Friday, September 12, 2008

big means BIG

Many of you may have done me the favor of reading my post about God being big in our home buying adventure. Little did I know at the time of writing that post that there was a sequel already in the works. It never ceases to amaze me how I limit God. But through this process my appreciation for his absolutely amazing "bigness" has been firmly established.

Starting where I left off, we were just over 2 weeks out from close, and everything was coming together smoothly. Then, rather suddenly the floor dropped out from under out feet! Christopher received a phone call a mere week before we were slated to sign escrow papers that our financing had some to a screeching halt. A necessary third party component to our mortgage was denied. YIKES!

I interrupt this news report to give you the following: For those of you, like me, who believe ARMs are the appendages attached to the side of your body you can read this little paragraph for a fuller explanation of the details. Apparently when you do not invest at least 20% of your own capital into the purchase of a home you are required to carry a special insurance policy with the lender as your beneficiary. This special insurance is called Private Mortgage Insurance, or PMI. Basically, statistics show that those people financing more than 80% of the purchase price are more likely to default on their loan. So PMI is issued until you have paid into your principle 20%, or your home's value has increased enough to appraise 20% higher than the original purchase price. PMI is standard, and if your lender accepts your financing package and is in the process of underwriting your loan then PMI is generally guaranteed. It was certainly nothing we, nor anyone else, anticipated giving us a problem. Now I return you to our regularly scheduled program.

Our PMI was denied. Our lender, who owns his own mortgage company and has worked in this field for decades was shocked! Our credit portfolio made a very strong statement of good credit risk, and his investors were excited to give us our loan. But the PMI company, Radian, said our appraisal was inaccurate, and placed the property far above actual market value. We could not understand what they meant. Our appraisal came back 15k over our offer and stood very solidly in the middle of the comparisons used for the context of what the market could bear. The only statement Radian could give for the reason of denial was the decision to mark our finished garage as a benefit to the property value. Apparently the truth is that finished wall board, double paned windows, stained wainscoting, and upgraded louvered garage doors should have been noted as a liability. That makes sense. Who wants a pretty garage? And anyone mentally well would willing pay over 15k to have the garage reverted to open wall studs, old wood garage doors, single light bulb fixtures hanging by chains, and rickety single paned windows. But I digress. The main point is that we were sitting dead in the water.

Of course our first reaction was to panic. What do you MEAN we have no financing? What do you MEAN we don't have a loan? What do you MEAN? We were told that we could go with a government subsidized program and be guaranteed PMI, but we would need to deal with some of the nuances from the program. Christopher continued to feel strongly that buying our home was something we were doing to get away from government intervention - financing with them would be a somewhat major step in the wrong direction. Our lender told us that he might be able to work something out if we came up with a more substantial down, and that he would also "do the ole hale Mary pass", where he took our application and put it back out to his investors to see if another set would bite. The theory was that a new set of investors might allow us to get a different PMI company. When we asked about Radian changing their minds we were told that was an impossibility. Apparently our lender doesn't know my God.

Friday came and we were no closer to hearing anything, but our nerves were shot. We kept holding onto the fact that the bible says God brings all things to completion which he starts, and we knew that God had started this home-buying adventure.

Saturday was awful. In an attempt to help support the original appraisal our lender went ahead and issued a government appraiser to the site. This appraiser got in touch with the listing agent, who then got in touch with our realtor. Our realtor called us to say that the listing agent was distressed over what appeared to be a "bait and switch" on our behalf, namely one of the largest components to the government subsidized program is the agreement of the seller to pay 1.5% of the selling price into the program for future funding of other candidates. This clearly affects the sellers bottom line profit and can not simply be added without negotiations. The listing agent said we would need to renegotiate the entire contract. YIKES! Later than day our own agent called us back and tried to assure us that things were going to get worked out. She realized we might have felt a little alarmed at her initial call, and felt badly that she may have scared us. It was nice that she called, and it was nice that she encouraged us, but the fact was that we knew we didn't have any money to buy the house and no amount of pleasantries changed it.

Sunday we get a call before we head out the door for church from our lender that he thinks we may have a deal, with the original loan application, but he will be in touch with more when he gets it.

Monday afternoon our lender announces that he has heard back from Radian and they have changed their opinion on our appraisal! They accepted our PMI, and the investors are still eager to fund our loan. We are in business!

Tuesday morning Christopher gets another call from our lender that because the original loan stopped in the underwriting process he had to restart the entire process again. This has caused some thins to be reevaluated, including interest rates, which had dropped since we first locked. To our utter amazement we were told that because of the PMI debacle the new loan configuring would take these falling rates into account and, along with an increase in our credit score since the initial application, we would end up with a below 6% 30 year fixed mortgage. Speechless would be an understatement. Apparently God wanted to make sure that the previous humanly impossible circumstances were made clear by yet again making the impossible the very reality of our lives.

With our loan in our back pocket, our signing date set for 9/11, and a crew of people lined up to start work on the house once we closed, Christopher and I felt like nothing more could touch us. You will need to read the rest of the story in the next post because, we are beginning to learn, there is always a sequel.

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