Wednesday morning we went straight to SunTrust and met with the banker to discuss our options. Jason and I were fully anticipating the green light on an FHA loan and were ready to sign on the dotted line.
But when we got to laying out the specifics with SunTrust, there were some major differences in the FHA loan versus the USDA loan.
The FHA loan required 3.5% down, which we were fully aware. We had the money ready to go. But after checking really really closely, SunTrust wasn’t 100% sure that the land amount was right for an FHA loan. It could still be too much land and not enough house for the government backed loan.
We liked this house too much to let it go. Besides, the foreclosure had already been snatched out from underneath us, we really didn’t want this one to be snatched out either.
Because there was even a slight possibility that the FHA loan would fall through, we started discussing our other options for obtaining this house with SunTrust.
We talked about a conventional loan. We didn’t have 20% to put down for a down payment, but we weren’t completely doomed just yet. If we only the 3.5%, we could still get a conventional loan, we would just have to pay extra for a little while in what is known as PMI. It stands for Personal Mortgage Insurance. Now… I don’t know the specifics of how it works; but it’s something like paying the bank your extra principal for a little bit to insure you won’t fault on your loan. Or something like that. Basically, we have to pay extra on our monthly mortgage until that extra amount totals 20% of the full loan amount, getting the bank their 20% down payment.
Okay…so we finally had a viable option that didn’t hide cracks in the offer documents.
Oh…but wait. That 3.5% you have to put as a down payment, yea, it can’t be a gift (as was the case with us. We were using wedding money, gifted by my parents as a down payment). If you were using gift money for a down payment, then it had to be 20%. Go figure…..this was just another heart rate increase inducing moment! For Pete’s Sake!! We would have been able to use the 3.5% had it been in my account for longer. But since I had my parents hang on to it for a while, then it caused issues. I mean, goodness…they don’t make this easy on you, do they?
But, SunTrust was very understanding and was still willing to help us figure out a way to get our house. Yes, I am referring to it as our house at this point. We started to look at what assets Jason and I did have, out right, in our names. Maybe we would be able to take out loans against those things to secure our down payment. Does it seem a little backhanded and if you’re not careful, could it get you into a very bad bind financially? Yes to both. But as I’ve previously shared, Jason and I were okay as far as paying our debts was concerned and the extra burden wasn’t going to be an issue. Especially since I did have the 3.5% in the bank that we could immediately turn around and use towards that loan.
So what were our options? The jeep that we arrived in? No. Still in my parent’s name. Jason’s truck? Possibly, but it really wasn’t worth enough. Can you believe it? The truck that my fiancé drives like a mad man on crack and that won’t stay running without a new issue every other week wouldn’t help us out of this one. That’s when one of us (I really don’t know who) mentioned that Jason was the sole owner of about 5 acres in Davidson County that was worth quite a bit more than the 3.5% that we needed. And guess what? SunTrust agreed to it!!
So we decided to get a lot loan and use the money from that loan as our down payment for the home loan. Make sense? I hope so, ‘cause I’m not explaining it again. Basically, Jason’s land would be collateral against the loan and if for whatever reason, we faulted on it, the bank would end up owning a portion of the land. We weren’t using all of the land, because we didn’t need it. We just need enough to get the 3.5%.
So Monica, who had been patiently sitting in the parking lot of the bank, rushed in, we signed our initials all over the paperwork again and we submitted our offer, again.
By 4:30 pm, we heard back from the sellers about our offer.
Okay…I’m just going to keep you in limbo for a minute.
Sucks doesn’t it? Imagine how we felt.
We had to make sure we kept ourselves very busy at work so we wouldn’t go crazy with the stress of not knowing.
OUR OFFER WAS ACCEPTED!! WE GOT THE HOUSE AND WERE OFFICIALLY UNDER CONTRACT!!
How we felt about that news!!!!!!
Love as always