Loan Frustrations
I just got rejected for the loan for the house. I'm not even joking.
So much has happened the last several days (and weeks and months), but I will try to summarize here. But first things first...I HATE debt. I hate it. I have it on houses, and the goal is to pay it off as quick as possible. 30-year loans are an anathema to me. 15-year loans are a starting point...with the goal of paid off in 11-12 years.
Banks for me are a necessary evil, but it's quite possible I have simply bought in to the American ideology of debt. If you ever research the history of 30-year mortgages, it's a sad tale. You've heard, "You don't work, you don't eat." Well, in decades past it was, "You don't have money, you don't build."
So have I bought into the debt ideology thinking it's simply necessary?
"Let no debt remain outstanding, except the continuing debt to love one another..."
I notified my bank on February 16 that I had bought this farm...75 days ago. Due to "the busy spring buying season," I was told the conventional 15-year mortgage could not be completed in time for the closing date set 30 days later. But I was assured by my bank that I was all set for the approval. They even locked in a rate.
But in order to honor my contract for the closing within 30 days, the bank said I should move forward. "But you shouldn't even have to make a payment on our bridge loan before the conventional loan is wrapped up."
I made the first payment on this bridge loan a couple of days ago, of which over $1000 went in interest. Yes, that's right, I lost over $1 an hour on this bridge loan that was never supposed to have happened. I was not happy. The bank's delay was now costing ME money...significant money.
The bank's delay took so long that my last two month's bank statements that were required...were required AGAIN!!! Unbelievable.
And then two days ago I was asked by the bank if I had made contact with the appraiser. No, I have not, because I was never told to do so, nor even knew that I had to. I demanded the number immediately (doing the bank's job for them). Well, yesterday morning, the appraiser called...
I answered, "This is Andy."
"Hi, this is the appraiser that never called you."
Hmm, that was a really odd way to start out a conversation. Very unprofessional. But I was only just learning about his un-professionalism. He had obviously been contacted by the banker since he knew he was late. He told me he had lost my number. Again, unprofessional. If you lose a number, you contact the bank to get it back.
We scheduled an appointment for the following day (today). I told him to watch out for demo materials in the two rooms I had started. He then informed me that if I had started the remodel already, that he couldn't complete an appraisal.
I sent an email to my banker asking about his comments, and the banker confirmed his comments. FannieMae loans are not given if the house is not complete (as it was when I bought it and the several weeks surrounding it). Not only that, but the banker immediately cancelled the loan request and said I could only get the 3.625% loan once the ENTIRE remodel was complete. He asked how many days I had planned for that to happen. I told him one year.
Sigh.
So now my "guaranteed" conventional 3.625% loan is at a whopping 5.5% commercial rate...all because of a delayed appraisal by the bank...or the appraiser. Had the appraisal been done anytime before closing or even a couple of weeks after closing, none of this would be an issue. NONE of it. Had the appraiser not lost my number, or lost it and asked for it back, or...or...NONE of this would have happened.
But here I am losing money because an appraisal was not done when the house was not in remodel shape. What am I supposed to do, sit on my thumbs? I have now owned the house for 49 days. I asked the appraiser when he was first given notice to do an appraisal on my home, and he literally refused to give me the answer. So unprofessional again.
If that doesn't sound shady, I don't know what else does.
I texted the appraiser tonight to cancel the appointment for tomorrow after learning the loan was cancelled, and he said, "No problem good luck with the remodel and I'm sure they'll call me when you have [it] completed good luck."
My response? "I hope not."
He was so smug, almost implying that he gets so many requests from the banks (he had four to be done today including mine) that he doesn't care if he is timely on one. The attitude was, "They need me, so who cares that I just caused you a $25,000 hit in interest. I still get tons of money!"
I was not happy.
So today, I received a call from the bank, and it is confirmed: I am going to be punished for the lengthy loan process on their side. The bank is "graciously" knocking my current bridge-loan commercial rate from 5.5% down to 5.0% and actually thinks that should make me happy. The reality is that my 3.625% "guaranteed" loan just got increased to 5.0%, no small sum. As if to try to appease me, they said, "We will even do an interest-only loan." That is about the biggest slap in the face I could get!
I HATE LOANS. And an interest-only loan is the scum of loans! What was supposed to make me happy in their minds actually did the exact opposite! Here, pay us money, and have nothing to show for it! You are literally burning money and getting nowhere.
I asked what it would take to pay down the loan. "Uhhhhhh, sure, I guess you could do that."
I am so unhappy. So much of financial planning involves using these numbers AHEAD OF TIME in budgeting for the remodel, and after blowing through $1000 unexpectedly already due to the exorbitantly-long loan process, I now have an additional $105/month (or $18,000 over the course of the loan) in interest. That changes everything. $18,000 goes a long way! Of course, I don't plan to keep the 5.0% loan for the 15 years, but this is today's current numbers.
I have now asked Marine Bank to give me the date that the appraiser was first notified since the appraiser won't do it.
But even more than all of these numbers, the game plan has now been forced to change. In order to get a conventional loan, I have to have all of the remodel work completed. ALL of it. Because I had planned to spend a year or so in the remodel, I would now be burning through that excess in interest that whole time. (Or in other words, the bank will take an additional $1260 a year in interest from me plus the $1000 in interest in the "un-needed" bridge loan). $2260 goes a LONG way in dry-walling a room or two.
I am so unhappy.
Had I known any of this, I would have simply asked to push back closing a few days until my bank got their mess in order. I just trusted them to be concerned about me, but the reality shows differently.
So now my year remodel is going to try to be pressed into a few months. I am going to have to do everything possible to sell my current house (probably dropping it in price more than I should...but realizing that a sale stops the extra 1.375% in interest I am now given on my new home) in order to pay a contractor to do the entire remodel fairly quickly. I already have a meeting set up with two of them for next week.
Gone are the days where I will be re-doing the house myself...taking down a room each day. I simply don't have time for that anymore. Every day that goes by means a money loss for me (higher interest rate) instead of a money savings for me (doing the work myself). The bank has really forced my hand on this one.
A typical appraisal is usually finished within seven days of being ordered. I am currently at 75 days since I first notified the bank of my purchase of the property.
And I am the one being punished.
It's almost driving me to by-pass banks altogether.
So much has happened the last several days (and weeks and months), but I will try to summarize here. But first things first...I HATE debt. I hate it. I have it on houses, and the goal is to pay it off as quick as possible. 30-year loans are an anathema to me. 15-year loans are a starting point...with the goal of paid off in 11-12 years.
Banks for me are a necessary evil, but it's quite possible I have simply bought in to the American ideology of debt. If you ever research the history of 30-year mortgages, it's a sad tale. You've heard, "You don't work, you don't eat." Well, in decades past it was, "You don't have money, you don't build."
So have I bought into the debt ideology thinking it's simply necessary?
"Let no debt remain outstanding, except the continuing debt to love one another..."
I notified my bank on February 16 that I had bought this farm...75 days ago. Due to "the busy spring buying season," I was told the conventional 15-year mortgage could not be completed in time for the closing date set 30 days later. But I was assured by my bank that I was all set for the approval. They even locked in a rate.
But in order to honor my contract for the closing within 30 days, the bank said I should move forward. "But you shouldn't even have to make a payment on our bridge loan before the conventional loan is wrapped up."
I made the first payment on this bridge loan a couple of days ago, of which over $1000 went in interest. Yes, that's right, I lost over $1 an hour on this bridge loan that was never supposed to have happened. I was not happy. The bank's delay was now costing ME money...significant money.
The bank's delay took so long that my last two month's bank statements that were required...were required AGAIN!!! Unbelievable.
And then two days ago I was asked by the bank if I had made contact with the appraiser. No, I have not, because I was never told to do so, nor even knew that I had to. I demanded the number immediately (doing the bank's job for them). Well, yesterday morning, the appraiser called...
I answered, "This is Andy."
"Hi, this is the appraiser that never called you."
Hmm, that was a really odd way to start out a conversation. Very unprofessional. But I was only just learning about his un-professionalism. He had obviously been contacted by the banker since he knew he was late. He told me he had lost my number. Again, unprofessional. If you lose a number, you contact the bank to get it back.
We scheduled an appointment for the following day (today). I told him to watch out for demo materials in the two rooms I had started. He then informed me that if I had started the remodel already, that he couldn't complete an appraisal.
I sent an email to my banker asking about his comments, and the banker confirmed his comments. FannieMae loans are not given if the house is not complete (as it was when I bought it and the several weeks surrounding it). Not only that, but the banker immediately cancelled the loan request and said I could only get the 3.625% loan once the ENTIRE remodel was complete. He asked how many days I had planned for that to happen. I told him one year.
Sigh.
So now my "guaranteed" conventional 3.625% loan is at a whopping 5.5% commercial rate...all because of a delayed appraisal by the bank...or the appraiser. Had the appraisal been done anytime before closing or even a couple of weeks after closing, none of this would be an issue. NONE of it. Had the appraiser not lost my number, or lost it and asked for it back, or...or...NONE of this would have happened.
But here I am losing money because an appraisal was not done when the house was not in remodel shape. What am I supposed to do, sit on my thumbs? I have now owned the house for 49 days. I asked the appraiser when he was first given notice to do an appraisal on my home, and he literally refused to give me the answer. So unprofessional again.
If that doesn't sound shady, I don't know what else does.
I texted the appraiser tonight to cancel the appointment for tomorrow after learning the loan was cancelled, and he said, "No problem good luck with the remodel and I'm sure they'll call me when you have [it] completed good luck."
My response? "I hope not."
He was so smug, almost implying that he gets so many requests from the banks (he had four to be done today including mine) that he doesn't care if he is timely on one. The attitude was, "They need me, so who cares that I just caused you a $25,000 hit in interest. I still get tons of money!"
I was not happy.
So today, I received a call from the bank, and it is confirmed: I am going to be punished for the lengthy loan process on their side. The bank is "graciously" knocking my current bridge-loan commercial rate from 5.5% down to 5.0% and actually thinks that should make me happy. The reality is that my 3.625% "guaranteed" loan just got increased to 5.0%, no small sum. As if to try to appease me, they said, "We will even do an interest-only loan." That is about the biggest slap in the face I could get!
I HATE LOANS. And an interest-only loan is the scum of loans! What was supposed to make me happy in their minds actually did the exact opposite! Here, pay us money, and have nothing to show for it! You are literally burning money and getting nowhere.
I asked what it would take to pay down the loan. "Uhhhhhh, sure, I guess you could do that."
I am so unhappy. So much of financial planning involves using these numbers AHEAD OF TIME in budgeting for the remodel, and after blowing through $1000 unexpectedly already due to the exorbitantly-long loan process, I now have an additional $105/month (or $18,000 over the course of the loan) in interest. That changes everything. $18,000 goes a long way! Of course, I don't plan to keep the 5.0% loan for the 15 years, but this is today's current numbers.
I have now asked Marine Bank to give me the date that the appraiser was first notified since the appraiser won't do it.
But even more than all of these numbers, the game plan has now been forced to change. In order to get a conventional loan, I have to have all of the remodel work completed. ALL of it. Because I had planned to spend a year or so in the remodel, I would now be burning through that excess in interest that whole time. (Or in other words, the bank will take an additional $1260 a year in interest from me plus the $1000 in interest in the "un-needed" bridge loan). $2260 goes a LONG way in dry-walling a room or two.
I am so unhappy.
Had I known any of this, I would have simply asked to push back closing a few days until my bank got their mess in order. I just trusted them to be concerned about me, but the reality shows differently.
So now my year remodel is going to try to be pressed into a few months. I am going to have to do everything possible to sell my current house (probably dropping it in price more than I should...but realizing that a sale stops the extra 1.375% in interest I am now given on my new home) in order to pay a contractor to do the entire remodel fairly quickly. I already have a meeting set up with two of them for next week.
Gone are the days where I will be re-doing the house myself...taking down a room each day. I simply don't have time for that anymore. Every day that goes by means a money loss for me (higher interest rate) instead of a money savings for me (doing the work myself). The bank has really forced my hand on this one.
A typical appraisal is usually finished within seven days of being ordered. I am currently at 75 days since I first notified the bank of my purchase of the property.
And I am the one being punished.
It's almost driving me to by-pass banks altogether.
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