Our First Guest Blogger

I've been asking for contributions by anyone who wants to talk about how this great recession affects them personally.

So here, blogging about what it's like to buy a house and get a mortgage in these tough times is Pamela B.

Hi all! I am writing this as a guest blogger (my first official blog anywhere) on Karen’s site :> Let me give you some brief background to set the scene. I’m a 38 year old working as an Office Manager in Southern California. My husband is 43 and we are dealing with him being let go from CBS in October 2008. We have been renters all our lives and have now decided to take the leap into actually buying a townhouse. The fact that Ernie is out of work is scary but our mortgage will equal what we are paying in rent so we feel we might as well do it.

The townhouse we are looking to buy is listed at $285K, down from the $430K that the owners paid for it in 2007. Yes, that is scary indeed when townhouses were almost half a million dollars. Ernie and I were locked into a lease in 2007 but even if we weren’t we were not comfortable paying that much for a townhouse. We stayed put and bided our time. When things dropped we began to look around and were moments away from leaving to an appointment with a mortgage broker when CBS called to let Ernie go. We were devastated! We put our plans on the back burner and pretty much wrote it off.

Towards the end of February 2009, my sister-in-law (also living with us as a renter) forwarded me a link to a unit up in our complex and after looking at the unit it we felt it would work out for us so we got the ball rolling. Believe it or not, we didn’t have any problem getting qualified for a home loan (350K to be exact). We did not use a realtor since we know the area and know what we wanted. We went directly to a broker who was able to get us a loan no problem. I really thought that with Ernie being out of work we would be denied and really even laughed at but it wasn’t an issue. We have amazing credit (with both of us having scores in the 800’s) and were able to show a good source of income from when Ernie had been working so it was no problem. Since we are first time home buyers we got a FHA loan with a 5 % interest rate. Because of the FHA loan we only have to put 5% down on the townhouse. We have enough saved to put down 10% but the difference in the monthly payment was only about $60 so we decided to keep with 5%. If we did put 10% we could get a regular loan and not deal with a FHA loan but our interest rate would not be as good, causing our monthly payments to be higher than what we want. Going with the FHA loan was the best way to go. However, because it’s an FHA loan we have to do a few things we wouldn’t be required to if we were going with a regular loan. We have to have the townhouse appraised. The FHA wants to make sure we aren’t overpaying for the townhouse. We have to have the HOA/Condo Board certified which will show if the funds for repairs are there or if they are over extended. All these things cost money and we need to have the unit inspected as well. Basically, we will be spending about $1000 to get these things taken care of. The risk to us is that the bank has only given us 10 days to do these things and that’s not enough time. Usually buyers have anywhere from 17 days or more but short sales are different. We therefore have to start the process sooner. Even if our offer is accepted there is still the risk that the bank can back out of it. Meaning we could be out the money for the inspection/appraiser/certification process.

As we stand now on the 6th of March is that the bank has indeed accepted our bid of $268K with closing costs paid by them up to 6%. We now begin the process of getting the Certification and the Appraisal done. If all goes well we will be in a townhouse in about 60 days but there are a lot things that can blow it (i.e. our inspection shows something we can’t financially fix or the bank at the end backs out of the agreement). Keep your fingers and toes crossed that all goes well :>