THE best job in the world . . .I love sharing stories like this . . . A week or so ago, I was given a lead through John L. Scott's eBusiness team. I'm a certified eBusiness associate and as folks search for homes on johnlscott.com, if they happen across a home that is NOT listed by JLS (the horror!) and they want more information about it, they fill out a little form on the site or call the number. Once they make contact with the eBusiness corporate team and they say "Yes, I'd like to speak to a Realtor" they're referred to someone like me.
So I spoke with this gentleman last Friday. He was pre-approved to $193,000 but in our conversation, he mentioned he was only comfortable to about $120,000 - $130,000. I said "No problem, we can work with that!" So on Sunday, we met at a home listed for $89,900. I could tell just by walking up to it that it would be very tough, if not impossilbe to finance. As I was pointing out the various deficiencies in the home, I mentioned that it may qualify for a rehab loan, but the maximum amount money available would be sucked up almost immediately in the repairs that needed to be done.
On Monday we spoke again and I asked him for his pre-approval letter. The letter stated that in fact he was approved to $193,000 FHA loan with a 3.5% down payment, but down towards the bottom the lender was asking for 6% in closing costs as a concession from the Seller. (Anytime I see this, it's a red flag to me . . . it tells me the lender is probably making a BUNCH of money at the buyer's expense) I told him I do a first time home buyers seminar and that I think he and his wife would really benefit from it to gain an overview of the process. I thought it would be helpful before we headed out and looked at anymore homes. He could understand why some homes were harder to get financing for than others. He thought it was a great idea and we set up an appointment for later in the week. I also asked "Do you mind if I bring my lender along? She does a terrific job of working with 1st time home buyers and explaining the financing piece." He said "Sure!" I also asked him to bring his Good Faith Estimate (GFE) with him so he could see how my lender's loan compared to his.
We all met Wednesday evening, my client had not received a GFE from the other lender (another red flag) but we sat down and my lender started her discussion of the process. About the first question she asked him was "Are you current or former military?" and he replied "No, I only served for about 3 years between 84 and 87." She and I looked at each other and I asked "Were you hororably or generally discharged?" and he said "Yes, honorably" My lender said "You can go VA!" She then went on to explain why the VA loan is quite a bit better than an FHA loan and how it could save him quite a bit of money monthly by not having to pay Private Mortgage Insurance (PMI). As we went through, she asked what payment he was comfortable with. He said "Oh, only about $1,200 - $1,250 per month" so she started running figures. She said "That gets you about $180,000 - $190-000" You could see his eyes actually light up. I said "(client's name) When we go look at a $180,000 home, you're going to see a whole new world opening up to you".
We finished our meeting that night and I went home and updated his search on the MLS. I sent him a number of listings. The next morning I got this "John, Listing # XXXXXXXX would be my dream home. All depends on the monthly payment. If we get approved for this price it would be great. Can we see the home?" Well the price was $184,000 and as his Debt to income ratio at the $180,000 purchase price was 31%, I knew it was a possibility, but checked with my lender just to be sure. Turns out the builder (This was a BRAND NEW HOME) was also offering an $8,100 buyer bonus on top of everything. So we went and looked at it Thursday night. I had a good feeling they'd like it (especially compared to the $90,000 one we looked at on Sunday) and had the contract written. I used the $8,100 to get them a refrigerator, washer and dryer AND get $6,000 of their closing costs paid. We got mutual acceptance on the contract yesterday and they move in at the end of May. His payments with ZERO money out of pocket are going to be $1,244 WITH Taxes and Insurance included.
So here's a guy that a few weeks ago wasn't sure he could buy a home. To thinking he could afford about $120,000 maximum (I'd REALLY like to know what that lender was charging him as a rate, etc.) to BUYING a $184,000 home and BEING COMFORTABLE doing it! I have THE best job in the world! No question.