Setting Roots

Wow… so one lesson that I definately learned the hardway is that it is very difficult to work a full-time job, find a house, close on the house and try to keep a blog about it, all at the sam time. Especially when your job involves a good deal of traveling, as mine does. So I decided that I do still want to maintain this blog, but now I will simply back-fill on my experience with buying the house, and what I learned along the way.

I also intend to document my adventures as a first time home-owner, and the projects I undertake along the way. I also would like for people to leave lots of feedback in regards to their own experiences. Advice is also always welcome. So with that in mind, I hope you’ll join me as I continue writing about my experiences, Setting Roots.

You will hear lots of stories, and see lots of articles touting the benefits of the “Down Market” as far as real estate goes. But don’t let yourself get taken away, or else you may get snapped back into reality real quick. The market is down for a reason, and the fact is that finance companies are hurting in a big way. Don’t let your pre-approval letter get you too comfortable, the way I did.

PRE-APPROVAL IS NOT A GUARANTEE!

Read the fine print. Pre-approval means that the bank WILL give you a loan, though it does not say what the conditions of that loan will be. I was recently pre-approved for 100% financing on my home, but when  I was ready to send the contract to the loan officer, I was informed that the bank would now only cover 97% of my loan. Needless to say I was crushed. If I had a down payment, I would not have sought a 100% loan to begin with. My credit is great, and I was approved for a very low interest rate, I just don’t have enough money saved for the down payment, and the closing costs.

At first I felt as though the bank was trying to scam me, or pull a fast one on me. After making a few phone calls, and discussing the situation for well over an hour with more than a half a dozen people, it was made clear to me that the problem was due to the fact that I am buying in a declining market. With home values dropping, all banks are starting to require a down payment. Which I can understand from the business perspective, but it would have been nice to know about in advance.

Fortunately for me, I do qualify for a VA backed loan, which will proved 100% financing (for now), but incurs some additional costs, and requires a more detailed appraisal. If you do not qualify for a VA backed loan, you may qualify for for an FHA backed loan, or grant.

If you find yourself really strapped for cash, I would suggest that you try putting off the purchase of your home until you have some more saved. Do not be tempted or seduced by mortgage scams, or any program that is set up just to get you into a home quickly. Don’t let yourself get talked into an adjustable rate mortgage, or some other high-risk financing. Remember, it is better to wait, and get a good home, with a good mortgage, than it is to rush and wind up setting yourself up for financial disaster.