Tricky situation regarding mortgage and house (Union, Head of the Harbor: apartment complex, rental, crime)
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I just don’t get you, OP. I don’t blame the lenders for thinking you are a bad credit risk. Why would someone with your income have ANY credit card debt? Why dont you have a higher credit score? You seem very irresponsible with money.
It is what it is, right now. What I would do is make sure this house is not too expensive for you. Are the property taxes reasonable? If it is an affordable house, get an ARM, as someone suggested, get your financial s*** together, and then refinance into a good fixed rate.
Basically at 4.125 with property tax the monthly payment would be close to 3750 a month
With 5.125 and property tax it would be 4150.
My monthly rent is 3800 plus 500 in parking.
The whole reason for shopping for a home was that I realized that I could buy a house with the amount of money I'm spending in rent and parking. Plus we would have more space for the family.
Credit debt cause we had to relocate back from Seattle to NY, plus medical bills from my wife's pregnancy before etc. Plus child support, plus student loans plus etc... And yes I am irresponsible with Money but I'm not debating about that.
I'm just wondering if I should just walk way from the 10K and just keep renting or just go for it.
Last edited by kekela98a; 10-12-2019 at 09:53 AM..
Hoping. I hate that word when it comes to financial matters. I'm a bit of a control freak which is why we took the definite 2-month penalty over the possible 0-6 month penalty. Even at 4.125 you would be exposed to $50k rent. Needing more space doesn't sound like a $50k crisis to me but that's your call. It just seems like you did not do your due diligence here. Did you talk to multiple brokers or go with the first one you called? Did you do a pre-qual before signing home contract? We did and our broker told us our credit score and expected rate before we committed. Did you pull your own credit reports before househunting and identify the areas for improvement? Btw, we found the credit scores that banks and cards provide you are inflated, at least relative to scores for mortgage loans. There are dozens of targetted scoring algorithms.
I did pre qualified and this broker was someone I used from my previous home purchase. He's been in the mortgage business x 30 year etc.
Basically at 4.125 with property tax the monthly payment would be close to 3750 a month
With 5.125 and property tax it would be 4150.
My monthly rent is 3800 plus 500 in parking.
The whole reason for shopping for a home was that I realized that I could buy a house with the amount of money I'm spending in rent and parking. Plus we would have more space for the family.
Credit debt cause we had to relocate back from Seattle to NY, plus medical bills from my wife's pregnancy before etc. And yes I am irresponsible with Money but I'm not debating about that.
I'm just wondering if I should just walk way from the 10K and just keep renting or just go for it.
Yes, you can have a nice house for less than an apartment plus contain your future costs. I get that. But you're not trading one for the other, you're potentially having both for up to a year. Your potential rent liability is $43-48k depending on exact dates. You hope it will be 1-3 months but consider this. If landlord gets a prospective tenant and has two vacant units, your leased unit drawing rent and an unleased unit not drawing rent, which one do you think he will lease to the new tenant? Yours will always be at the bottom of the list of unleased vacants. Is there a waiting list?
You hope it will be 1-3 months but what if it's not? Can you comfortable make the house payment AND the apartment rent? If not, you are putting yourself at great financial risk when you default on the rent and get sued, and you will get sued for that kind of money with your kind of income.
The red flag here is you *want* something better - your own home and more space - but can't wait until the time is best to have it. Maybe it's a one-time thing or part of a pattern. Most people I know in deep debt is because they have no spending discipline. They can barely pay their bills but they *want* a new car so they finance it 72 months or they *want* a Fiji vacation so they put in on a credit card.
I did pre qualified and this broker was someone I used from my previous home purchase. He's been in the mortgage business x 30 year etc.
So he should have given you your credit score then. I totally get using someone you know and have previously used but it should still be a competitive process to secure yourself the best deal. In that case, I would give my old broker the first call, and the last call to match, but loyalty only extends so far. If my old broker offered 5.125 and a new reputable broker offered 4.125, all else equal I'll go with the new one.
Talk to your attorney. You stated that your contract has a mortgage contingency clause for conventional financing. If the bank issues you a declination, you should be able to get your deposit back.
OP, I'm curious as to what your wife's feelings about this situation are. You mentioned earlier that the "only reason why I got the house was because my wife needed more space for our family." Is this essentially a happy wife/happy life situation, i.e., you feel under the gun to get something ASAP regardless of financial risks or downsides?
Not meaning to pry but again am curious: is your wife a stay at home mom? If so, and if you're coming home every night to an unending refrain of "I can't stand living in this apartment!", I can see where you would be under pressure to change that situation.
As far as your mortgage broker's expertise, well, when it comes down to dollars and cents every person who works on commission is in it for themselves -- not for you. Over the decades I've learned that lesson the hard way. Especially when it comes to anything that concerns the buying or selling of real estate. A cutthroat business if ever there was one.
And as @oceangaia has said, there are factors you can't control. I once found myself in a situation of having to carry two houses because the buyer of my house died between the signing of the contract of sale and the closing, and I was already in contract to buy a house that had taken me 3 years to find. It took me a year to find another buyer for my house despite slashing the price multiple times, because Superstorm Sandy also hit that area in the interim and people got scared of buying anything south of Rte 27A. So you never know. Remember Murphy's Law.....
OP, I'm curious as to what your wife's feelings about this situation are. You mentioned earlier that the "only reason why I got the house was because my wife needed more space for our family." Is this essentially a happy wife/happy life situation, i.e., you feel under the gun to get something ASAP regardless of financial risks or downsides?
Not meaning to pry but again am curious: is your wife a stay at home mom? If so, and if you're coming home every night to an unending refrain of "I can't stand living in this apartment!", I can see where you would be under pressure to change that situation.
As far as your mortgage broker's expertise, well, when it comes down to dollars and cents every person who works on commission is in it for themselves -- not for you. Over the decades I've learned that lesson the hard way. Especially when it comes to anything that concerns the buying or selling of real estate. A cutthroat business if ever there was one.
And as @oceangaia has said, there are factors you can't control. I once found myself in a situation of having to carry two houses because the buyer of my house died between the signing of the contract of sale and the closing, and I was already in contract to buy a house that had taken me 3 years to find. It took me a year to find another buyer for my house despite slashing the price multiple times, because Superstorm Sandy also hit that area in the interim and people got scared of buying anything south of Rte 27A. So you never know. Remember Murphy's Law.....
We have a 2.5 year old toddler and another baby coming on the way. My wife is working part time and she has mentioned to me several times that it would be nice to have a larger house with a backyard for our dog and expanding family.
I understand the rental situation I'm in. It's an area where it'll rent pretty quick due to proximity to the subway and shopping (costco downstairs) and in the future Ikea across the street.
To set aside the Monday morning quarterbacking and focus on what to do going forward, you listed three options.
1. Delay closing and *hope* for a better credit score to get 4.125. Seller might not agree to it.
2. Cancel contract and lose $10k earnest money. As someone posted, look closely for ways to cancel and avoid this.
3. Complete the deal and refinance later. Might cost $5k refinancing costs.
Option 1 and 3 both leave the current rent hanging over your head. To deal with that you could see about reletting unit or leasing house for a year. Either one could become a massive headache. Option 2 is an expensive $10k hit if you can't find an out but is the lowest fized liability. It comes down to how much you want this house and how much you're willing to risk. I don't think I would have put myself into this situation but if so I personally would take Option 2, work over the next six months getting my credit score as high as possible, shop lenders, get pre-approved (not just pre-qualified), then househunt next summer ready to pounce.
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