Hello! So I am probably going through a first time buyer's worst nightmare right now and I am looking for advice, knowledge, experiences, anything really... and yes I know some of these things are real estate questions but I am really lost.
The story goes:
My husband and I were pre-approved for an FHA 203k Loan April 10, 2015. We placed a bid of about $100,000 on a 2,500 sf 100 year old American Foursquare house on a nice property/neighborhood that needs some extensive exterior work but has good bones on the inside. Our bid was accepted on April 12, 2015 with a closing date of June 12, 2015. There was a period where we were going crazy trying to find a general contractor who could do the work we needed done (about 60k worth) that lined up with our HUD consultant's numbers, but eventually we found one, had a successful appraisal, and were on our way to closing. Last week we got through underwriting with just a few conditions: another copy of bank statements, more recent bank stubs, and proof that we were both still in school for over a year. We also got our clear to close list which was very trivial (mom's name is on bank account, my ID is expiring) all taken care of. Basically, we WERE clear to close.... except 5 days before closing we got word that the sellers have a nearly $300,000 IRS tax lien on the house. My Loan Officer said we were fine except for the title.
So after $1000 in hand money, $500 appraisal, $800 HUD consultant fee, and numerous days off of work babysitting contractors (half of which never get back to you), all the craziness of underwriting, homeowner's insurance setup, and we still can't close. Apparently the owners had no idea that the tax lien existed, although I'm not sure how that could be missed because that's generally what happens when you don't pay taxes. Of course it also helps that they were moving to a family house that they weren't going to have to pay a mortgage on, so they didn't have their credit checked. I did double check the disclosure and they checked "NO" next to the title/lien question. It's also part of the contract they signed that the title is free and clear . But it's not clear obviously and IRS website says the process takes about 30-45 days to fix (at least) and that is assuming that the IRS will accept the $9,000 they were making from our sale to release the lien. So on top of all this:
-My real estate agent nor my Loan Officer & Loan Processor have ever been through something like this... only very minor versions...
-I am afraid I will lose my contractor... mine/the lender's contract with him is that work will start within 30 days of closing date. Will I be out of contract if he walks and I end up needing more time to find another guy for the same price? My real estate agent doesn't think so since it's a domino effect from the seller, but we aren't sure.
-Will I have to go through underwriting again if this drags on? I work 2 teaching jobs. My full-time job is year round pay, but my part-time job on the side teaching online has summers off. I teach summer school through my full-time job for extra pay to make up the difference, but during July and August I can't provide current pay stubs for the part-time job since I don't get paid. Am I screwed if I have to get documents all over again? They can verify employment, but I won't have pay stubs.
-On that note, I am also going on a trip in July to meet with my dissertation chair (going for my doctorate). I will need to use my credit cards... it's nothing crazy but I'm not supposed to be using them until after closing. Am I screwed in this department, too?
-I also need to close ASAP since I am going FHA and our student loans aren't being held against my DTI, but as you know, the rules are changing... if this drags on, can I am be impacted by the rule change for how student loans are counted or will I be OK since I have a loan number already?
-Any advice on my situation at all?
Thank you in advance!
