Adventures in Buying a House

Damnen and I have temporarily abandoned our plans to buy a house.

We found a place in Medway, OH, that we really liked. It was a decently-sized two story house with a massive back yard in a small town being offered for around $35K. We negotiated and had a bid of $32,500 accepted.

Damnen was approved for a loan, but it was contingent upon the house being appraised at average value. This house needed some work. It needed a new roof, quite a bit of drywall replaced, paint, the carpet removed and floors refinished, a new furnace and repairs to some of the ductwork, and the bathroom remodeled (but it was still functional). Before we ordered the $300 house inspection and $300 appraisal, Damnen spoke with her loan officer and specifically asked if the things that needed fixing would keep the home from appraising at average value. He said no, that it would be fine. She then spoke with the appraiser that the loan officer recommended and again specifically asked about the repairs and remodeling that needed to be done. He said it would still appraise at average value. He said they didn't look too closely and the house would have to be in really bad shape to not pass appraisal.

Satisfied that we would not be wasting money, we ordered an inspection. The inspection uncovered a few new things: in the basement, the main water pipe to the house had burst, there were termites, and there were a couple of small wiring issues to be corrected. Otherwise, no surprises. We ordered the appraisal.

It took them a few days to finally get out there and appraise the house. In the meantime, the loan officer sent Damnen the preliminary paperwork for the loan for her to look over.

Now, when Damnen applied for the loan, she very specifically asked for a thirty-year fixed-rate mortgage. We were not interested in anything else. No ARMs, no balloons, and nothing less than thirty years. When the paperwork arrived, the loan officer had signed her up for a 15-year balloon mortgage. For those who may not know, this means: For a $32,500 house, we would pay just over $93K total for the house after taking into consideration the interest on the loan. We would make monthly payments for fifteen years, totaling approximately $63K and at the end of fifteen years, we would be required to make a one time, final payment of approximately $29K in order to pay off the house.

This did not please us. She called the loan officer to ask him what was going on, but he said he was busy and could he call her back in about ten minutes. She agreed, but he never called back. The next day (or maybe the day after that), we were just waking up when the phone rang. It was the loan officer calling to say the appraisal was finished and the house did not pass. He then preceded to yell at Damnen over the phone, wanting to know how the hell she thought the house would pass appraisal in its condition.

While this was going on, there was an authoritative knock at the door, which I hurried to answer. It was a sheriff delivering a court summons for Damnen, so she can appear at the grand jury hearing of the woman who burglarized our apartment over the summer - one of many reasons why we wanted to move.

When I came back in, Damnen was off the phone and not happy. We had a few days to figure out what we wanted to do about the house. Apparently, we could still get the loan (though it was still unclear whether it was a 30- or 15-year), if we were willing to put $10K into an escrow account for repairs on the house. At this point, we were still considering doing that.

Then we found out that the loan officer had gotten off the phone with Damnen and called our realtor and yelled at her, as well. We could understand if he was a bit upset that things hadn't worked out, but that sort of rude and belligerent behavior was absolutely unacceptable. We were very upfront about the needed repairs and he assured us that they were fine. It's not like we were lying to him or omitting certain details in hopes he wouldn't notice. We didn't want to waste our money. We decided that maybe we would still buy a house, but we were going to go somewhere else for the loan.

Damnen called the loan officer and left a message on his voicemail asking for a letter stating that the house did not pass appraisal and therefore we were denied the loan, so we could get out of the contract on the house. He never responded and no letter arrived in the mail. For two weeks, he avoided us and our realtor, until finally the realtor caught him while he was driving and he answered. We received the letter the next day.

In the meantime, we decided that maybe the powers that be were trying to tell us it wasn't time to buy a house. The cars need some work and the cats needed to go to the vet and if we bought the house, most of our savings would be going into repairs. We'd be living without a safety net and if something went wrong, we'd be scraping for money. Also, our plan was to purchase the house right before winter break, so we would have nearly two months out of school during which time we could complete most of the necessary repairs. If we had to start the process all over again, we'd end up purchasing a house just as school was resuming and it would leave us very little time to work on the house.

We aren't thrilled about staying in this apartment, but we figure it could be worse. Our building was sold recently and we have a new manager who is not happy with the neighborhood. She's planning to speak with the neighborhood association to get the area cleaned up and the crime rate down. The owners are investors who intend to put a great deal of money into the house to get it fixed up. They are currently planning to replace all thirty-two of the windows and replace the gutters. Our cats were grandfathered into the lease, so we don't have to worry that they'll suddenly tell us the building is pet-free. She is also allowing us to paint, which we intend to get started on tomorrow. It isn't ideal, but we'll be better off financially and probably a lot less stressed.