Home Buying & Selling Logistics and Lessons for Newbies and Novices (Part 2)

This is a follow-up post to my discussion on some of the lessons we learned during our home buying process, as well as laying out some of the monetary commitments. My original article can be read here. At this point in the discussion, our offer had been accepted on the home, and it was up to us to secure the loan and close within 45 days. While we do not know the other bidders price, we do know that it was close.

The asking price on the home was $199,000, plus the bank was offering 3.5% towards closing costs. Since we knew we were competing, we offered slightly more than asking plus the 3.5% towards closing costs. In the end, we won with our offer, which makes us believe we might have won because of the amount over asking (the Realtor said it was really close with the competing offers). If we had known we were the only bidders, we would have tried to come in substantially lower even though we knew the home was well priced to begin with based on comparable homes and the area. Since we were in a multiple bid situation, we knew we had to put our best offer forward.

Submitting an offer also became really un-nerving because we had not had any offers to purchase our existing home. Luckily, we had started the tenant search a couple weeks prior. Shortly after finding out the home was ours, we secured a great tenant, who showed up and paid us in cash 5 months plus the security deposit up front. One thing to note here.

During the closing process, the bank wanted to see some additional funds since we had not sold our previous home. We were quickly able to supply some information on our retirement accounts to prove there was additional available funds. However, I also notified my mortgage representative with our bank, and told him about the cash my tenant had provided, and that I would be depositing it in the bank. My agent told us that since it was cash, DO NOT DEPOSIT IT IN THE BANK!

Our agent told us that as soon as we show up with a large sum of cash, they have to start asking questions, and he feared it would complicate the closing process. Fair enough, we threw the money in the safe, and waited for the right time to deposit the money. Now was the long process of closing the loan.

We knew in this market that the loan process was going to be more stringent than previous years, and in addition, our bank we always knew had very tough loan processing. However, we nearly lost the home because our bank was so ridiculous.

Rather than get lost in all the nonsense, to make a long story short, we tried closing early before the July 4th holiday, and the bank did not make it, then they missed our contractual deadline. Communication on their end was almost non-existent, and we were WAY to involved (daily) in the process because they kept losing our information or requesting new info. The biggest issue we had was we have been with our bank my entire adult life (at least 12 years from what I can figure, had a large sum of money sitting in the account, had perfect credit, and long-time stable jobs. There was nothing that should have delayed our closing. If anything, they should have easily been able to close within or less than 30 days. Instead it took almost 45 days.

The scary part was the bank we were buying from could have easily rejected our contract extension if they choose. In addition, our Realtor warned us that the other people we were bidding against were waiting on our heels for everything to fall through because they really wanted the house.

So I guess the big thing we learned is that all the planning in the world really will not make a difference in this market for closing on a home loan. The process really is strict, or the bank I worked with was incompetent. One needs to have a lot of patience with the whole process. For weeks I had to constantly be next to my phone for the next phone call or email. I always responded with the requested information in under a half hour, so we did everything on our end to get everything in order to meet our deadlines.

Despite all the stress, we now own the most amazing home we never thought we would have ever been able to afford. The previous owners of the home stuck a lot of money into it, and we were lucky to score an amazing deal, which I will highlight more in my next post on this subject.