So, I'm sure you all have been chomping at the bit for an update on my journey towards home ownership. (Humor me here, okay?) Well, I made the offer on the condo, and things were looking pretty good. From a personal standpoint, my credit is spectacular and there didn't seem to be any worries on that front. The only stumbling point (or so we thought) was that it was a short sale, so the seller's bank was going to have to approve the sale - not a sure thing, but I was okay with some things being out of my control.
Turns out, that the nice folks at the FHA don't like it if there are too many condos in a complex that are rentals. I'm not sure what the preferred Owner Occupied ratio is, but apparently it is not 22%, which just happens to be the ratio of the complex where my target condo is. Okay, we may have to go a more conventional route, which would mean a down payment of 5% instead of 3% - still very doable. Any more surprises? Oh, yes.
While the bank would love to give me buckets of money toward buying a condo, apparently it is impossible to get mortgage insurance for a condo in a complex with an OO ratio that is lower than, say...50%!!! But, not to worry - if I just put down a little bit more, I won't have to get mortgage insurance. How much more, you ask (I sure did)? Instead of 5%, a measly 20% down will do!!!!!!! (Yeah, like I have that kind of scratch in my couch cushions!)
I'm concerned my writing may be too subtle here, so I will be very clear - I am frustrated, annoyed, and seriously pissed off!!! I didn't go for the cheap money several years ago, when I could very easily have gotten a loan that I couldn't afford while substantially overpaying for the condo. But, I was responsible, and waited until I was making a good salary, and had minimal (my car loan) debt. So, because the banks gave loans to anyone who had a pulse - maybe even some folks who didn't - Now they have standards!!! And, they are punishing the folks who tried to be responsible and play by the rules. The rules as they should have been, not the free-for-all they were all too happy to participate in two years ago. If I had just played along, I too could be facing foreclosure today, instead of having trouble buying a frickin' home. Seriously, does this make sense to any of you folks?
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21 comments:
Ms. F --
Maybe you're not taking advantage of the market. There are many "properties," as the barkers like to say, out there available at a discount.
I resisted buying a home for decades. I did not want to be an "owner," a capitalist. I finally gave in and bought a house in an upscale town. Now I own my piece of the earth. (Remember the old man in Love and Death, with his cake-sliced sized piece of property? That's me.) Now, as real estate prices hit bottom, I am still way ahead. So much for principle.
But to your gripe. Forget it. Let it go. Of course the capitalists and their markets are not "fair," or ethical. You know that.
Lefty - it's not the market, it's the regulations. I don't have 20% to put down, and this guy will not be able to sell his condo unless he can find someone who does. Who is helped by this rule? The thing that made this particular condo attractive, is that I know the neighborhood, and it's somewhere I feel safe. Other things that are in my price range are not in areas I would want to live, or are 'fixer-uppers', which would require additional capital...
I know it sounds like a whiny post, but I did put it in the 'pity party' category...plus, I'm just frustrated and this feels slightly less futile than cursing the darkness...
oh, FH, I'm so sorry. That totally sucks. I don't think you should give up though. Is it possible to find a loan through another banker or broker?
I know the regulations are ridiculous. When I bought this joint I basically had to show a paystub and my tax form. When my friends bought their place about two years ago, they had to jump through many many many hoops.
It is still a buyers market. You will find another place that you love. You're in a good place - you definitely won't be penalized for being responsible about this. Promise. Don't despair!
:)
Suza - thanks for the encouraging words. The bank & the realtor are still doing their thing, and I'm just letting them do it. It'll happen when it happens, and I'm not heartbreaking over the place. It's just frustrating...
What's been really interesting is that just the thought of buying something used to terrify me. Now that I've decided to take the plunge, it's not really that scary. Of course, I haven't gotten to the point where I sign my life away yet, either. It does make me hopeful that I just might be enough of a 'grown up' to actually do this...ya know, eventually.
BTW - love the new photo. (I think 'Snorkel Dork' would be a rockin' name for a band - 60's covers or surf punk, I can't decide...)
it's really NOT scary. I never for one minute had anything resembling buyers' remorse - I'd dreamed of owning a home here in the city for a long time and didn't think it would be possible. and wait until you get the great tax deduction after your first year of ownership - whoo hoo!!!
thanks for the comments about the photo - snorkel dork does have a nice slant rhyme thing, huh? I think I have found a new nickname for my bro.
Uh, ferret, in case you haven't noticed, there are no guarantees in life. You're not guaranteed that Mr. Wonderful will always stay Mr. Wonderful, there's no guarantee that after years of careful planning, you'll end up financially secure, there's no guarantee that cops are the good guys, or that you won't lose your job and have to re-formulate your plan and take risks--that may or may not fail. Life's a crap shoot, dear.
And when we die, there's no guarantee that people may or may not remember us. One way I'm reminded daily of the dead and gone that are meaningful to me is that I'm carrying all of their genes--that constantly express themselves.We're essentially made up of the dead and long gone...and so are my children.I've immortalized not only all of my ancestors (think about how long that is!), but added my own print to the pages. Immortality at it's finest, I suppose. Maybe that's a slim guarantee of something?
Who is we? And you don't wanna buy where there are a lot of rentals, anyway...
gina - 'we' is the ferret-homebuying triumverate of me, the banker, and the realtor... I'm not asking for guarantees in life, just wishing that for once logic would apply in situations where it might be reasonably expected. There are a lot of rentals in that complex because they only converted to condos in 2006 when money was easy to get and lots of people bought them for investments. The realtor was shocked at the OO ratio, because they property is spotless and so well maintained.
For someone who has apparently memorized every word I've typed, you might recall that I am adopted...the immortality of my ancestors isn't exactly a priority for me.
FH, unless it was a killer deal, you're probably better off. I don't see home prices going up anytime in the near future.
Darlin'...not only are there no guarantees, life isn't logical, either.The sooner you realize that, the better off you'll be.
And regarding your ancestors, they gave you life--what more could you ask for?k
JMF, are you certain it's regulations and not that particular bank's internal policies?
Ted, it's not the bank, it the company that writes the Primary Mortgage Insurance policy. They are thinking that if something goes wrong, I won't be able to sell the condo, because of all of the rentals... The problem is that in order to get around the PMI, people were borrowing the 20% down payment, and not telling the bank they were borrowing the other 80% from. So, no mortgage insurance, and 100% financing = foreclosures. Now, of course, they've learned their lesson, and aren't letting people borrow that 20%, so if you don't have 20% to put down, you have to get PMI. But, you can't get PMI if the owner occupancy ratio isn't high enough...bleah!
So I'm a little lost here. Are you still pursuing this particular property hoping the banker and realtor work something out? Or is it a dead deal? If so, that sucks. Am I right to assume it's in the City of San Francisco and not an outskirt?
The bank's concern about reselling is interesting. I've heard that some of the new unfilled condos in downtown Oakland are luring people with "rent to own" deals. Not being in the market, I haven't paid attention to the details. Maybe you have a certain option period to decide whether to convert the lease to a purchase and some of the rent you've paid goes toward the down pmt?
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Think you can talk your seller into something like that?
Nope, it's up here in Sonoma County. With the short sale, I'm not even sure if the seller's bank will even approve the sale, as it's approx. $100k less than is owed on the loan. So, that is already out of my control, and I'm okay with that. Presently, my banker and realtor are seeing if they can't find a work around for the PMI that doesn't involve a 20% down payment. There is a slight possibility that the loan might be evaluated upon my credit worthiness not the OO ratio, but I'm not counting on it... I'm in wait-and-see mode right now.
Thanks for letting me blow off steam, everybody. I appreciate the support and advice - you have no idea how much!
I wish you luck. Let us know
Jean, the saying is true in real estate: if you don't get it, it wasn't meant to be. Whether you purchase this home or another, I can tell you with absolute certainty that you will love it...
Real estate is behaving in a way that we've never experienced before. Keep pressing forward.
wv: mucra (kaff, kaff)
Love that Rick, DSG! ;)
Sweet, indeed! What are you running it through?
WT and TS, thanks. Right now, I run my guitar through a Line 6 Pod XT into a 180W 1X12 Behringer PA that also runs my keyboards. I also have a Line 6 Flextone (1X12), which is currently being borrowed by one of the other guitarists in the group, as well as a late '60s/early '70s silverface Fender Deluxe Reverb.
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