In the Beginning

Going into the process of buying a home, I had no real understanding of the process and no savings (which means no down payment). After talking to friends, family, and coworkers, I called a Realtor that had been referred to me by a coworker who recently purchased a home. In talking with my new Realtor, I found that my lack of down payment and my first-time home-buyer status would require two things: An FHA loan, and OHFA down payment assistance. My first step would be to call a lender and get preapproved.

My Realtor recommended a lender at the mortgage company owned by the real estate company I went with. This was a nice idea for me, because I really felt that they were able to communicate and share information easily as they both worked for the same umbrella company. I got my preapproval letter and was then armed with a number to work within.

Less than a week later, we looked at about 8-10 homes in the neighborhood that I wanted to live in (and that I currently live in in my apartment) within my price range. That evening I made an offer on "the perfect house." It was a 5 bedroom, 1.5 bath with a recently renovated kitchen, 1-car detached garage, sun room, fireplace, waterproofed basement and... a gazebo! I offered $3000 more than asking because I needed the seller to pay for the majority of the closing costs (back to the no savings issue).

That same night, the seller accepted my offer, but here's the catch: this home was subject to "short sale." This means that the seller was attempting to sell the house for less than they owed on their mortgage. What that means to the buyer is that the seller's bank has to approve the contract, and agree to accept less than they are owed. In this market, most banks will agree to this to avoid a foreclosure. However, this bank didn't want to pay more than 3% to sell the house. So- they didn't want to pay all of the closing costs that I put in the agreement. They declined the offer, and I countered with another $3000 on top of my original offer to help offset those costs even more. Alas, too late! Another buyer swooped in with a "conventional loan" and no "seller concessions." Conventional loan means that it was not an FHA loan. The benefit of this for the bank, is that it doesn't come with stipulations like: "must add a handrail on the basement stairway, must scrape and paint garage, etc." The seller concessions are things that the buyer asks the seller to pay - so this buyer was paying their own closing costs.

OUCH! MY favorite house, or 'dream home #1' as I dubbed it in the corresponding facebook post, was no longer on the table.

Now what?