Friday, July 11, 2008

At Any Rate?

The Bee had a story last week that hit close to home. All three of the homes we have tried to purchase, led to negotiations with the bank (2 REOs, 1 SS). In two of the three cases, negotiations played out over months, as opposed to days.

In both of those cases , I watched interest rates fluctuate over the course of our drawn out negotiations. This gave me considerable heartburn as I had predicated our offer on a particular rate (a tad conservative, but obviously not enough to capture the fairly large changes).

So of course, being the risk averse planner that I am, I wanted a rate lock. So here comes the Catch-22. To get a rate lock, I need a contract, but to agree on a contract price, I wanted a rate lock. Argh.

As of today, both of the REOs are Pending, and the SS is still sitting.


G Spot1 said...

Doesn't the standard purchase agreement include a place for some numbers in the financing contingency? You might want to make sure you are putting numbers in there that make sense for you. Don't want to be unreasonable as the seller may take the offer less seriously, but certainly you could include you conservative figures so that if you can't get that rate you would want to walk away. I've never tried to get out of contract on a financing contingency, so I don't know if it gets messy - anyone out there have experiences?

I think the same contingency could be used as leverage to renegotiate the sale price a bit if rate rise, so that monthly payment stays the same for you. Obviously the seller would be loath to do that, but the argument would be that the rising rates are going to squeeze all potential buyers. Most reasonable sellers aren't going to want to go back on the market over a few grand. Might be worth a try anyway if you are otherwise prepared to walk away.

Of course, while walking away under these circumstances might save you money it won't save you frustration of starting over....

HOUSE2008 said...

This has been our personal experience. From the sound of it what your going through isn't unusual. Were going on 60 days while the first 30 day rate lock @ 5.87% came & went due to THEIR lollygagging. SOOO now their going to have to pay an additional $1800 for the procrastination. But deals are to be had in the midst off all this. Their paying our HOA dues for the next three years as they mistakenly stated them to be lower than they actually were on the original acceptance offer & the MLS listing. I credit my awesomme real estate agent for delicately pointing that out to the bank. Fast forward>>>>>

Hopefully we'll be able to close by the end of the week. It's been a loooong road to "homeownership" & having come from a military family & been in the military & then renting, I'm just plain TIRED of renting & moving. Me BONES are tired of it. You know those shoes people bronze for babies? Well I'm going bronze a pair of mine & drill them off to the side of my front door. Good luck though.

P.S. Hopefully the market will recover in the next 15 years for me to recover at least the taxes & interest I paid on it. No?