FINALLY Closed!!!!

Friday 11/11/11 we signed the paperwork to close our mortgage. FINALLY!!! Now I have not updated blogger nation but this has been a NIGHTMARE!!! Who knew closing the mortgage was harder then building the house in the first place.

This is a LONG story so I will tell it in two parts:

We locked in our interest rate Tuesday 9/27/2011. (May I add rates are G-A-r-e-a-t right now). We "officially" completed our house Monday 10/10/2011 (and did not close for a month and a day later). An appraiser came out a week later. Two days after that I received an email from our mortgage company giving us what the value came in at. I FLIPPED out!!! It was 18,000.00 less then out initial appraisal they had performed based on our house plans. Now keep in mind we added square footage and the concrete drive to the original plans. These upgrades were not noted in the original pre-appraisal. With the current economy we expected it to decrease some but not 18,000.00 in five months.

Now for those of you who have not yet dipped your feet into the cold water of real estate; Let me explain why I was so upset......

The bank tells you what your soon to be home is worth then they loan you 80% of that. You either have to have the other 20% in the bank, pay Private Mortgage Insurance (PMI - essentially a higher rate that will decrease when you have paid the principal down to 80% of the value) or  you build and/or buy your home for 80% of what it is worth.

When you are building they perform a pre-appraisal for the construction loan. Then you base your budget from that. You try to build it for 80% of the value plus whatever amount of cash you have in the bank. This is what we did and if I must say so myself we did a wonderful job. We came in well under budget. Did you hear me? I said UNDER our budget (from what I hear this is a hard task to accomplish).

However when the value dramatically declined so did our budget. Meaning we were now short. We were fixing to have to drain ALL of our savings down to their minimum balances. That terrified me. I do not feel safe without at least 3 months living expenses. What was going to happen if one of our cars died or if one of us lost our job???

Justin began to be proactive. He searched the appraiser's name on google. (His name is Josh Smith from Wedowee) He found out that Mr Smith has had his license pulled and reinstated due to a court case he was involved in. He was now on probation. We then asked around and have yet to find someone who had positive things to say about him. Justin called him and gave him other properties to use as comparables. He refused to use them.

We then spoke to the Mortgage Company about contesting the appraisal. They said we could but if the next one came in lower we would have to take the lower number. This was too much of a risk to take. We decided to proceed with the closing. We put the whole thing behind us and were finished.....or so we thought........

To Be Continued