, the other can be paid off with $5.5 k and is 4 years old.

I have one item on my report that the broker stated I would need to pay off for this to all go through (yuck, asset acceptance). She has nothing.

I have no debt in my name, I do have one credit card (orchard per the recommendation of others here..thanks...)

Like I said, this is a very nice house for a very good price in a very good neighborhood. The school district is ...ok..but getting better everyday as more nicer houses are being built here all the time.

Overall, our expenses for heating/cooling etc will actually remain the same on the larger house as the house is much more efficient. We are not married yet but will be soon. (broker didn't think that made much of a difference).

While many will say, just let it go..save up , build better credit etc etc....like I said, it's not like we are searching, we saw this house by chance and then decided to look at others in that price range. It's this house, or sit and save for another 5 years give or take.

The loan he said he could get us was an FHA. she currently already has an FHA. We MUST sell this place to get another FHA as we can own two FHA's at the same time.

Each of us is just barely under the qualifications to get it in our names individually. We must get it jointly for it to go through he said.

He stated that many other brokers and banks may promise us the world, but we will just end up disappointed. All the numbers he ran past us seemed pretty on key for what I've been reading. It sounds like the interest rate will be 5.25% fixed 30 year. Jointly we earn almost 100k. Again, total asking price is $219,000.00 minus $5000 sellers incentive without any negotiating.

What say thee?

[Denita]

Is the price of the house in the market range? Did you get comps for the area (sold's within the last 90 days)? It is hard to tell what kind of offer to make without knowing exactly what has sold in the area over the last 90 days and compare accordingly.

I am a little confused, the actual FHA required down payment is 3.5% yet this broker asked you for 3.75%...do you know why he asked for more?

What are the other fees this broker is charging you? It is important to shop your financing too. Did you shop any direct lenders like Chase or maybe a local regional bank? Many times the direct lender will come in with lower overall costs and a better interest rate.

Do you have a written Good Faith Estimate on the closing costs and payments for you to compare across lenders? The Good Faith Estimate can be made by a lender at any time and is very, very important to have BEFORE you make an offer on anything. Since you have a specific house in mind, you can use actual taxes and get an insurance estimate prior to making the offer.

As to the seller paying your closing costs it is a buyers' market and most FHA transactions (here where I am in S FL) have the seller paying a contribution toward buyers closing costs and prepaid expenses. Make sure the paragraph in the contract specifies for BOTH closing costs and prepaid expenses otherwise you will be limited in what you can use the sellers' contribution for at closing. (Note: pre-paid expenses include insurance, escrows and pre-paid interest). The maximum seller contribution allowed by FHA guidelines is 6% of purchase price.

Edited November 8, 2009 by Denita

[hypersloth]

That's actually what the broker stated as far as %, I had it wrong ...it was late.

Yes, I believe he is trying to get the best # for us toward getting into the house. He originally suggested that we ask for the full 6% which is something like 13140 off of the house. The owner was willing to do $5000. That's a big difference.

As far as comping the deal, well - it's in a neighborhood with $500k + homes. It's smaller but still 'fits in' well. It's $220, has 3 bedrooms - a finished basement , two car garage, beautiful lot, fenced in back yard with maint. free fencing, a heated inground pool with a ornate shed and manicured lawn. The owners are older and want to migrate south asap. The house was built in 1995 and has had one owner. I can't really comp the deal because the houses around there are far more expensive.

[Denita]

Sounds like you are buying a FSBO (For Sale By Owner) without an agent, right?

Don't look at the homes that are on the market. Although the area homes are larger and their asking prices are in the $500k range - it does not mean that they are selling anywhere close to the asking prices. I admit that our area is one of the hard hit areas so we are especially tuned into market sales - but you should always check recent sales in the neighborhood in which you plan to purchase. Sales are on line in the public records along with all the appropriate tax information (size of house/lot etc) for you to do a reasonable approximation of value.

If you can't do this, then make sure you have the appropriate FHA addendum to your contract that specifies that the contract is subject to an appraised value of X (the contract price). This will protect you - especially now that AMC's (Appraisal Management Companies) have taken over the appraisal valuation process nationwide as of May 2009.

[hypersloth]

Thanks for the advice. No we have an agent. Met with the woman from the agency tonight to sign a conditional offer and put up $1k 'hand money'. She went over all of this very well with us including contingent on positive appraisal. I think she said that FHA loans must have these but wasn't sure...or maybe it was the bank.

It's kinda funny, the mortgage broker we went with isn't sugar coating a thing. He's very straight forward and a bit rough around the edges. He's went off on a 10 minute rant about how we lent to people based solely on their lack of ability, what did we think was going to happen...they would suddenly get lucky and start working harder to afford a house they couldn't afford to begin with?

He then went on and on about this and that. Actually rather scared me almost out of everything.

And tonight, as I sit here - I am actually thinking that if the owners don't accept the offer, I'm the better for it.

I have had health issues that they can't figure out. I swear I'm going to be done for within a couple years (or sooner if the flu hits me), I have an autoimmune thyroid disorder, constantly get infections in the ears and have a low white blood count. They can't figure out much, one doc swears its ebstein barr reactivating + the thyroid kicking my butt. Everything has (at least seemingly) great certainty that I'm paranoid and will bounce back, but it has been getting worse every week for 3 years.

So with that said, I'm a bit paranoid about leaving my sweetie with a huge loan and in dire straights within 6 months without at least SOME income coming in from another person. Maybe if I find out I'm about to kill over I can get her hitched to someone else quickly?

Nuff negativity on that. Honestly I love the place but I really want it for her. I think she will be VERY happy with the place. It's everything she ever dreamed of. Sure it's not a huge house, but it looks like a really nice house with everything you would think most people want. It's picturesque.

The woman from the agency hugged us when we left today with what I thought were tears in her eyes. I was a bit surprised as were didn't hit the struggle part to get into the place, we only put up an offer.

Oh well, here's hoping whatever happens is for the best. I'm nervous, very.

[jq26]

I say go for it. It seems to be the house you want and you have sufficient income. And rates are at generational lows.

Just be careful about what the broker's fees are. I got hit pretty hard in 2007 by a shady broker who played some last minute games with my loan. Last week I bought a home and financed it directly through a bank and it wasn't only smoother, but unbelievably much cheaper.

Good luck. And if you feel comfortable posting what town it is in, please do if it is east of the Susquehanna. I'm in PA. Home prices have been relatively flat over the past four years in most areas- we fared much better than the urban/suburban sun belt areas.

[2ndTimeAround]

Sounds like you found a keeper - you have to ask yourself - this is where I am going to be living. I got a good price on the home, what about your neighborhood (neighbors)?

If you meet a realtor or speak to a loan broker, be careful on what you say about your self. Every one you meet is trying to be nice to you, what they are doing is sizing up how much they can get from you.

When we brought our home back in 1992", we contacted a Realtor who spend 3 weeks showing us houses we didn't like, finally we found one that fit what we were looking for. At the last minute spoke to another Realtor, on the first trip saw three homes we liked right away. Point - there are many property's out there for sale, speak to at least three Realtors, and three banks/brokers so you get the best deal and your happy.

When you are negotiating a property, used to tell people you make at least three offers. You 1st being way low (almost insulting them), your 2nd half way between what they brought their last offer down to. Then the third half way between what they brought their 2nd offer down to. After you had a survey done, you still want to negotiate lower if there is any needed repairs found.

Something really important - I hope to is not too hard to understand, you can't make a lower offer, once you made your first offer......

jq26 has some good advice about watching out for broker fees. Do not just shop for a broker, go directly to a bank. The difference can be $1000's more in broker fees you would have to pay, compared to very low fees dealing directly with a bank.

Keep us updated on your progress.......

Edited November 9, 2009 by 2ndTimeAround

[hypersloth]

The wind has been let out of my sails folks.

Agent called today, "are you sitting down, I have some particularly disturbing news"

I'm thinking, they have another offer and want us to take the contingency off and carry two mortgages.

"Well it seems they confused the offer..."

To make a long story short, what they heard sounded like 10 thousand more than what we were offering ...another 1000 more.

Why we would counter with 9000 more than what they countered with, WHO KNOWS. But they actually went to sign the paperwork under this notion.

SO, the owners are apparently upset once my agent said WOH, that's not the deal. They are willing to bump up the price of the home to allow us the same 11 seller assist. BUT that makes our up front money more, and our loan more.

So of course, my very emotional fiancee became....very emotional. By the time I got home, she was in a bad mood. She was wearing her bad mood pjs, her hair was in bad moods style and she had that bad mood scowl. Of course, I wanted to try to be logical about this, and try to figure out what our next offer would be if any. She of course, is ready to walk or really wants me to FORCE them to carry through the offer they accepted.

You can not logic with an angry person who is tired and very emotional. We exchanged some words and of course, the day ended badly. We fought for awhile about the difference in price.

I then find out that she thought I was going to put an addition onto the house as the bedrooms are a bit small but livable (like what we have now, but the rest of the house is so much more). I guess I might have jokingly mentioned the devious things I could do to get more sq ftage out of the house...but was not serious.

So, I'm thinking, it's over right? No, she then yells that she wants the original offer to stand.

This whole time I'm trying to calm her down, she's getting angry at me for trying to calm her down, but I just want her to see my logic.

-If the sellers aren't willing to budge, we have our out if we want out now. Contract is void (hand money refunded of 1k).

-If we still want the place, and they do not budge, we can simply say ok - possibly deterring more buyers in our hopefully new place because the agents just wont try as hard anymore. In the meantime, sell our current place buy take the money we were willing to go down to and bump it up another 4k.

yes the difference , even after paying for 30 years - would be about 5k.

And she is very worked up over it.

SO - I canceled the seller agent that was to visit OUR place tomorrow to see if they could get it on the market asap, AND I did not call our buying agent back to counter like I promised.

My fiancee went to sleep angry, but I'm pretty sure in the morning she is going to be anxious and call me from work requesting that I counter.

SO. That's the story so far.

meanwhile - in the land of reality. I'm just shaking my head because the possibility that we will ACTUALLY get this house is very slim. Lets face it. Nothing in our neighborhood has sold for over a year. The one that did wasnt an MLS listing and was sold at owners original cost. He needed to get out asap to move. Our place has more to offer I think but from the outside looks pretty drab. The inside needs work, but overall it's nicer than any other house in the market.

BUT - what difference does it make. Our place isn't even on the market yet. And from the looks of things, won't be for at least a bit longer. If it's not on the market, it won't sell and that's just more days that this house we want could go bye bye.

Honestly, at this point - I don't care. I promised myself that I wouldn't force the issue as it seems when I do this I over extend myself. After all, we would essentially be DOUBLING our payment per month for living. If one of us loses our job here, we won't even notice but would tighten the belt in case it was a long haul. If we lose a job over there, we have a limited time to get back on our feet. With my health always being a question, we could be fine for years...but honestly I think within some periods of the ownership we will go through some tougher times at best.

Is it all worth it? I don't know. A home does not equate happiness.

With ALL of that said...talking myself out of being unhappy when this all falls through which it appears it may be already, I still really want this house! (shhh just between me , you guys here, and of course the rest of the internet hehe).

The thing I just can't convey enough to my financee is, that we are not going to find another home like this for a long time if at all. It's in our price range and to get the same somewhere else is going to cost us another 100k. We won't be able to do that, at all. Sure we could add on later some of things that cost, but - will we do that and will we still be able to enjoy it the same?

I can honestly say that I do not enjoy the things that I've remodeled in our current place. It still feels like the whole place needs redone. Maybe its because the appearance wasn't worth the blood, sweat, tears to complete (3 bathroom remodels and of course the rest of the house). I still have a foyer marble tiling to do and then I would be finally finished after a few days of odds and ends work here and there. Selling when we are finally done remodeling?

While this doesn't sound like a bad idea in a buyers market, the price of houses in our area are the same that they were 5 years ago. BUT, people aren't selling the places with upgraded interiors, the places that need work are selling. Because people want a GOOD DEAL.

Sorry to ramble on, just a bit anxious and sad. Hoping that this resolves itself soon because I can't stand to deal with more drama. I headed into this thinking, if it happens...it happens. If not, nothing lost. But somehow my fiancee is not taking this attitude and is taking it as a personal affront having this initial deal fail like this.

I just don't get it. With contingent offers like this, what are the chances you actually end up in the house? I mean, there is SO much that it takes to get into the house, especially with someone like me with a spotty credit report. (refer to broker stating I would have to pay off an asset acceptance claim on my credit AND get proof...good luck getting AA to provide anything they agree to I say...)

Oh well, enough for now...I will keep you all posted. If it ends up a bust, i will post...or if we end up with an agreement and a sign out side of my house that says FOR SALE...I will post.

Wish me luck (for my sanity)

[jq26]

If it is meant to happen, it will happen. Briefly, let me share what happened with my wife and I over the past few months. Three months ago, my wife was fixated on getting a larger home as our family is growing. We made an offer on a respectable home. Then they countered. This went on for almost 8 days. In the end, they walked away from our final final offer because we were a few grand short of their final, final offer. My wife was crushed (ie very emotional and deflated). I have to admit I was very disappointed.

Then we decided to change strategies and sell first so we could become stronger buyers, and quite possibly be able to get an ever better price on a home since no sale contingency would be involved. We spent a few bucks and threw some granite countertops and an undermount stainless steel sink into the place. I repainted (again) most of the house and spent a few hundred at Lowe's and planted some new shrubs. Superficial stuff mostly....

We sold the house within 5 days with multiple offers coming in. Since we sold for more than we had planned for and we now lacked that albatross we call a home sale contingency, we became much better buyers. Then, low and behold, interest rates collapsed just as we were locked and loaded. Things just seemed to line up. Then we found the perfect house the very next week. Offered $25,000 below asking. After two rounds of negotiation, we settled on $21,000 below asking. I think its a very nice place, but my wife is on cloud nine, at least for now. I am forever thankful the previous would-be-sellers rejected our offer. We would have over paid for a home that doesn't compare to our new place- I would have been miserable in it as everything needed repair/upgrade (the would-be-sellers called us as soon we sold our home and offered to sell their home for less than we agreed- we declined to even bid).

So just sharing my recent similar situation. My point is, if it is meant to happen, it will. If not, then let things progress. It may just be for the best. It will work out!!! You are in the driver's seat here even though you don't feel like you are.

Wishing you luck- but hold the line. If they want to sell, then they'll have to bend....

Edited November 11, 2009 by jq26

[hypersloth]

Thanks for the info.

We countered with them raising the price of the house to allow us to have the same seller assist. It will raise our payment to $1618 a month instead of $1607....and we will need another $200 to get into the house.

SO, I plan on making sure we make that up and more when we sell our place.

Which after reading the last comment, gives me some hope.

I have granite tops throughout, plan on putting in new carpet and tiling the foyer area with marble that I picked up very cheap. Very nice too.

I just replaced one of the last lights in this house with something much nicer and more modern looking that was inexpensive.

Overall I plan on putting about $4-5k into this house to get it to sell, if it doesn't sell - then it was worth it to get my butt into gear to finish remodeling the house which really didn't need much more anyway.

Tiling the foyer, carpet, two doors in closet areas, caulking and possibly repainting the kitchen (it's pepto pink now...yuck), replacing a light or two, cleaning up the outside in the back a bit, scrubing the whole place down and touching up where needed, etcetc etc.

All told I think I have about 3 DAYS work ahead of me. Split that out from work hours, family duties etc and I probably will have this house ready within 2 weeks to be fully shown. Im hoping that is quick enough. I don't want to half **s it because we may be staying here awhile if something should happen toward the negative.

Anyway, I WILL update.

Thanks!

[Denita]

Sounds like you are doing the right thing for you. Condition is important even in this market. I find that buyers all SAY they want to do the work, but the houses that actually sell are the ones that are in move in condition that just need a little decorating, not work.

Fresh, NEUTRAL paint and curb appeal for your home are the best way to get it sold. Stay away from extreme colors...pink is not considered a neutral color BTW. LOL As to curb appeal, walk up to your front door and notice each detail. Check especially the front door, make sure it is clean and freshly painted (or stained, where appropriate). Squeeky clean homes and yards sell much faster than any other home....always.

Lighting is very important too. It goes with that fresh, light, open feel that most buyers crave. So, put in a little higher wattage then what you might normally have in your lamps. You can update an entire room by changing a few light fixtures...it is amazing how people think the house is newer when the lighting is a little newer. Have your new agent give you tips on what works in your market - if your agent doesn't know, get another agent....JMO.

You will do fine. You have a good plan. Good luck! Post a pic for us!

Edited November 13, 2009 by Denita

[jq26]

Good tips Denita!

Lighting is key. Spend a few bucks on the better bulbs. I probably spent $75 on bulbs the week before we listed- there are these 65W halogen floodlight type of bulbs that make the room look great (I put them in the high hats- they're bright and enhance the appearance of cleanliness). Then there are these soft-white bulbs I put in other fixtures- I think GE puts 'em out. They have a bluish tinge but give a wonderful look to the room.

And definitely declutter!!! The countertops should be basically bare. The room should have one or two pieces of furniture. It not only makes the rooms look much larger but it allows for the potential buyer to imagine their vision of what the home will look like instead of your vision.

You now have an extended first-time homebuyer credit AND super low interest rates on your side. Buyers are biting imo. Are you in the greater Philly area?

Edited November 13, 2009 by jq26

[2ndTimeAround]

Dito on the Good tips Denita!

Diffidently a women touch.....:)

[hypersloth]

The dream is a bust.

Just as I said would happen. Someone came in 2 weeks after our initial offering with an offer to buy the house without the contingency.

I pretty much knew this was going to happen. I have the worst luck. I'm the guy that while others are talking about their bad luck, I can't get the words out to say NO I HAVE the worst luck because I'm being chased by a cloud and lightning bolts.

BUT, I'm hoping to some day find something that we can afford that is equally appealing. I'm pretty doubtful as , like I said it had everything perfect about it for us. The bedrooms were small, this pushed all the potential buyers away so far but us...and until yesterday another couple.

While we still have the option to carry two mortgages, we are a bit worried about doing that.

The new owners are doing just that.

Now obviously their paperwork has to go through etc etc but like I said, my luck is - it will go through.

So, that's that I guess. Not much left in that area except lots with big hillsides for $70k. That's just the lot. Imagine what it would cost to build a comparable home WITH an inground pool.

sigh.

Breaks my heart at a time when I could use SOMETHING to keep my head up.

[Denita]

Don't lose hope. Things happen. In this market there will be another home. You may want to prepare your home for sale anyway. If you sell it you will be a ready, willing and able buyer without a contingency. Sometimes that involves a little discomfort. You may have to sell your house first and rent on a month to month while you find the next right home. It is a little uncomfortable, but it reduces your risk tremendously and makes you a buyer without a contingency. It also makes you a stronger negotiator for the new home. JMO

[hypersloth]

I guess I wouldn't worry if it wasn't for the fact that I can't find ANYTHING near what that house was. It had everything, even how the yard slopped down toward the driveway and the garages were hidden on the side and below the house with a nice retaining brick wall that matched the brick on the house.

Everything I see now has no trees, shrubs, straight flat driveway with garage in the front, the kitchen and living room is like one long room, and the construction is very flimsy. This was a beautiful custom home , albeit a bit smaller than the rest of the houses in the plan, it was a colonial. I love colonials..esp with a side extension. The walkway was even pleasant.

My fiancee thinks we will be able to build. Her friends filled her head with great notions of buying land and building. She believes them over me for some reason. She does not understand that there are NO level lots left in any of the areas we are interested in, and if there is, they are very very small with many restrictions and a HIGH price tag, higher taxes, higher...everything.

This was what we could afford.

SO - I guess all I can do now is save up and hope that something comes available some day that I like in a decent neighborhood. Everything that even comes close though is around $350k. And that is rather far out of our reach.

Sigh. I just signed the null and void contract to release the sale to the new buyers.

The sad thing is, I did the math - we could afford both places for awhile. And if it came down to it, I have options. Lower the price, refi and rent it ( I would make money each month too), etc. But my financee is freaking out about carrying two mortgages. Not that I really want to but I really didn't want this house to slip away.

Oh well.

[jq26]

One closed door will lead to many more open doors. It could be a blessing in disguise. You'll never know. Don't fall into the trap of romanticizing about any one home in particular. As you know, homes are 2x4s, sheetrock, and shingles. And lots of maintenance. Let your wife do the romanticizing!

What you do know is that you have a buyer's credit to contend with and interest rates that are drop dead awesome. If you sell, or at least get under contract to sell, you'll be that buyer without a home sale contingency. Or just let it go and build more equity. The ball is in your court.