The $2,000 Surprise: A First-Time Buyer’s Mortgage Lesson
As part of my commitment to protecting my clients, I regularly refer them to my local lenders for home mortgages. I have relationships with local mortgage brokers whom I can contact at odd hours and on the weekend…which is when real estate happens. Recently, I had a stressful experience with a national Big Bank that was a fitting example of why you should go with a local lender.
The Bait – Grants
After finding the right home, my first-time-home-buyer client had been lured to Big Bank with grants toward his closing costs. He had good credit, a solid job, and the necessary cash-to-close funds. The contract to purchase was signed, closing was scheduled, and we moved forward.
Alarm Bells
From the beginning, I had difficulty getting in touch with Big Bank. It seemed they would tell my client one thing, then gloss over details with me. I was concerned, yet was told all was good and we just needed “a few more documents”. My alarm bells jingled.
As required by federal law, Big Bank sent the Closing Disclosure (CD) to my client three days prior to closing. The CD very specifically lists all fees, taxes, credits, and debits on both sides of the transaction. It’s a very important document, and a lot to digest, especially for a first-time-home-buyer. My preferred lenders always send the CD to me so that I can go over it with my client. But in this case, Big Bank only sent the CD to my client. My alarm bells got louder. What were they hiding? Why didn’t they send the CD to me, as was common practice? I reviewed it, but nothing seemed to be out of order
Closing Day – The Switch
I met my client at the closing attorney’s office, and he was visibly upset. He immediately asked me why there had been a change. Big Bank had told him, just an hour before closing, that he would need to provide an additional $2,000 to close on his new home! And again, they had not mentioned this to me! After much back and forth between us, the closing attorney, and Big Bank, it was finally revealed that Big Bank had decided to use a higher tax rate! At. The. Last. Minute. While some things on the CD can't change, unfortunately the tax rate can. By waiting this late in the game to make this decision, the buyer had no choice but to proceed with the purchase or lose his earnest money.
Lessons
- First time home buyers are eligible for financial assistance from almost all lenders.
- You will have to provide a lot of documentation to secure a mortgage. Period. Don’t be lured by an easy way out. There isn’t one.
- Trust your Realtor®. We’re here to protect you.
Sarah Tynes | 678-827-2653 | sarah@sarahtynes.com
