Closed On New Home

We got a call from the title company yesterday morning saying we could still close that afternoon, instead of waiting until today (Tuesday). So, we decided to get it over with. Being used to closings, it took us about 20 mins to sign everything and we were done (although, it took another 5-10 mins for the rep to make copies of everything and create a CD with all the docs on it).

So, now that the house is officially ours, I can talk about the financial (and other) details ...

As I mentioned in an earlier post, we first came across this house in late September. At that time, it was listed for $270,000. We found out from our agent that it was a model home that was sold to a lender who specializes in selling model homes - so there was no "real" owner. The home was first put on the market in March of this year for $345,000. It sat for a couple of months and then was taken off the market for who knows why. It went back on the market for $298,000 a couple months after that. It was about that time when the real estate market nationwide was the #1 story in the news. It dropped to $280,000 and then to $270,00, which is when we first saw it.

So, we put an offer for $240,000, thinking the Seller would counter (and hoping they would accept it - LOL). A few days later, we got a counter offer for $263,835, which our agent said she was surprised to hear. We went ahead and countered at $250,000, hoping they would just accept our offer. No matter what house we were looking for, $250,000 was our absolute top amount we were going to spend. They came back with a flat-out rejection. So, we waited.

Almost 2 weeks later, we noticed they dropped the price to $263,000, so we thought we'd try again. We again offered $250,000, and they countered at $255,596 (or some whacky figure like that). My wife and I really wanted the house for both personal and investment reasons, so we decided to break our own rule and offered $255,000. About a day later, both of us started to get cold feet and we told our agent to void our offer before the Seller had a chance to counter. And, we continued to wait.

Every day we would watch the listing to see if the price would drop again. A little over two weeks after we pulled out offer, it did. What shocked the bejeebers out of us was how far down the Seller dropped the price this time. We expected them to eventually drop the price, if they didn't receive another offer, but figured it would only be $5k-$7k. We were shocked to see they dropped it $12,000. Instead of risking losing the property by low-balling their new price, we just offered them what they listed it for: $243,000. A few days later, our agent told us they accepted our offer. Whoo-hoo! Now the agony of financing the deal set ...

It turns out we were always in communications with our loan officer - even well before we found this home. When we made our initial offer of $240,000 way back in late September, our loan officer said the home qualified for a USDA loan. I've heard of USDA loans, but that was about it - I knew nothing about them really. My loan officer explained to me that USDA has a program in which they can pay for up to 102% of the appraisal price of the home, if it qualifies. You can't get any money back, but they CAN pay for all of your closing costs and prepaids, such that you can literally come to closing with $0 in your pocket (although it's rare).

USDA loans have a lot of stipulations, though, and not everyone can qualify. Some of the stipulations are goofy, for example, my loan almost got turned down because the new home was within 0.5 miles of our current home. Another stipulation is that the home must qualify as a rural property in order to fund. There were other "gotchas" that almost killed the deal for us, but eventually everything fell into place and we got the loan.

The downside was the fact that we HAD to put down 1% for the Seller. We found out later that this was figured into the closing costs and prepaids, and was deducted from our loan. So, we never got it back as we were hoping.