1 Scott Circle
Everything was going smoothly in the home buying process for Lauren Masterson.
Within a week of seeing a 465 square-foot junior one-bedroom at 1 Scott Circle (map) in September, the 27-year-old reporter had made an offer on the unit and it was quickly accepted. The $195,000 listing was just a few blocks from her studio at the time, and the monthly mortgage payments wouldn’t be too much more than her rent. Some of her friends lived in the building (40 percent of the units are rented out), and they liked it.
With the closing set for November 14th, Lauren started getting her finances in order. That’s when things got complicated.
While putting 3.5 percent down would have been more comfortable, Lauren had decided to forgo getting an FHA loan in favor of the conventional route. She needed to put at least 10 percent down; some savings and a gift from her mother covered it.
Well into the process of working with her lender, Bank of America, the first hitch emerged: in order to be eligible to put down the relatively low 10 percent, her building needed to be at least 70 percent owner-occupied. Otherwise, no deal.
Lauren Masterson in her new condo.
Masterson went into a tailspin. As with many fine-print exceptions, the first-time home buyer didn’t see it, and it hadn’t occurred to the lender to check until the process was well underway.
Masterson had a few options: apply for an FHA loan instead, double her down payment to 20 percent, or back out of the deal and start looking for another place.
The FHA option was appealing, but when she started looking into it, another wrench appeared: her building’s FHA approval had just expired. Not an insoluble problem, but it would require paperwork and a process that would extend her timeline.
Masterson decided to pull together a bigger down payment. She tapped her dad for help, and her mom contributed more. Together with every bit of her savings, she made it to 20 percent.
As the closing date approached, however, Masterson and her agent were growing frustrated with Bank of America. They were moving very slowly, promising to have something to Masterson in two days that would end up taking a week. Calls from her agent to the bank were fruitless, and they grew worried about the bank’s ability to get the loan together in time for closing. “They would get confused and want more documentation for every single transaction on my account,” Masterson told us.
The closing date arrived and their fears were realized: the loan was not ready.
Masterson and her agent scheduled another closing for November 30th. The date rolled around, and again the bank was not ready.
Frustrated, they set up another closing for December 7th, and Masterson’s agent began looking at other lenders. He had worked with Bill Wilson from Monarch Mortgage for 20 years and had recommended him to Lauren at the very beginning of her process. Originally, she passed on Wilson because he had pre-approved her for a lower amount than Bank of America.
Wilson promised to turn the loan around in ten days. Masterson was tempted, but still believed that Bank of America would come through on the deal. Also, mortgage rates had inched up since her low rate was locked in back in the fall, so she didn’t make any changes.
Masterson’s new kitchen
When December 7th came with no news from Bank of America, the seller issued an ultimatum: switch lenders or the deal is off.
Masterson contacted Wilson, and as promised, he took ten days to pull the deal together. With all wrenches dealt with, Masterson closed on her new condo on December 23rd. “All that I felt was relief that it was over,” she said.
Now, Masterson is finally settled in and enjoying the new place. Her monthly payments, including taxes and condo fees, are only $50 more than her old rent. And Masterson loves having a separate bedroom.
“Studio living was getting majorly old,” she said. “Also, the dishwasher is pretty fantastic.”
This article originally published at https://dc.urbanturf.com/articles/blog/the_pursuit_almost_derailed_by_financing/4994.
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