“If you want to make God laugh, tell him your plans.” –Woody Allen
When I was setting up my travel plans for the summer, I knew I needed to be in Viroqua, Wisconsin on July 29 to give a presentation at the library about my books. After that, I had 12 days until I had to be anywhere. Since most of my summer adventure, which had been made possible by selling my home and not having a place to live, had taken place east of the Mississippi, I decided to head west. My plans called for stops in Deadwood, South Dakota, Theodore Roosevelt National Park in North Dakota, Cody, Wyoming to visit the Buffalo Bill Center of the West (a museum I have long wanted to visit), a day or two in both Yellowstone and Grand Teton National Parks, and a couple of other stops, including a buffalo ranch in Wyoming to take photos and a barbeque restaurant in Kansas City. My plans were set. Then everything changed.
I had contracted to build a new house in Tennessee back in April. My intention was to make a 5% down payment (I don’t like putting a lot of cash into a home purchase), and I wanted to conserve my available cash. The builder conveniently had their own mortgage company, and they offered $17,000 toward closing costs as an incentive to use them. It made sense to me, so I applied for a home loan with the builder’s mortgage company.
During my first call with the mortgage broker, she took a bunch of information from me, and said that both my income and credit score looked good. She didn’t see any issues moving forward. But in our next call, she advised that I’d likely need to put down 10%, rather than the 5% I had planned on. I didn’t like the change, but I agreed to it.
Before I go any further, I should point out that I had already sold my home and knew that I would be moving very soon. I was anxious to purchase another home, even if I couldn’t move in right away. It’s not that I was nervous about finding another home, but I wanted the peace of mind that comes from knowing where I’m going to live, even if I can’t move in for a few months.
I spoke again to the mortgage broker a few weeks later and was told that the underwriter (the person that makes the final decision about the loan) needed me to pay off my vehicle. That seemed odd to me. I owed about $20,000 on my vehicle, and I wasn’t planning on paying it off. Even so, I wanted the house, and that wasn’t going to happen without the mortgage, so I agreed to pay off my vehicle loan.
I was talking to the mortgage broker a few weeks later, and she mentioned that I “might” have to put another $35,000 into the deal. I wanted the house, but I really didn’t want to spend that much more money. I told her about my reservations, and she said she’d discuss it with the underwriter.
By this time, the underwriter had become like the Wizard of Oz in my mind. He or she seemed like the person behind the curtain, pulling levers and making demands, but never talking directly to me. I’ve purchased 17 homes in my life—including four new home builds—but I’ve never run into a situation where the mortgage underwriter appeared to be pulling all of the strings the way they were with this house.
Several weeks passed without me talking to the mortgage broker. By this time, it was late July—three months since I had contracted to buy the house—and I still didn’t have an answer on the mortgage. I reached out to the mortgage broker, and she said she still didn’t have a final answer on the loan, but she thought the underwriter would require me to either pay off my vehicle, put $35,000 more into the deal, or both. There was also talk of me having to buy down the interest rate on the mortgage they were providing.
At this point, I had enough. For me, the whole deal had soured. Nothing was working out the way I had planned, and it just kept getting more and more expensive. I decided not to go forward with the deal. I wasn’t sure where I would live or what I would do, but I couldn’t justify continuing to work with the builder or the mortgage company. I notified my realtor, and she notified the builder.
Then a strange thing happened. The very next day, all of the demands to payoff my vehicle, put more money into the deal, or buy down the interest rate went away. Just like that, all the demands they were making over the course of three months vanished. And to sweeten the deal, the builder voluntarily said they’d kick in another $10,000.
I don’t know exactly what happened, but I have a theory. Before I tell you about the theory, let me tell you that I don’t have any evidence to back it up. I could be wrong. In fact, I probably am wrong. But here’s what seemed to have happened from my perspective:
During my first phone call with the mortgage broker, everything seemed straight forward. They knew about my income, my debts, and my credit score, the way every other mortgage I have ever gotten has worked. But once they received the closing documents on the house I sold, things seemed to change. I was fortunate to make a decent amount of money on the home I sold, and it seemed that the mortgage company wanted to get as much of that money as possible into the deal. Why would they do that? There are two reasons. First, it’s easier for them to make mortgages when the buyer puts more money into the deal. There’s less risk for the mortgage company. Second, it’s easier for the mortgage company to sell the loan when the mortgage amount represents a lower percentage of the loan-to-value.
Even as I write this, I smell the faint odor of a conspiracy theory. Like I said, I could be wrong. But something weird was going on. From the time I said I wanted out of the contract until they decided I didn’t need to payoff anything or put more money into the deal, nothing changed. And as much as I appreciated the builder’s “gift” of $10,000, it smacked of desperation to me, like they had gotten caught doing something they shouldn’t have done.
The builder did try to make things right. I was contacted by people from both the builder and the mortgage company. They were all very nice. They apologized and encouraged me to continue with my plans to buy the house, but I couldn’t. A bond of trust had been broken. The only question left was, would I get my earnest money deposit back.
This was a long-winded story to get to this point: rather than go on my adventure out west, I decided the best thing for me to do would be to return to Tennessee to deal with the fall out from my broken house contract. I hated missing out on all the things I had planned out west, but going back to Tennessee allowed me to deal with the house contract in person (or at least close by), and to see my kids.
Our discussions with the builder went on for several days. They tried to convince me to stay in the deal, I kept saying no. That’s not to say I didn’t think about it. I liked the house and I wanted to firm up my living arrangements, but I just couldn’t rebuild the trust I once had with the builder. In the end, the answer had to be no.
The builder finally accepted that I wasn’t going to buy their house, so the next hurdle was getting back my $5000 earnest money deposit. Truthfully, I was willing to walk away from the money if need be, but of course, I didn’t want to. The builder pointed out the contract language which said if I backed out of the deal, they got to keep the earnest money. My realtor (who was awesome throughout this entire ordeal) and I argued that it seemed unfair to stick to the black letter language of the contract after everything they had done to prolong the financing process and dissolve the trust we once had.
In the end, I’m happy to report that I got my money back, and I have moved on from this unfortunate experience. Two days after ending the house contract, I found a nice house in Murfreesboro to rent. I hadn’t intended on renting, but it does give me the luxury to take my time and figure out my next move. Will I buy? Will I build? Will I continue to rent? Will I get an RV and travel the country? Every option is on the table, and I have a year to get it all figured out.
