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.