Monday, October 8, 2012

Final Inspection for 203k Loan

Scheduled final inspection with the appraiser who came to my property at the very beginning. The entire process lasted about 30 minutes as she went around taking pictures of the work that was completed and specified on the contract by my contractor. She said everything looked really good, and as we were walking outside from the front units home, she saw that there was still termite wood damage on the roof eaves. She pointed at me that the contractor did not complete that work and that he did not completely paint throughout either. She said that HUD is very big on flaky paint due to the LEAD danger it imposes on the kids. She took pictures of it and said that what's going to happen now is that she is going to send her report to the bank and they will review her finding and most likely they will request for me to fix the problem and have her re-inspect AND pay for her revisit!

I obviously didn't want it to go this way, I wanted her to come, take pictures, and say everything looked fine and be through with everything! I started looking at the damage wood she called out, but in reality it isn't damage wood, it's damaged paint. My contractor DID cut the edges of all the wood that hangs over the roof, but this section didn't look as smooth as the other sections because the nails that were used to put the facing went different directions on the back with made the wood appear as it was termite damage... it was damaged alright, but it nail damage.

In any event, my draw center specialist called me the next day and informed me that the final check for my last contractor will be mailed out that day or the following! She didn't mention anything about the things my inspector/appraiser said! They probably realized that it was nail damage and not termite damage!

My draw center specialist also advised me that my contingency amount was not used and therefore it will reduce the balance of my mortgage loan. The reduction will lower my loan amount, not my monthly payments. At the end of my 30 year loan, I'll probably won't have to pay the last 3 months due to the contingency amount! 

Tuesday, September 4, 2012

Wells Fargo Draw Center

I spoke to Andrea from Wells Fargo draw center and she was giving me an introduction of the rehabilitation program and how it works. She will be disbursing 35% for each of my contractors. FYI - You can have more than one contractor/bid with an FHA 203K loan. My first bid was for rehabilitation work and the my second bid was for termites.

Word of advice, if you do have two different contractors, make sure you ask your draw center representative to issue you two checks one for you and contractor #1 and the second check for you and contractor #2. If you don't give them specific instructions, you'll have to chase for signatures...

When I tried cashing the cashier's check that was given to me and contractor #1, I was not able to get immediate credit, because according to Bank of America they cannot cash checks larger than $5,000. My contractor and myself signed the check and took it to the bank for deposit. I paid him from my account because I really wanted him to get paid at the moment. Check cleared two days later.

Another important thing you should know is what type of permit is the draw center requiring from you. In my case, Andrea was telling me that they only needed a General Building Permit, even after my contractor filled out a Wells Fargo form requesting what permits were required. The permits that my contractor selected were, electrical, plumbing, and HVAC...but according to Andrea's computer, they needed a General Building Permit.

It's literally useless to fill out the "Permit Required Form" from Wells Fargo if they supposedly have a "special team" that reviews the bid to see what permits are needed. In any event, my contractor got all 4 permits. If you don't give them the permit they are requesting you'll either have to have the city write them a letter or have the bank rep call the city to find out. Without the agreeable permit, no final draw will be released.

I'm happy to report that after so much stress dealing with the bank, contractor, and inspector, my house finally passed inspection! Inspector signed the permits today and will be given to me by my contractor this evening. I can finally do whatever I want with the property and not worry of someone checking my work...

Will be posting pictures up soon


Thursday, August 9, 2012

"For Rent" Sign is Now Up!

Posted a "For Rent" sign on Sunday, and since then, I have received about 20 phone calls! Each person that calls has such a different story of their current living situation, that I'm always interested to pick up the phone to see what story the person calling will share.

My contractor is going to give me both houses completed this month! I am excited to see how they are going to turn out. Contractor began work on Tuesday and is moving pretty quickly! He has a total of 7 people working on my property! Talk about getting things done!

It's a bit difficult putting a house for rent because you can't really tell who is serious and who isn't. I've had one person willing to give me a deposit to secure the property, but I wasn't sure if I should take it because this person is the previous homeowner! The bank foreclosed on her, house was put on sale, I purchased it, and now she wants to move back in as a tenant! She seems like a very nice person, but I am not sure if it's a good idea to rent the house to someone who owned it before.

I am going to give her an application and if she meets the requirements and shows financial stability, she will move forward in the rental application. I do not want to discriminate and want to do everything right. At the end of the day, all I care for is for rent to be paid and for my tenants to be happy.

I am going to begin to pass out applications this week and hopefully I will have a contract signed by next weekend!

Saturday, August 4, 2012

AFTER Escrow Closes

Escrow is officially closed when they receive confirmation from the title company of name change to new buyer and when funds have been released to seller.

Escrow closed July 31, 2012 and since then I have been working out the details with my contractor on how I want the property to be remodeled. Honestly, it's not too exciting once you cross the bridge from being in escrow to being a homeowner. Don't get me wrong, it's exciting, but I've been excited ever since my offer was accepted and throughout the process the "excitement" died out.

The feeling is more like "finally!" My loan process lasted 60 days and it's not over yet... I still have to wait another 60 days for my contractor to remodel the homes. Once he completes the work, I will then be extremely excited. As mentioned previously, this property was an REO and hasn't been cared for for almost a year now. Windows are broken, garage was being converted into living places, my kitchen has no sink, faucet, cabinets, and let's not talk about the 80's tub that still sits in my ugly bathroom. With a 203K loan, the process doesn't stop when escrow closes, it ends when the draw center has disbursed the last payment to the contractor after his work has been inspected by the bank and city ...I can't wait to see how my house is going to look when its "move in ready" .... now this part, is exciting!!

It's all process, but I'm glad to be in this process than no process at all! It's a big achievement and I'm extremely proud of myself and all the people who made this dream come true. I am looking forward to the day I can move in and enjoy my purchase! I'll be posting pictures of the home and show you before and after pictures. Soon you'll be able to see the beauty behind this diamond in the making... Go and find your treasure today!
I dare you

Monday, July 30, 2012

The Drive to the Escrow Office

Ashley from Harmony Escrow called me on Friday (7/27/12) to have me come into the office to sign the loan documents! She wanted me to come in asap in order to close at month end. Honestly, when she called I wasn't too excited. Maybe because I was in Culver City and she was in Irvine! It was an hour away, but
with traffic it was 2 hours, not to mention another 2 hours back! They are not open on the weekends so I had to go Friday, so I did. I asked my kind boss if I can take off at 2:00 PM and he was completely fine with it. At this point in the process, I should have known all the details of my loan, such as total closing cost, monthly payment, etc. Unfortunately, I didn't. I had been asking my loan officer for this info for days but his response was always, "I'll get that for you right away." Well that "right away" never came.

At 1:00 PM I called the escrow office back to let them know that I'll be passing by to sign the loan documents and asked her what would I need to bring with me. She said that I will need to take my ID and a cashier's check for the escrow balance... I've been wanting to know how much more I had to come out of my pocket for closing cost and the 3.5% of my down payment. I had already sent a cashier's check in the amount of $4,100 as my earnest deposit at the very beginning of this process so I was very anxious to know what was left. She finally responded and said to give her 30 minutes to finalize the numbers and that she'll e-mail me a copy for my review.

At 1:20 PM I received her e-mail and I couldn't have opened the attachment any faster! The attachment finally opened and I quickly look at the bottom of the report and there it was, "total due to escrow: $5,215.25" I felt so relief to know it wasn't anything outrageous like I saw in the Good Faith Estimate presented by banks when I was shopping around for a lender. This probably has a lot to do with the sellers credit of $6,117 (3% of selling price). This was literally, $6,117 that I didn't have to take out of my savings account! FYI - Freddie Mac provides up to 3% of sales price as a credit and a 2 year home warranty (only applies to single family residence) for owner occupant buyers. My property didn't qualify for the home warranty, because it's a duplex. I am happy with the credit though!

Okay, back to Friday... At 2:00 PM, I went to the bank to get a cashier's check and anxiously drove to the escrow office. It felt like I was never going to get there. It was so surreal. This drive felt the same way the day I drove to church to get baptized and the day I picked up my iPhone 4! It's a feeling that you're so proud of, but you feel something big is going to happen because you cannot believe it's really happening. I seriously thought I was going to be involved in a car accident on my way to the escrow office. Not because I was driving recklessly, but because my presence in this world didn't feel real. It felt like things like this do not happen in real life...

Made it safe to the office (thank God, because I was speeding...haha..kidding of course, traffic was jam). Ashley met with me in a private room and we went through the loan documents and she had me sign where a signature was required and after an hour and a numb hand, I was given a copy of what I had just signed and I drove back home. At this point, it didn't feel like a big deal that I just signed loan documents to buy a house, I was probably just tired.

Wells Fargo should be paying the seller tomorrow (Monday) and keys to the property should be provided to me on Tuesday of which I will then officially be a homeowner!

Day 1---July 19, 2012 : File was submitted for final review (lender process)

Day 2---July 20, 2012: Waiting

Day 3---July 21, 2012: Waiting

Day 4---July 22, 2012: Waiting

Day 5---July 23, 2012: Waiting

Day 6---July 24, 2012: Waiting

Day 7---July 25, 2012: Waiting

Day 8---July 26, 2012: Loan specialist received my file from underwriter to close for final approval. File was put into the closing department for them to draw the loan documents

Day 9---July 28, 2012: Call from escrow office that loan documents were ready to sign. I signed documents that same day and file was faxed back to Wells Fargo by escrow office who will overnight originals as well.

Day 10---July 30,2012: Wells Fargo will review loan documents to ensure everything was completed correctly and if everything looks okay Wells Fargo will fund escrow account. Escrow office will submit borrower info to title and pay seller

Day 11---July 31, 2012: Title acknowledgment is confirmed and escrow is closed. Realtor will pick up keys from listing agents office and proudly give you the keys to your new home!

I then have to call my contractor to begin to remodel the property and once completed, I can finally move in! But before calling my contractor, my boyfriend and I are going to go to our favorite Thai restaurant in Santa Monica and celebrate our victory!

Thursday, July 26, 2012


Okay.... well close! My file has been sent to the closing department and loan documents should generate in a few hours!!! Contractor was validated just fine and loan docs will be sent to escrow who will get title and all that good stuff ready to sign! I cannot believe this is actually happening. I am 24 years old and seriously have always dreamed of this moment my entire life. You know when something is too good, you can't believe it... well this is one of those moments. God is so good and I am humbled by His grace.

Tuesday, July 24, 2012

What Happens A Few Weeks Before Close of Escrow

A lot of excitement and a little bit of stress as time is of the essence and everyone is running around to get everything finalized and ready for funding!

Okay, if getting a house isn't stressful enough, imagine your loan officer telling you that they found a tax lien and a judgment against your contractor just a few weeks away from close of escrow!!

Last week, the bank called me to request letters from my contractor to justify the tax lien and judgment he had against him!! When my loan processor told me this, I freaked out! This was coming in a few weeks before close of escrow and of course I thought the worse. If my contractor isn't validated, I would need to go searching for another contractor that can match my budget and have him fill out all the paperwork, all in a few weeks.

It is so important to get a responsible and reliable contractor for a 203k loan. Luckily, my contractor was responsible to write a letter of explanation for the tax lien and judgment that was requested by the bank in a timely manner. We had to wait two days to hear back from the bank with a "your contractor should be validated just fine."...........Finally, I can breath!

Now that oxygen is running to my brain, I can process that I'm soon going to be a homeowner and a landlord!!! I'm so excited!!!! I feel like I was finally able to reach such a big dream of mine...

This is it a few weeks before close of escrow .... contractor is going to be validated just fine, I satisfied all contingencies, property has been approved, and now, we have to wait for the final decision! At this point, I just want everything to be over already, it's been more than months and I'm hoping my next blog will be titled "I AM A HOMEOWNER!!"

Tuesday, July 17, 2012

Loan Process & Electronic Signature

When shopping for a mortgage lender, some loan officers will lock the interest rate they quoted you for a maximum of 60 days. That's what happen in my case. I locked an interest rate and it is set to expire on its 60 day mark which happens to be exactly two weeks from today.

My loan officer from Wells Fargo is confident they will close on time and are trying to close ASAP. According to him, we are in our final stages and I believe him. One thing that slowed down the process was that my student loan service provider was transferred from Direct Loans to EdFinancial. The bank thought I refinanced by student loan, but clarified that the service provider was transferred. The bank had to send a validation form to the service provider in order to get clarification on the status of the loan since my credit report is showing "closed" instead of "transferred."

On the other hand, I've been going back and forth with the loan processor regarding a deposit of $1,000 that I cannot supply supporting documents for. This is why I tell you that's it is very important to keep track of your deposit slips and a copy of the check. When I deposit checks, I deposit them as cash in order to get immediate credit rather than waiting days, sometimes weeks, for the check to clear.

When applying for a mortgage loan, the bank will let your borrow the money to purchase your home, but they will have conditions you will have to meet in order for them to finance the money to you. These "conditions" are items requested by the underwriter for additional information in order to make a decision. When your mortgage banker asks for conditions, don't delay, get it to them ASAP in order to get your loan processed sooner. Examples of conditions are, verification of employment, last two paychecks, updated bank statements, and so forth.

I am anxious to know when I will be closing. My official closing date should occur on or by August 6, 2012 if not, I will be charged a $100 per diem for everyday after August 6, 2012 imposed by the seller. I have complete confidence on Wells Fargo that they will be able to close on time.

A great tip that I share with all my family and friends, is getting forms filled out and even signed electronically!! This great FREE website I found is called and it's great! I've been able to sign real estate forms requested by seller, type directly into a PDF, and so much more! They have this new thing where you can get your forms notarized, but I haven't tried that service yet.

I will continue to wait and see what else the bank needs from me, and hopefully we will be closing in the next few days.....

Thursday, July 12, 2012

Property Appraised Above Loan Amount!

Great news, the duplex property I am purchasing appraised $30,000 above my loan amount! This means that I have equity and that I'm getting a killer deal! I am really excited everything is moving smoothly and that I might be closing a week before the scheduled date.

The appraisal didn't act like an inspector like so many people said they act. My appraiser did call out repairs that need to be done in order for the property to meet FHA/HUD standards. I'm glad I have a 203k loan because I will be able to do these repairs AFTER I close escrow and not BEFORE. These repairs are nothing insane compared to what other blogs have said inspectors look for.

The following repairs were called out by the appraiser.

1) Replace all broken windows
2) Any peeling paint needs to be scraped and removed from the site entirely. Area will need to be treated and repainted
3) Light fixtures missing (electricity wire exposure)
4) Termite damage eaves
5) Repair missing or torn crawl space screens
6) Holes in walls (drywall repair)
7) Missing door knobs
8) Repair missing or chipped wood siding

I read a lot of places online that the appraiser will want updated electricity, plumbing, functional heaters, and so much more! This was NOT my experience!

The following were NOT called out by my appraiser:
1) Broken security bars
2) Stove (read that stove is a "must" for property to be habitable)
3) Kitchen cabinet doors that are missing
4) Floor heater
5) Broken tile around the house
6) Laundry room floor sinking

Reading into something so much can really make you go crazy and stress you out for no reason! I was so afraid the appraiser was going to request a lead inspector, have roof repaired (not in good condition), and replace floor heaters. Don't let this process stress you out, just look into the future and believe everything is going to turn out great, and if it doesn't, there will be a solution for you!

I thank God for my experience thus far!

Friday, June 29, 2012

My Experience with an Appraiser

Appraiser was professional and polite. No comments were given on the condition of the houses, didn't bother to ask her any questions, just wanted her to do her job with no interruptions or distractions. She went through every room, took pictures and that's pretty much it. She didn't touch anything or asked any questions.

After 30 minutes, she said she was done and to enjoy our weekend! I can't believe I was worried all week for this... I might be speaking too soon considering I don't know what her report is going to say, but it's all in God's hands. I guess what was worrying me is that I kept reading that appraisers act like they are inspectors and that they check every inch of your property and write you up for anything that is wrong. It didn't seem like that at all! She didn't act like an inspector.

My realtor says that it will take about a week for the appraisal report to come in. I'm actually excited to see how much this property will be valued at. Because I am doing a 203k rehab loan, two numbers will be presented, the current value of my property as-is, and the second number being the value of the property after the items written in the contractors bid.

Thursday, June 21, 2012

203K Streamline Paperwork & LEAD paint

I finally had a contractor fill out all the documents the bank requires including a bid! 5 pages in total and the bid being about 10 pages. I am not done with this loan process yet, but I am not sure if I can recommend the 203k loan to someone that has other options like a regular FHA or conventional loan. Will touch this topic once everything is done.

The great thing about using the 203k loan is the bank loans you money to bring the property to par ..all in one loan (rehab $ and loan amt). The most difficult part for me was finding a licensed, bonded, and insured contractor who wanted to do the work for the "regular amount" it will cost to rehab a house to the minimum standards.

My initial budget was $18,000 and I had to increase it to $25,000! $25,000 might not seem a lot to others, but it's a lot of money and I'm sure that a non-licensed worker can do so much more with that amount. I'm talking about these non-licensed workers who work for the contractors and get all the work done. Contractors negotiate their fees to the penny with their workers, but maximize their profits when charging the client and play such a double standard game.

I suppose business is business...maximizing profit is the "big picture."

When I sent the bid to my loan officer at Wells Fargo he wanted my contractor to include the specific work he was going to do to get termite wood clearance and to include "EPA standards" when painting.

I talked to my contractor about the "EPA standards" and he went on and on about how that's going to cost a lot because we need to get a certified LEAD company to inspect the property and if lead is found, he would literally need to sand everything down to the original wood and paint that wood. He estimated all of this to cost an additional $3,000!

I called my loan officer and he said that the appraiser would call for the above if he sees any paint that is flaking, pealing, etc.

The moment of truth is when the appraiser checks the property out which I hope is soon so I can get it off my back already.

My experience thus far, buying a house is NOT easy!

Wednesday, June 13, 2012

The Nightmare Continues

I met again with the contractor who was giving the lower bid last week and at the end of it all, it didn't turn out well and I am now feeling like I'm starting all over again!

This contractor really wants to help me and said he'll do everything for $18,000, but wanted for me to buy most of the material! After thinking about it a few days, I realized that's not going to happen.  I cannot spend my money like that, I rather finance!

I received the bid from the company that was still working on it and it came in at $27,000. Not bad... but it went over my budget by $9,000. There are a lot of items that I can remove to bring it down to $18,000. I met with them yesterday and the guy really was disappointed I was cutting all of these items. After our meeting, he said he'll talk to his boss, but honestly... he felt like he didn't want to ever see me again. I called this guy today and he told me that he talked to his boss and advised me to go with a smaller company because they are a big construction company and that they do not deal with such small jobs! Can you say rude and arrogant?

We agreed that he'll create a list of the things he can do for $18,000 and see where we go from there. I am not sure where this is going to turn out since "$18,000" doesn't seem to be "enough" for them...they are charging me $275 to install a garbage disposal when they only cost $75...Just wanted to give you an idea of how inflated contractors prices are!

I talked to my loan officer to get an update on my loan and he said that escrow will officially be opened tomorrow. I was always under the impression that escrow was opened when they received my earnest money and contract, but I guess that's not the case.  So much for paying "overnight standard" to mail out my EMC two weeks ago.

Something new I also learned is that termites need to be included in the bid with a 203k loan! At least Section 1 does. Section One contains items where visible evidence of active infestation (termites, beetles, etc.) or infection (wood decay fungi) were found. Termite report that was paid by seller ($75) shows a total of $4,600 for section one! $2,700 for chemicals and $1,900 for wood damage! Isn't this fantastic? Not only was $18k not enough to cover all expenses, but now I have to worry about termite clearance too?

I now understand why so many people rather rent than buy a house! It's expensive buying a house! But I will enjoy all the tax deductions throughout the years and the large cost basis whenever I do sell. I can either come out of my pocket for all of these repairs or finance everything, which I'm going to HAVE to do! I am going to increase my $18,000 budget to whatever it needs to be in order to pay for all the repairs needed in this house. But I'll tell you this, if I have to increase my budget, I don't want to have to do anything myself afterwards, like painting etc. I want it to be move-in ready!

Also, if you are thinking of getting a 203k loan, be advised that you need city permits for ALL repairs requiring a permit. Contractor will need to schedule a city inspection and good luck getting a nice inspector if you have illegal additions.

At the end of it all, this house doesn't feel like a "great deal" considering all the word it requires, but this might be the case for the majority of REO homes.

Friday, June 8, 2012

I am done meeting with Contractors! Finally!

I received a bid from Salvador Hernandez from M.A.S Home Services yesterday and it was outrageous! He quoted me at $54,900 when other contractors have been quoting me between $17,500 to $36,000. And to come to think that he said he doesn't charge too much and that his prices are reasonable! Yeah right!

To date, I have met with four contractors and I am reading to make a decision. See below for bid amounts

- First Contractor: $17,500 (not including redecking, but did include exterior paint for 2 properties & fence)
- Second Contractor: Will have on Monday
- Third Contractor: $36,000 (including $18,000 total to redeck 2 properties, didn't include fence or exterior paint)
- Fourth Contractor: $54,900 (included everything to leave both properties ready except floor, plumbing, or electricity).

I am meeting with the first contractor tomorrow (Saturday) again to work out a plan that I'll be happy with. Again, my budget is $18,000 (which he knows already) and we will work off of that and see how much I can get done. For sure I need to remodel one complete restroom and paint one house. The rest of it is simply cosmetic work like painting the kitchen cabinets, painting inside and changing carpet... nothing dramatic to cost $54,900! What a joke.

I'll post pictures of the before and after projects along with the contractors information when everything is completed. The great thing about him is that he doesn't take days to get back to you like other contractors, he's been doing this for years and can give you a quote right there and then.

I've seen a house this contractor was working on in Gardena and it was beautiful! The house had four bedrooms and 3 bathrooms and a huge yard! He charged them $30,000 to remodel everything, except roof and stucco. He did the landscaping, exterior and interior paint, laminated floor throughout the house, closets, garage repair & door, gate, kitchen, plumbing, electricity and all of the small details like fixtures, door knobs, etc! He left the house ready to move in, and it looked beautiful!

I hope I can make my duplex look half as good as that house. I'm wondering if he can get all of that done for $18,000 considering I won't need plumbing, electricity, landscaping, laminated floor, and garage repairs/remodeling...... We will just have to wait and find out! Meeting with him tomorrow and will let you know how much I was able to get with an $18,000 budget.

Wednesday, June 6, 2012

Another Contractor and the Importance of Following Up!

I met with a 4th contractor yesterday! I now see why people say that a 203k Rehab Loan is a lot of work. The most consuming part is shopping for the best bid. If you know someone who is a licensed contractor who either has insurance or a bond, you'll be fine! Unfortunately, that's not the case for me!

This contractor really took his time measuring everything. It was great, but we were there for two hours... not fun! He measured every single window I wanted replaced even when they looked identical! He was just doing his job and I respect him for that. He didn't give me a quote on the spot because he said he'll need to go through everything in detail to be sure he is giving me the correct numbers. He said I should be receiving his quote late Thursday.

Also, I called the escrow company I'm working with today, Harmony Escrow in Irvine, CA, to make sure they 1) received my earnest money check (EMC) and 2) applied the check to my account. They have received my check, but have not received the sales contract so escrow is not officially open yet. I asked her who is suppose to send them the contract and she said the sellers agent has to send it.

After I talked to her, I informed my realtor about it and he said he'll let the seller know and a few hours later my realtor told me that the seller has sent the contract to the escrow company. I called the escrow company to confirm, and after transferring me back and forth, they were finally able to confirm that the contract was received today at 11:30AM. Nice... I'm glad I called. You see why it's important to make that call?

She said the next steps would be to print out the contract, review them, and after 48-72 hours in the initial step, package is sent to the execution department and then escrow will be open.

Close of escrow is exactly two months from now, August 6, 2012! Exciting exciting!.... Not!... You can't allow yourself to get excited until you have the keys in your hand, at least that's how I feel after what I've been through. I had my very first offer on an amazing deal accepted and I was already throwing myself a parade to celebrate my achievement, for it to fall off of escrow a month later...It's like when you want something so bad and you are making plans on how better your life is going to be once you get this "thing" and you didn't get it.. At this point, your emotions are out of control!

So now, my motto towards my investments projects are "No Emotions, No Pain!" Simple as that!

Tuesday, June 5, 2012

Waiving My Rights, Contractor, and Loan Update

Listing agent wanted me to initial a document that says I received certain reports (e.g., termite report, 9A report, mold report, etc.) even when I haven't received them! My realtor knows that we haven't received them, brought it up to his attention and he said that if I don't initial those forms, we don't have a deal! This is the kind of stuff these brokers/realtors do behind the curtains and never expect to get caught! I wish I was an undercover investigator working for the Department of Real Estate to catch all of the unethical activity these son of a biscuits try to pull!

It's a lot of work once your offer gets accepted and the thought of losing a deal and starting all over is exhausting and a lot of buyers (like myself) are afraid to walk away and will just do as they say. So with that being said.. there I was.. initialing these reports that I have "received."

Another great thing that happens behind the curtains, is that they require you to sign about 3 to 5 forms requesting your rights to be waived for X,Y, and Z! (e.g., sue, no final inspection before close of escrow (COE), and the list goes on). The law is suppose to protect you, but if you waive your right, the law doesn't protect you, simple as that. But let me remind you, if you don't sign these forms, you won't get that house you invested x amount of hours in.. haha what a joke!

Another fun thing I did yesterday was meet with a contractor who said that the roof needs to be re-deck and was charging me $9,000 for an 800 sq. ft. home and another $9,000 for a 900 sq. ft home! (remember.. this property is a duplex). Oh and his company stands on his prices being very competitive! another joke! But on a serious note, I didn't include the roof on my budget. My budget is $18,000, however, with the 203k streamline I can have improvements up to a total of $35,000. I am not hitting that max, because the more money I borrow, the more my monthly payments will be.

Quick loan update: locked a 3.75% interest rate with Wells Fargo for a $215,000 loan amount and 3.5% down. Monthly payment will be $1,504. Whenever you think of buying your first home or your second home, please make your life easier by buying a multi-unit property so you can have the second unit help with your mortgage. In my scenario, I am planning on renting the first unit (2 bedroom/1 bath) for about $1,200 and the remainder $304 will be my monthly payment! Talk about playing your cards right! Ok now check this out... when I move out...I will rent out my unit for about the same price ($1,200) and I will then have $890 left over! Of course this isn't including regular expenses I'll incur along the way (water bill, repairs and maintenance).

Start saving your money so you can find that investment property that will bring in passive income!

Monday, June 4, 2012

Mailing out EMC & Sellers Package

Seller wanted earnest check to be at least 2% of the selling price, it hurts to mail out a $4,100 cashiers check! That's a big chunk of my down payment, let's hope this deal closes. 

Went through the 64 page contract sent by the seller and it sure was a lot to digest! Whoever wrote the contract was really tired because I found A LOT of typos, not to mention documents that had a completely different address. I made my corrections and signed off on every single page. These contracts are pretty much standard in the real estate industry, with slightly changes here and there, but overall, they are all standard. 

Will be blogging about my experience with the contractors next post.

Sunday, June 3, 2012

New Offer Accepted

It took the seller about three weeks to counter my offer. I offered $200,900 on a duplex property with an asking price of $192,900. They are asking for $203,000 instead and they will pay $6,000 of my closing cost! The net cost for me would be $197,000  ($203,000 less the $6,000 BCC). I accepted their terms and they also threw in a 2 year home warranty.

Will be financing with a 203k loan at a 3.75% interest rate. I am now scheduling contractors for free estimates. 

Monday, May 14, 2012

203K Contractor and The End of The Road

This 203k loan experience has been a nightmare. One of the biggest reasons why that is, is because I have NO guidance! My realtor isn't experienced in these types of loans and my mortgage lender pretends to know everything when she doesn't know $**&! With that being said, I've been running around trying to get a contractor who can move fast and give a bid!

For the 203k loans streamline loan, I needed a  bid from a contractor who had 1) A contractors license and 2) Insurance, according to my mortgage broker. I searched online for a contractor and finally found someone that can meet me in a few days. 

I scheduled a contractor who said he'll give me a free bid for Saturday (most were trying to charge me due to the "extensive detail" the lenders require), note it was Wednesday for me then. I was already short in time, but decided not to schedule another contractor because I felt like the bid was suppose to have been submitted last week and didn't want to waste any time!

Finally.. it was Saturday at 8AM and here I am with the contractor going over the things that needed to be fixed. Seriously, this guy had no personality and didn't seem to want the job! I wanted to know where his prices ranged so I asked him how much he'll charge to paint the house, he said between $3,500 - $5,700!! I was so turned off when I heard those numbers and regretted not scheduling another contractor right after him, but again, due to timing, I had to just deal with it! Did I mention that my sales contract said I should have ordered and received an appraisal by the 15th day of opening escrow or seller can cancel sale due to non-performance, let me count the days.... let's see... the 15th day would be...Oh no... this Wednesday coming up!!! I was just meeting with the contractor on Saturday who then said will take him 2-3 days to complete the bid! You can only imagine how frustrated and stressed out I was. I tried putting pressure on him that I needed it sooner because the bank needed it immediately. My realtor jumped in and said "No, that's fine 2-3 days will be okay." I then said don't you remember the bank needed it immediately? (I didn't have a lender yet, but as I mentioned, trying to put pressure on the contractor). My realtor then replied and said "Trust me, we will be fine!" I was afraid my realtor would say, "What are you talking about, we don't even have a bank yet!" I guess we can say I escaped that one!

I ended up going back home after meeting with the contractor and just waited patiently for Tuesday (contractor said he'll have bid ready by then). I called the contractor on Monday to ask him what the total is and how's it looking so far. He replied by saying he will be working on it tonight! Seriously?? He told me these bids take "so much time" and that he'll need at least "2-3 days" and here he is telling me on a Monday evening, a day before Tuesday, that he'll work on it tonight? I thought these things take "so much time!" Seems like everyone has to lie to get by nowadays. I was so mad, but again due to time constraints I felt like I had no other choice and keep going with it.

Tuesday morning arrives, and about 10AM he e-mails me a bid for $29,000 with no description. We agreed to only paint the house and remodel a room! I called him immediately and told him that I needed a description and he said he'll e-mail it to me in a few minutes. Minutes passed....nothing, hours passed...nothing! I have my realtor asking me if I've received the bid already and all I can say is, no. I kept calling him with no success and I eventually was fed up of it, that I ended up calling someone from Craigslist who was able to meet me at the property in 30 minutes! I told my boss what was going and that I'll be back....  I left work to meet the contractor who wrote a bid for me right there on the spot! Talk about wanting the job! I was fed up with the whole thing that I had this new contractor write me a bid to remodel all 3 units and we negotiated to $30,000! Had him sign off on the contract, drove back to the office, scanned all the documents and at last, I emailed them to my realtor and my mortgage broker!My job here was done!

After I submitted the bid, I now have to wait for my mortgage broker to send my package to a "lender pool" and that alone took 24 hours. At this point, it was Thursday and there was 6 calendar days (including weekends) to order and receive an appraisal. If it was up to me to order an appraisal, I would have done it already, but the bank would have not accepted the appraisal I would have paid for... which is understandable.

To make a long story short, my mortgage broker realized that we weren't going to be able to close on time and requested for my realtor to request an extension of at least three more weeks to close escrow. My heart dropped when my realtor called me to  tell me what was going on. At that moment, I was at a house that my contractor has been working on and wanted to show me his work! I guess you can say I couldn't get the call at a more perfect time. After all the tears, shattered hearts, the seller cancelled our offer due to appraisal contingency not being met on time.

We submitted a second offer with an approval letter from Wells Fargo, but it was rejected after a few days due to the "many contingencies the bank listed." One of the biggest lessons I learned from all of this is to NEVER go with a mortgage broker! They only request additional items upfront compared to going directly with a lender. When you submit paper work, the mortgage broker has to review it (which takes a few days or) and then the package is submitted to the bank of their liking (I am sure is the bank who is giving them the highest referral fee or interest rate spread!). As you can see, there are extra (unnecessary) eyes seeing your paperwork, of which can be eliminated and save you time! There might be good mortgage brokers out there that can get the job done, but unfortunately, I wasn't lucky enough to have work with one like that.

I am now looking at other properties and trying to be more prepared this time around.... I will one day blog about finding the right house and I hope you can find that right house too and be successful with a 203k loan.

Saturday, April 21, 2012

Home Inspection Experience

So much has happened these past two weeks. As a recap, I opened escrow April 10, 2012 and it will officially be three weeks this upcoming Tuesday. To be honest, nothing happened these past tho weeks, but a lot of running around and learning. I've learned that it is sooooooooo important to have an inspection and a contractors bid the moment you find out your offer was accepted. With a 203k Streamline Loan, the lender needs a contracts bid (who is licensed and insured) and they need it fast! When my realtor told me I needed an inspection and a contractors bid, I was on it! I was having a hard time finding someone because none have worked with a 203k loan before and although it is not required that they have, it would make the paperwork process much easier.

The first person I scheduled was an inspector and guess what???? She said she had a contractors license! You know what that means? I do not have to meet anyone else to get a bid!! I can kill two birds with one stone! This is wonderful I am doing great so far. Let's call my inspector Tina the TIGER! Ok - so my realtor and I met with Tina the TIGER at the property and we went through every inch of the house which was great. We started in the front of the house and located the three gas meters which were under the house (my boyfriend and I couldn't find them on our previous visits) and saw that everything looked good. We moved along the property and started to pin point things that will be needing attention in the future, etc, but so far nothing big. She went into the basement and noticed that underneath one of the restrooms there was water damage and possibly, terminate damage! The seller normally pays for a terminate inspection (which would be performed later) so I wouldn't know if it's terminates or water damage until then.

To summarize everything, the house wasn't in bad shape. The roof seemed new and there was a few outlets that were not grounded, but the back duplex was all ground, which was great! No electrical work needed there! The real problem laid underneath the house....the pluming! Of course, everything was galvanize with a few parts being copper. Even with that discovery, I was still very excited about this property. I can already see my golden retriever running all through the yard seeing what he can chew!

After we were done inspecting the property, she gave my realtor and I her business card saying that she doesn't include her license number in her business cards because people use it! I was disgusted when she said that, I just can't believe people would do such a thing! As we talked more, I asked her if I can get her license number for my records, and of course she said..."Well... in California inspectors aren't required to be licensed." I was completely shocked that she lied! I had also asked her on the phone and before she answered me she paused and said "Yes, I am a licensed inspector." The other big question remained....

me: "Are you a licensed contractor?"
Tina the TIGER: "I do have it, but it expired back in the 90's"

Ohhhhhhhh great! The lies! I was disappointed that she lied, but I didn't give myself time to react towards her, but rather trying to find a solution to my dilemma that 1) I paid $395 to an unlicensed inspector and 2) I don't have a bid! She still had the nerve to say "You aren't giving this report to the bank right?" I replied with "they are the ones that requested one!" she said "Oh, Sh**t" I asked her what was the big deal, and she said that she didn't want the bank to think the property needed too much work.

On the good note, my inspector was very respectful, timely, and detailed. She not once try rushing me out of the property. I later found out that California does not require inspectors to be licensed, so she was telling the truth about that at least.

She provided me with a detailed inspection report two days later (some inspectors normally complete it the next day) that included pictures which was fun to look over at a later time since the pictures helped refresh my memory. I will try to see how I can upload the inspection report to my blog so you can all get an idea of how an inspection report looks like.

If you are buying your house for the very first time, it is nice to get an inspection because you get to learn so much of the property you are buying. However, I also believe that if an inspection report is not required, do not get one (unless you want to). It is best to get a contractor to inspect the property and tell you what needs to be replaced, etc. Just a though to help you save money in this costly transaction.

The next few days I will be focusing on getting contractor bids, let's hope they aren't filled with lies!

Monday, April 16, 2012

FHA203K Loans

With all the research I did regarding Fannie Mae Homepath Financing (FMHF), I will not be financing my purchase with that type of loan - Instead, I'll be using FHA 203K Streamline. The only reasons why I will not be using FMHF is because they will only finance 75% of my home purchase due to it being a multi-family property.

My attention will now turn to 203k loans! These loans will finance repairs needed AND wanted on your new home! Luxury repairs such as a pool, spa, etc., are not allowed. You will also need a person who is licensed to do the repairs. This type of loan should definitely be considered when you walk into a house that needs a lot of repairs. A lot of buyers are turned off when they see an ugly house and simply just walk away. A savvy person will NOT be turned away mold this "ugly" house into something you love!

There are two types of 203k loans, standard and streamline. The standard loan is the more complex one since repairs will be over $35,000 with no limits! (The only limit will be how much you were approved for).
You will need a consultant for your 203k standard loan who will begin working after escrow closes. The second type of 203k loan is streamline. Streamline is for repairs between $5,000 and $35,000. A consultant is not required, but again, you cannot do the repairs yourself unless you are licensed.

I will be going with a streamline 203k loan and will be financing the major repairs that the house needs (roof, floor, plumbing, electricity). Anything in addition to that, I will repair with my own money instead of adding it to my loan as I do not want my monthly mortgage payments to be too high.

I've been in communication with my escrow officer and she is really good. I love when someone can respond to my e-mails the same day. My escrow officer replies to me in minutes! She leaves no time for me to worry about anything. I love it! I sent my $1,000 earnest check last week to open escrow and what they are waiting for now is the loan documents. What my mortgage broker said I needed to do was get bids from different contractors for the repairs required on the home. I am scared to know what damages this house has.

I am glad that the listing agent was kind enough to add in the addendum that Fannie Mae will pay up to $4,000 in repairs required by the lender. These "required repairs" are health and hazard issues such as:

1) Broken windows
2) Double strapped boilers
3) Rails missing in stairs
4) Visible flooring (such as rug missing, etc.)

The house needs to be "liveable" and therefor all utilities (water, gas, electricity) need to function properly.

I will be contacting 203k contractors this week to get bids on the work required and will be letting you know how that goes. Also, to save money, have a contractor tell you what is FHA required or what are "health and hazard" issues of the property instead of an inspector. An inspector will just pass through the house and call out all things that need to be looked by a professional, such as a plumber, electrician, etc., because "he" isn't one... You will then need to pay the inspector, all professionals he required (electrician, plumber, etc) AND in top of that you'll still need to get a contractor to see how much those repairs are going to cost! To make it simple just pay the contractor who will tell you what needs to be fixed AND give you a price of how much you can fix it for... so much more informative and valuable.

Thursday, April 5, 2012

What Happens After The Week Your Offer Gets Accepted...

To make this short, nothing has happened in one week. I am not sure what the normal waiting process is in closing an REO* property, but I really want to start working on this house. It needs a lot of updates and repairs, but I really enjoy getting my hands dirty. I've been spending time researching the best colors to paint houses and how to make them more "cozy." One tip is that lighter colors makes a room look spacious.

[*REO - property that was foreclosed and now owned by the bank]

If you are going to buy a multi-unit* homepath property please be aware of the following financing problem. Fannie Mae has specific lenders who provide "homepath financing" with as low as 3% down payment, no private mortgage insurance** (PMI), and no appraisal***. All this sounds great, but they charge higher interest rates AND the 3% down rule only applies to single residential homes and it needs to be owner occupant.

[*multi-unit - more than one living unit in one lot]
[**PMI - Insurance on your mortgage in case you default on your pymts. This seems like something the banks should pay!]
[***Appraisal - A person who values the property to see how much it is worth and does this by comparing recent sales in the neighborhood along with other analysis]

I invested a lot of time researching this because all the banks I called quoted me at 20% down! It would be nice to have that much money, but I don't! I only have as much as 5% to put down and a little more cushion for closing cost (being quoted at $6,500) and repairs. I called almost every lender listed on Fannie Mae's website and they were all quoting me with about the same down payment rate, I started to panic! It's unfortunate when you fall in love with a house and cannot find a lender for as little as $185,000 with a low down payment and considering that it is my first home, I'm going to be living there, and my credit score is 730! I would of thought lenders would want to marry me!

Fannie Mae allows their special lenders to finance a multi-unit property up to 75% and a single residence property up to 97%. The good thing is that private companies make their own rules and can finance up to whatever amount you qualify for without having to follow Fannie Mae or any other bank rules (credit unions, private banks are more flexible).

Just so you know, other loan types I looked into are FHA (house needs repairs, wouldn't qualify) and conventional (higher origination fees). Although homepath financing has slightly higher interest rates, I am glad I do not have to pay for PMI or for some appraisal guy to come value the property. A new thing I learned is that since this property has 3 units, I would have had to pay for 3 appraisals! That's insane!

Tomorrow (4/6/12) will officially be one week since Fannie Mae accepted my offer. This deal suppose to close at the end of May and I am praying everything goes smoothly. I am open to any questions or comments you may have. You can also e-mail me if you need to. I'll keep you all posted!

Tuesday, March 27, 2012

My Offer Was Accepted!

I am 25 years old and I've been saving money my entire life to one day say, I bought a house!!! Ok, I should really say my offer has been accepted and that if everything goes well, I would have bought a house. I know there are a lot of people getting into real estate so this blog will be just about that - my experience, tips, advice, etc.,

I've been looking for a house for about a month and made five offers thus far. My brother is a realtor and you would think that I have insider tips, but the truth is, it's been difficult working with him. He doesn't move as fast as I would want him to and that bothers me a lot. When you find a house online, you want your realtor to move on it in the next second or so....but they don't... and they don't.. and they call to find out an offer has been accepted. The two answers I would hear a lot are "This house has a lot of offers" or "The seller has picked an offer already." I just wanted to hear "Yes, this house is still available and waiting for your offer." And guess what? I did hear that answer, at the right time for the right house! And you will be able to, just have to be patient with a lot of prayer! Prayer is key and so is God's will.