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Regular Contributor
J_G
Posts: 185
Registered: ‎07-12-2013
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Re: USDA Direct after BK... here's my story

[ Edited ]

How did they take another offer? I thought you were under contract and they already exepted your offer Dan? I thought once you get the appraisal and have got mutual exeptince they can't take another offer? You never had mutual exeptance? I am 2 days past the 10 day contingency and the house already shows sold on the builder website and has a sold sign in the front yard. No one is allowed to go into the house. It is new construction. Can this happen to me?

7/1/13 - EQ = 593 TU = 578 EXP = 573 FICO
8/11/13 - EQ = 600 TU = 590 EXP = 603 FICO
10/1/13 - EQ = 611 TU = 689 EXP = 605 FICO
12/4/13 - EQ = 625 TU = 648 EXP = 604
Lender Pull 2/18/14 - EQ = 630 TU = 678 EXP = 594
Lender Pull 2/28/14 (EQ 640) (TU 660) (EX 655) Rapid re-score =)
9/30/14 - EQ = 660 TU = 710 EXP = 669
New Contributor
rideswithchrist1
Posts: 100
Registered: ‎02-04-2014
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Re: USDA Direct after BK... Here's my story

03/03/2014 - I recieved my Good Faith Estimate and Truth in Lending Statement from the USDA in the mail. Closing costs are estimated to be approx. $5,500. This includes the appraisal ($425), tax service fee ($102), home and pest inspection ($825), excrow deposit ($2,000), homeowner's insurance ($800), title insurnace ($1,000) and recording fees ($350). I'm hoping that the appraisal comes in high enough that all of these can be wrapped into the loan. 

 

 

I am paying for the home and pest out of pocket. What is the escrow deposit? Is that your earnest money?

Regular Contributor
DanTheMan77
Posts: 165
Registered: ‎01-06-2014
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Re: USDA Direct after BK... here's my story


J_G wrote:

How did they take another offer? I thought you were under contract and they already exepted your offer Dan? I thought once you get the appraisal and have got mutual exeptince they can't take another offer? You never had mutual exeptance? I am 2 days past the 10 day contingency and the house already shows sold on the builder website and has a sold sign in the front yard. No one is allowed to go into the house. It is new construction. Can this happen to me?


I'm in NJ. We have an "attorney review period" where the contract must be reviewed by your attorney before it becomes final. It was during that time that the seller recieved another offer. Their attorney never signed off on the contract, which in effect voided it.

Regular Contributor
DanTheMan77
Posts: 165
Registered: ‎01-06-2014
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Re: USDA Direct after BK... Here's my story


rideswithchrist1 wrote:

03/03/2014 - I recieved my Good Faith Estimate and Truth in Lending Statement from the USDA in the mail. Closing costs are estimated to be approx. $5,500. This includes the appraisal ($425), tax service fee ($102), home and pest inspection ($825), excrow deposit ($2,000), homeowner's insurance ($800), title insurnace ($1,000) and recording fees ($350). I'm hoping that the appraisal comes in high enough that all of these can be wrapped into the loan. 

 

 

I am paying for the home and pest out of pocket. What is the escrow deposit? Is that your earnest money?


Escrow deposit and earnest money are different. Escrow deposit is the money that is deposited with the mortgage company to initially fund your escrow account. The escrow account pays for insurance and taxes. The escrow deposit is usually 2-3 months of taxes and insurance.

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rideswithchrist1
Posts: 100
Registered: ‎02-04-2014
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Re: USDA Direct after BK... Here's my story

ok. 

I guess that is part of closing. We are not paying those.

we had the inspection done today- all looks good I hope

but- usda called today and said they don't know why my original certificate of eligibility came in at 149,700 when it should only be 144,500. 

they told me to have my agent change the contract to reflect the price of 144,500 and I told them no- this is a legal and binding contract and I will lose this house because 4 other people made an offer. 

They called me later after talking to the state and said since it was their error, they had to honor it, as long as we signed a form saying we could afford it.

 

so- now I am waiting for the appraisal right? How long will it take? Our option period ends on April 5th

New Contributor
rideswithchrist1
Posts: 100
Registered: ‎02-04-2014
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Re: USDA Direct after BK... Here's my story

DanTheMan77,

  

   any good updates from you?  Did you find another home?

Regular Contributor
DanTheMan77
Posts: 165
Registered: ‎01-06-2014
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Re: USDA Direct after BK... Here's my story

[ Edited ]

I'll add a quick update...

 

06/29/2014 - Our COE and all of our extensions expired without us finding a house. Since we ran out of extensions, I had to fill out a new application - basically, I had to start the process all over. The application was mailed on June 29 so we're back to waiting. We took a month or two off from looking for a house when my car died. I had to buy a new (used) one, which I know will negatively impact my DTI ratio, but there was nothing else I could do. The good news is that my wife's car (loan is in my name) will be paid off early in a month or two, so that should bring my DTI back to where it was before. I thought about waiting until it was paid off and showing that way on my credit reports, but honestly I was just curious what I would qualify for now. If I don't qualify for enough now, I'll just revise my application once the car is paid off.

 

I wish I had better news to share - like "sorru I haven't posted in a while, but we were so busy moving and enjoying our new house I haven't had the time", but we knew that even though USDA qualified us, we still weren't where we wanted to be financially before buying a house. So, we made the tough decision to wait a couple of months.

 

As an added bonus, as of June 17, I am now a full 3 years out of BK. Doesn't really matter for USDA since my scores are above 640, but I guess it opens up some other options as well.

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Senior Contributor
StartingOver10
Posts: 4,566
Registered: ‎03-06-2010
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Re: USDA Direct after BK... Here's my story

Yes, you can now consider FHA programs too since it has been more than 3 years.

 

I am sorry you are having this difficulty. I hope you end up with an awsome place and the process of actually getting it fades into the background.

Regular Contributor
DanTheMan77
Posts: 165
Registered: ‎01-06-2014
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Re: USDA Direct after BK... Here's my story

[ Edited ]

So here's my updated progress. There are many details that I could probably skip over, but I'll include them to give you the full scope of what this process had been like for us.

 

07/16/2014 - Received our second Certificate of Eligibility from the USDA. Our approval amount dropped to $190,000 die to the additional car payment. We knew this would happen so it wasn't really a shock. I has been able to calculate our pre-approval amount within $50 using the DTI ratios.

 

07/18/2014 - Found another house. It had been on the market for two weeks but was listed as a short sale. Owner purchased the house in the 1950's, so something didn't seem right to me about it being a short sale. We went to look at it that evening and loved it. After a little digging, we found out that the listing agent's assistant incorrectly marked the property as a short sale, when in fact it was not. This is good news, since this "mistake" deterred potential buyers and there had been no offers on the house. We also found out that there was a stream at the rear of the property (3/4 of an acre) that was in a flood zone, but the house itself was not.  We needed to run this past USDA before making an offer to make sure it wouldn't be a problem later on. 

 

07/23/2014 - Finally heard back from the USDA on the flood issue. Apparently, USDA does not have a problem with this. As long as the house itself is not in a flood zone, the property qualifies (assuming all other requirements are met) and no flood insurance is needed. We made an offer on the house that evening. The house was over priced and our offer was about $20,000 less than asking - well below our approval amount. As part of our offer, we asked the seller to contribute $5,000 to closing costs.

 

07/24/2014 - We found out that while we were waiting to hear back from the USDA on the flood issue, the seller received another offer the day before ours. The other offer was higher than ours, we increased our offer by $15,000 - just below asking price, but still asking for $5,000 concession for closing costs.

 

07/25/2014 - Find out that the other offer was the same as ours increased offer, less the concession. Since we felt that we'd be over paying if we increased our offer any more, we withdrew our offer.

 

07/26/2014 - Go look at another house (at this point we have looked at over 10 houses, have made offers on three, and have had one under contract - and all have fallen through). The house is a little smaller than what we wanted, but it's in very good shape. No issues - public water & sewer; flat, dry yard; appears to meet all USDA requirements - only problem is that it is also over priced by about $10,000-$15,000.

 

07/29/2014 - We have our agent draw up a contract for $165,000 with seller to provide $5,000 for closing costs. The house is listed for $179,900.

 

08/01/2014 - Seller counters with $179,000 and $5,000 for closing costs. We counter with $175,000 and $5,000 for closing costs, and tell them that's our final offer.

 

08/03/2014 - Seller declines our counter offer, saying there are several upcoming showings and is expecting an offer from a previous showing. Yet another deal seems to have fallen through. At this point, we decide to wait until we can pay off one of our cars (2-3 months) and remove the payment from our DTI ratio so we can qualify for a higher price range.

 

08/14/2014 - The house is still on the market so we have our agent contact the seller's agent on more time, letting them know that we're still interested in the house. There is nothing else on the market that comes close to meeting our needs and is within our price range. After not receiving any higher offers, the seller accepts our offer of $175,000 with $5,000 for closing costs. I was tempted to try to renegotiate a lower offer since it was definitely at the high end and I'm worried about the appraisal not coming in high enough. However, I decided to go through with it in order to do our best to keep a good relationship with the seller in case we need to negotiate something more critical later on in the process (eg. repairs, inspections items, low appraisal, etc). We also asked for 21 days to do our inspections (14 days is typical here). Since we're a little concerned that the house might not appraise for the contract price, we'll have the appraisal done first before we spend money out of pocket for the home inspection. I also sent the earnest money deposit off to our attorney ($1,000). So far, this is my only out of pocket expense besides the initial credit check fee to USDA ($32).

 

08/15/2014 - New contracts are signed by both parties and send off to our respective attorneys. Here in NJ, we have an attorney review period that can last anywhere from 1 day to several weeks. After the contract is signed by both parties, either party's attorney can cancel the contract within 3 days in order to modify the language of the contract. The contract does not become binding until this attorney review period ends - once both attorneys, buyer, and seller all agree on the modifications. The stressful part is that during this period, the seller is still free to accept other offers and the seller's agent typically does his/her best to go out and solicit additional (higher) offers. As a buyer, we're basically a sitting duck.

 

08/26/2014 - Still in attorney review. We hadn't heard anything from the sellers attorney, only to find out that he had been on vacation for the past week. Finally, the two attorneys are in contact and negotiating the final contract. Since I had sent the initial contract to the USDA, I also received the Good Faith Estimate and Truth in Lending Disclosures in the mail, which I promptly signed and sent back.

 

08/28/2014 - Still waiting. Talked to the lady at the USDA this morning and they have everything they need from me. They went ahead and ordered the appraisal even though we are still in attorney review. I don't know why, since this deal could potentially still fall apart, but my agent and the seller's agent both seem to be confident that we'll get this deal done. I certainly hope they're right.

 

Waiting is definately the hardest part of this process. Our pre-approval expires in two days and I'm a little worried about that, although we still have two extensions left if we need them.

Regular Contributor
DanTheMan77
Posts: 165
Registered: ‎01-06-2014
0

Re: USDA Direct after BK... Here's my story

[ Edited ]

08/29/2014 - This morning I got an email from the USDA that included a worksheet titled "Funding Commitment and Notification of Loan Closing". Our interest rate is 3.625%. There's no mention of any subsidy, but it don't think we qualify. The only problem is that we still don't have a firm contract. I called my agent and he assured me we were OK and not to worry about the contract. It seems both lawyers are on vacation this week and the contract should be resolved early next week. The Funding Commitment includes a list of conditions, but they seem pretty standard: survey, inspection report, insurance coverage, etc. There was no mention of any appraisal, so I asked about that. She said the appraisal was complete and came in at $500 above our contract price. There was also no mention of required repairs, so it looks like that's another hurdle we've cleared.

 

Still no idea when our closing date will be. In our contract we asked for a date of 10/30/2014 because we heard USDA is notoriously slow. However, they seem to be moving incredibly fast. Within 7 days of sending our initial contract to the USDA, the appraisal has been complted and we have recieved our funding commitment. So maybe we'll end up closing sooner than anticipated? For those that have been through this process before, how long did it take from this point forward? Besides the home inspection, are there any other major hurdles? Finally, will USDA do their own inspection prior to closing? I thought I read about that somewhere, but I can't seem to find it now.


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