Last week I mentioned that we finally closed on our condominium. As you might recall, we were originally supposed to close a couple of months ago, but the deal feel through at the last minute. Thus, we ended up negotiating with the builder to get a better deal while we were waiting.
In the end, we did manage to get a better deal, and I wanted to share the process from start to finish.
Last minute delay
We were less than 48 hours away from our closing date and had just came out of the walk through of the condo. It looked great overall, and we wrote down a few things that needed to be fixed before closing. We were nervous and excited about the place as we headed towards Lowe’s to get some painting supplies for the big move. We received a call from the building company and were told that our closing date was delayed.
Since we were getting an FHA loan and it was a condominium, the builder was supposed to notify HUD when it was complete, and then HUD had to have some paperwork approved before the bank would be willing to the loan us the money. Unfortunately, HUD was backed up, and the earliest we could close would be sometime in the New Year.
Working with the builder
Our main worry was about our housing situation until we could get the financing worked out. We were supposed to close Wednesday and be out of our apartment the following Monday. To make matters worse, it was a holiday week so we needed come up with somethings ASAP. The builder acknowledged the hardship they caused us and said they’d help us out.
We called the leasing office at the apartment to extend our month-to-month lease until we could get this sorted out. They said they’d be happy to help us, but we’d have to pay $300/month more than market price! We were already paying an extra $150 since our lease expired, and $300 was too much.
We then contacted our real estate agent to negotiate something with the builder, and gave them several options hoping to get an answer right away.
Switching lenders – worth the incentive?
Unfortunately we had to wait to hear from the builder. Their first offer was a little more than $500 off at closing, but in order to talk further we’d have to call a lender they recommended so they could get the paperwork in sooner. We were skeptical about talking to another lender, but we called just to see what they had to offer.
The guy who answered explained that they could give us a better rate (by about 1/4%) than what our current lender was offering. In addition, they could close in about two weeks instead of another month or so. I asked how could they close quicker than big bank we were dealing with. He responded that they were a “correspondent lender” (i.e., they lend money and then immediately sell off the loan) and wouldn’t have to wait for the sign off on the condominium before proceeding.
Since they were sort of a mix between a mortgage broker and lender they had some leeway with things. The catch was we had to completely re-do our paperwork (which they claimed they could expedite) to get the house through them. He was pushing how some other buyers were switching to their company from other lenders because of the better rate, and he insisted we’d have a great deal. I told him we needed to think about it before we’d commit to anything.
I had a bad feeling about this last minute change in lenders, so I started to gather more information. Since I had some friends that used this particular lender, I called them to see what they thought. As it turns out, they didn’t like the lender at all. In fact, when they called to lock their interest rate, the lender had already locked it without their permission which at a rate that was 1/2% higher. They worked it out, but it was a pain to get the paperwork changed.
I told our real estate agent that we didn’t want to go with the correspondent lender, and to instead see if the builder could offer something more suitable. If not, we wanted to just end the deal. Meanwhile I went to check with the Department of Housing and Urban Development.
Calling HUD for information
Since we’re first-time home buyers, we wanted to get more information about how this process worked. I went to HUD’s website and found the HUD office in our state. From there, I was directed to an office in my city and was connected to the finance help department.
I explained our situation to the rep and asked if this was a typical occurrence. The woman said things weren’t typically that messy, and that it was wise we didn’t jump to a different lender. We ultimately received a lawyer referral hotline number and contacted a real estate attorney. Under the program, you can get a 30 minute legal consultation for $30. We came away with more information of what to expect, and what would be reasonable to request.
More Closing Costs Covered
Through emails and phone calls, we relayed the information we were given and told them we had contacted HUD and a local lawyer to get everything squared away. It helped that we kept all of our documentation and organized our notes to be clear and concise.
We finally heard back from the builder that they would increase their offer. By being persistent and informed, we were about to save an additional $1, 400. That worked for us, as we found a cheaper housing solution in the mean time.
While we would’ve preferred to avoid this trouble altogether, I’m glad we took some time to negotiate and get ourselves a better deal. We were able to get a good mortgage rate, the lender we wanted, and a better deal on our closing costs. We’re now in the process of painting, moving, and unpacking from our apartment to the house.
How did your home buying process go? Did you ever hit any speed bumps? And were you able to get any additional concessions from the builder/seller to make up for the trouble?