Sunday, August 21, 2011

A House-Hunting Horror Story

for my good friend Lauren and her husband Neil. Good luck, guys!

At the beginning 2009, Sarah was done with the MSW coursework she intended on taking at IUPUI, and I was still trying to get into grad school. The American Recovery and Reinvestment Act of 2009 included a first-time homebuyer credit of $8000 that need never be paid back so long as the first-time homebuyers stay in their homes for at least 3 years. Since we had nothing to hold us in Indianapolis but our jobs, we started applying for jobs near the graduate schools that I applied to, hoping that one of us would get a job near a school that I would get into. We had crunched the numbers and discovered that, for roughly the same monthly payment as our rent at the time, we could buy a house, build equity, and get a free $8000.

I didn't get into grad school that year, but Sarah landed a job near Bloomington, Indiana, and the house-hunting began.

A nice thing about house-hunting in Bloomington while living in Indy is that we didn't have to take off work to do it - the cities are close enough together that we could do it all during evenings and weekends. I worked in the state building, and I spent my lunchbreaks applying for pre-approvals at the financial institutions in Circle Center (the center of Indianapolis). For what it's worth, 5/3 and Chase were my first choices going in, since I already had accounts at both of these institutions. The representative that I spoke with at 5/3 made it clear that my lunchbreak was close to his lunchbreak, and he'd rather be taking an early lunch than working on a mortgage application for some punk kid. The rep at Chase was superprofessional, though, and Chase had a better rate to offer us anyway, and lower closing costs. The only downside to Chase was that they couldn't guarantee we'd be able to close by the time our lease was up at the end of May.

I talked to our (wonderful, fantastic) landlord, and he said it was fine if we paid month-to-month without a contract until he found new tenants, meaning we could stay past our lease and push the closing back a month. I went down to Chase and paid the application fee to get the ball rolling.

Sarah had already arranged to quit her job in Indy and start her job near Bloomington to coincide with our original closing time. Meanwhile, our Realtor suggested we apply for a mortgage with a company in Bloomington called Mortgage Masters. Sarah went in and talked to a representative there who said it would be "no problem" to get a mortgage closed by our original anticipated move date. I went back to Chase, got my fee back since they hadn't actually started processing the app yet, and went down to Mortgage Masters in Bloomington and paid the fee there instead.

On May 2, 2009 (Free Comic Book Day), we made an offer on a house, it was accepted, and we signed the paperwork to make our agreement binding for 30 days. We ordered a home inspection and put down our earnest money. We dropped off all of the paperwork asked of us at Mortgage Masters, and we went home to our apartment feeling pretty proud of ourselves.

The representative stopped answering her phone and responding to emails when Sarah would try to check on our application. The representative kept emailing us, asking for updated bank records and paystubs, and for older documents that we had already provided. The representative did this so much that we started keeping records of what we sent her, when, and how many times we had to send it again. By the time our scheduled closing date came around, our mortgage master had not even finished our application. We met up with our sellers, apologetically, and we all signed paperwork to extend the agreement another 30 days.

So we paid an extra month at the apartment in Indy. Sarah's parents live near Bloomington, so while she was working there but before we moved down there, she stayed with her parents so she wouldn't have to waste so much time/gas/money commuting so far.

The next 30 days went about the same as the previous 30 days. By the time our new closing date came around, our application was complete but had not yet been sent to the underwriters. We tried to extend our contract with the sellers again, but they were too pissed at already taking off 2 days of work each and getting nowhere. They refused to extend the agreement, raised the price of their house, and said that even if we agreed to pay more than they were asking they wouldn't sell it to us.

All along, our Mortgage Masters representative acted like I didn't exist. When we were there in person, she'd tell Sarah to tell me or ask me things. And when the application still wasn't ready a full month after she said it would be, she laughed with her apology, saying it was no big deal, and it's not like we'd be homeless because of it.

We really thought that an extra month beyond "no-problem"-time would have been enough time for our mortgage master to get it together and we'd be able to move in. We had rented a U-Haul for the second time in as many months, and since we'd had all of our stuff packed up since late May anyway, we went ahead and loaded it up. We'd already agreed to be out of the apartment by the end of June. In one day, we'd gone in our minds (and our lives) from homeowners to homeless.

Sarah's parents let us stash our boxes of everything-we-own in their garage and let us stay with them while we tried to find a new place to live. We made a point to chip in for groceries, but Sarah's parents wouldn't let us pay them any rent or utilities.

We did a lot of hand-wringing about our situation, particularly about whether to stick it out with Mortgage Masters where we'd already sunk thousands of non-refundable dollars and more than three months time. They'd screwed us over bad enough that everything we owned was packed in boxes in a garage, but if we changed lenders, we'd have to spend all that time and money again. We doubled down and hoped that it would not be another three months before we were done with Mortgage Masters.

Somehow, it was a lot easier to house-hunt when we were living in an apartment than when we were overextended houseguests. We saw a lot of interesting houses, many of which would have been fine if we would have had some time to fix them up a little before moving in. As it was, we wanted to find something we could move into right away, so that we could not be homeless anymore.

Applying for a job while not having an address is superdifficult, by the way, so my Bloomington-area job hunt was rather stagnant, and I was commuting to Indy during our homeless days.

My favorite inside-a-house-while-house-hunting memory came during this time. Our realtor had found a foreclosure that was quite a bit less than we'd been expecting to spend, but not so low that we suspected anything terribly wrong with it. When we stopped to look at it, we quickly realized that it has almost the same floor plan as my parents' house. We were pretty excited about it until we discovered one of the rooms was missing a wall to the outside. Well, the wall was laying in the yard instead of attached to the house. Besides that, the house looked great.

Eventually we found the house that we bought, and we closed on it on August 19, 81 days after we were told we'd be able to. 5/3 lent us the money. Our Mortgage Masters representative was late to the closing. My name is spelled "Jonhnanthan" on our documents.

Way back in May we'd gotten some coupons for free grilled KFC that Oprah Winfrey had been giving out, and the night we bought our house, we sat on the floor of the filthy, dirty, empty, wiener-dog-smelling house and ate our grilled chicken. It's been good since we finally moved in, but it was a mess going through the process.

Oh, when we asked our Realtor why she'd recommended Mortgage Masters, she told us that she'd heard good things but had never worked with them before. She said she's not going to recommend them anymore!

So, my advice, if you'd like it: finance your house with an institution you've worked with before and trust and/or plan on the process taking a lot longer than advertised.

Good luck guys!