my real estate loan debacle

[scatterbrain]

long story short- me and my wife decide to buy a house. back in may, we qualify for a usda loan which is 100% financing, because the house/property we bought was in a rural area and we qualified becuase our ajusted gross income was below a certain level our down payment, excluding closing costs would of only been $2,000 for a 2,000 sq ft brand new house on 1/2 acre with a community pool and boat ramp.. anyway, i worked lots overtime for the past couple of months to save some cash, and within 30 days of closing, i find out i exceeded the income level for the loan. so, technincally, I MADE TOO MUCH MONEY!!! u cant make this stuff up! sadly, im still poor and my choices were between a FHA loan and a conventional. yes, we could of walked away, but for the last couple of months we have watched this house being built to our specs. it would have been heartbraking to watch it go away.SO NOW OUR DOWN PAYMENT WENT TO AROUND $6,000.

also, i didnt realize that home loans were way different than normal car loans or credit cards. the amortization schedule/fees are crazy. yes, i feel like i am putting a huge chuck of change, so therefore, even though im not a "real estate investor" by any means, this has been my first dive into real estate and ive invested lots of time and money.

but i try to think that yes, its not liquid capital, but i just put less than 5% down on a piece of property that valued at about $225,000. the area is a booming town, that got hit hard during the first part of the recession, but is fastly coming back to life.

just wanted to share my first real estate experience and if anyone has any comments or thoughts, please share.

 

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[Runum]

Well.. I wanted to read it and offer advice but, I can't read it. I am not sure where sentences end and begin. If you would like to clean it up some I would be happy to try and help.

 

[biophase]

Well.. I wanted to read it and offer advice but, I can't read it. I am not sure where sentences end and begin. If you would like to clean it up some I would be happy to try and help.

LOL, I thought the same thing. We both have purchased lots of real estate and can't understand what happened. His screen name definitely fits him.

Did you buy a house or not? What was the debacle?

 

[scatterbrain]

LOL, I thought the same thing. We both have purchased lots of real estate and can't understand what happened. His screen name definitely fits him.

Did you buy a house or not? What was the debacle?

yes, and sorry for the run-on sentences. im not very good at typing. anyway, yes we went with the f.h.a. and put the 6 grand down. but it was just the way it happened, within 30 days of closing. kinda like getting the rug pulled from underneath you. like a forced, unwanted up-sell on a product you were happy with already. just felt crappy, coz i worked overtime to pay for my larger mortgage payments that were coming and then they said i made too much money. i call b.s. i still make almost at poverty levels, so its not like i skipped two complete tax brackets. and putting that much money down was the biggest chunk of change i have ever had to pay for anything, so yeah, i was a little nervous during the whole deal.

as far as my screen name, yes, i am a scatterbrain and i have severe add/learning disability since i was very young without ever using/abusing any prescription drugs. i find it very hard to concentrate and complete tasks. i have done everything in my life on my own without any help, and ive done well (not-academically speaking). but, now that im older i realize i need people more than ever to succeed and become wealthy, thats why i joined this forum, to hopefully have some good advice or suggestions that will help me see the light.

please let me know your comments. thanks

 

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[Runum]

If you cannot use correct capitalization, punctuation, and sentence structure to communicate correctly then I suggest typing one sentence per line. It really does hurt my head and eyes to try and read your posts.

 

[Red]

okay... from what I can ascertain, you thought you qualified for a loan that was zero down, turns out you did not & had to go FHA, resulting in a higher down payment & you feeling duped. And you want feedback on the series of events?

 

[DealMaker]

This is interesting... First off, I want to make it clear that I do not know much about this program...

Just for grins, I input my information into the calculator, and I do not qualify for this program due to income. I did some digging, and in Oregon, the maximum income for the zero down program is $52,550.

Based on some "rambo math," I question someone purchasing a $225k home with zero down on an income of somewhere around $50k per year. Perhaps things are different with this program in other states?

Am I off-base here? I'm honestly surprised the DTI requirements from the Feds aren't a bit more strict after recent issues on the real estate front.

I thought the whole point of the Fastlane lifestyle was NOT getting bogged down in debt while trying to build one's business...

 

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[scatterbrain]

And you want feedback on the series of events?

yes, i just want to know if this had happened to anyone else and if so, did you pull out of the deal or just go with it? i understand this might not be fastlane, but rather a building experience to learn from.

 

[Red]

yes, i just want to know if this had happened to anyone else and if so, did you pull out of the deal or just go with it? i understand this might not be fastlane, but rather a building experience to learn from.

You have way too many variables undefined in order to give feedback on this scenario. Sometimes you've just gotta sit & make your own pros vs. cons list & forge ahead with your best guess.

 

[Steve37]

I'm not completely sure I understand much of what you said above, but i'll add my .02 anyway.

You need to walk away from this deal. If $6k is a huge sum of money for you there is no way you need to be purchasing a new home. Save a nice pile of money before committing yourself to 30 years of debt.

 

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[JAJT]

I don't understand why you are buying a house that you don't intend to make money from while you are at near-poverty levels by your own admission.

If you are complaining that you no longer qualify for a loan geared towards the poor I'd say you should seriously be reconsidering the purchase of the house...

 

[LightHouse]

I don't understand why you are buying a house that you don't intend to make money from while you are at near-poverty levels by your own admission.

If you are complaining that you no longer qualify for a loan geared towards the poor I'd say you should seriously be reconsidering the purchase of the house...

Right, I was sort of thinking the same. Not that he is at poverty levels, but mainly it would come down to cashflow. If you are struggling to get the 6k, then you definitely need to invest in a high end home warranty, because chances are you wont have the cash to pay for things if something goes wrong. This might not be as big of an issue with a new home, but it is still a factor.

Otherwise, be glad you didn't qualify for USDA, because it comes with a fee equivalent to what you would have had to put as a downpayment anyway just tacked to the loan. You would have started out with negative equity.

 

[Milkanic]

Back when I was young and dumb (3 years ago), I bought a house with my girlfriend at the time using a USDA 0% down loan.

Long story short, we broke up a year later, the market crashed more, and I am now underwater around 10k on the house.
I'd like to move but my options are to sell and take a 10k loss (more like 15 once you pay the realtor, etc) or wait for the market to return. I am basically paying the bank rent (interest) in a home I don't want to be in. I would be much better off renting a place and putting my money into actual assets.

Lessons learned: Don't buy a house without 20% down and never, ever, buy a house with your girlfriend.

My advice to you: Rent until you have a 20% down payment and 6 months emergency fund.

 

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