CLOSING TIME! every new beginning comes from some other beginning's end...

We are officially homeowners!!!  

Our top priority will be to get the 3rd floor finished so that we can move in while we finish the rest of the house.  We'll also work on the exterior of the home and get it painted, fix the porch and clean up the landscaping a bit.

We can't wait to start working on the place.  We'll be sure to post photos along the way!

Backstory Part 5: Federal Loans are the Devil

So I mentioned this previously, but just to reiterate, this house is a foreclosure and was stripped of everything (seriously EVERYTHING) and has also been vandalized.  It sat vacant for a while and probably became a nice little hang out for some young teenagers from the neighborhood.  Since it's been stripped and is considered “unlivable” by the bank, we are required to get a FHA 203-k loan which is a pain in the a$$. 

Definition: The Federal Housing Administration's rehab loan product, the FHA 203(k) loan, was designed for individuals who want to rehabilitate or repair a damaged home so they can live in it as their primary residence. These loans are endorsed by the government to encourage lenders to offer what would otherwise be considered a risky loan product. 

On paper, the idea of a 203-k loan seems great, however, dealing with one is not. To get this type of loan, we needed to work with a pre-approved contractor to get a quote for the necessary work that would deem the house livable. This quote amount is then added to the sale price of the home, therefore, making your mortgage higher than what you buy the house for.  Blah!

Another thing to note about this loan is that all work needs to be completed within 6 months of closing.  Mind you, major construction, such as tearing down walls, is not allowed during that time. The way it works is that while the house gets worked on, the bank sends an inspector out periodically to check on the work and, hopefully, gives a final sign-off when everything has been completed.  Once the final approval has been granted, you are free and clear to do what you want.  The frustrating part about this is that we are essentially paying to fix things that we'll be taking right out, so it's a big waste of money.

After our offer was accepted, we quickly began to work with a contractor, and he determined that the work we needed included fixing all of the plumbing (remember, all of the copper was missing), making the bathrooms in working order and constructing a "kitchen". (This means one cabinet with a sink, electrical outlets and a gas line.)

We submitted the quote to the bank for approval, and then they sent an inspector out to check that our quote covered all the work needed to make this house livable.  The inspector came back and told us we needed to add painting the exterior to the scope of work.  Since when is an unpainted house considered unlivable?!  This was a crazy expense that Adrian and I were not expecting.  Sure, we talked about painting the house, but not this soon :/

So we submit the updated quote with the exterior paint job on it, the bank talks to the inspector and the inspector comes back AGAIN with something.  This time he says we need to get a new window for the garage, a gutter for the garage and also paint the garage.  ARE YOU SERIOUS?!?!  Was he looking at the same garage we are?  Our garage is a dilapidated shack that we plan on tearing down.  The most expensive paint out there couldn't even fix this thing!  This is super disappointing because the garage fixes alone come in around $4,000 and we know that money is a toal waste.

  We aren't taking this photo at an angle...it just leans that way.

Side of garage...with holes in it.

Inside-Here you can see that the foundation is pretty messed up and the wood slats are pretty worn.

So the contractor added the garage work to the quote, we submitted it to the bank again, and everything was finally approved.  All this back and forth took up so much time that we wound up having to ask the selling bank for a month extension during the process. They only granted us an additional 2 weeks though. Awesome.  Did I mention how much I hate the selling bank? 

Anyways, for the past 2 months, we've encountered so much stress with having to go back and forth so many times between the contractor, our bank, the inspector and the selling bank.  So we are relieved everything finally worked out and came through on the last possible day.  Had we not received the clear to close last Friday, we might have lost the house.  I think it will be a while before we buy another house ;)

Backstory Part 4: Foreclosures- The Good, The Bad and the Ugly

Monday rolls around and our real estate agent notifies us that our offer was accepted and sends over the paperwork that needs to be signed and faxed back by Thursday. YAY!!! We’re ecstatic and start sharing the news with family that evening.  

So now it's Tuesday, and we're still both so excited.  I even share the news with coworkers, which is big considering I'm a very superstitious person. I was so happy….that is...until…Adrian calls me that afternoon to tell me that the bank reneged and the house was no longer ours.  (Are you #@$%^*  kidding me?!!?) 

This was the worst feeling ever. Now I realize it’s probably frustrating to read this, so I’m sure you can probably understand how much I loathed the bank at this point.  If you know me, you know I have a ridiculous fly-off-the-handle temper.  My immediate reaction was to send some sort of hate mail to bank people who did this.

Apparently, the fine print on the bottom of the contract that said the bank could accept other offers until we had EVERYTHING turned in, even though our "Congrats, we've accepted you're offer" letter said we had until Thursday.  So, we were told, AGAIN, that we needed to come in with our "best" offer. Seriously? So Adrian and I discussed it some more and decided to put in another final offer. 

This time, we waited a day before submitting it so that we could send our offer with all the necessary items at once so that if our offer was accepted, we wouldn't lose it again. So on Thursday morning we put the offer in and by Thursday afternoon we were notified that they had (again) accepted our (higher) offer and we were officially under contract (yay again!!!!). It was hard to be excited this time around though because the bank had ran us through the ringer, and made us pay more, but nonetheless, we were happy to be under contract.  This of course was just the beginning of more headaches to come.

Backstory Part 3: Moving Out

So, I forgot to mention earlier, but around mid-November, Adrian and I decided that it might be a good idea if we moved out of our building and rented our unit, so that if we did find a house, it would be easier for us to obtain an owner-occupied mortgage.  Again, we hadn't really thought we'd find a house until spring so we only casually began to market our apartment. I think we both expected to maybe get tenants around February or something, but fortunately (and unfortunately) for us we found tenants who wanted to move in December 1.  This gave us 2 weeks to move out...without a contract on a house...with nothing packed up...and during my finals week for grad school.  Worst. Plan. Ever.

So while dealing with waiting to hear back from the bank regarding our offer, we spent all of the Friday after Thanksgiving packing up our stuff to get ready to move into my parents' house.  We rented a truck on Saturday and spent the day moving all of our things either into the basement of our building, a storage unit down the street or various places in my parents’ house.  To say the least, it was pretty stressful especially with this offer weighing on our shoulders.

Backstory Part 2: The Offer

It was the Tuesday morning before Thanksgiving when we put the offer in on the house, and to our surprise, the bank countered a couple of hours later.  We were impressed with how quickly they responded, so we figured we’d counter one more time, hear by the end of the day, or worse case Wednesday, and have a contract by Thanksgiving. WRONG! Instead, we countered back Tuesday afternoon, and it was radio silence on the other end all of Wednesday and Thursday (Thanksgiving).  Of course, those two days seemed like an eternity to us. 

On the morning of Black Friday we receive a message from our real estate agent telling us that multiple offers came through over the holiday (wtf?!) and that the bank was asking people to come in with their best offers.  I was crushed.  We could forget about low-balling now. I think the part that bothered me most was that we had a jump on everyone by finding the house so early and we no longer had that advantage.  If we would have just accepted that freakin' counter offer two days ago we could have already had a contract, and for less money!

So after much deliberation, Adrian and I submitted our "best" offer Friday afternoon. We waited the rest of the afternoon, but heard nothing back. Awesome.  More waiting. 

Backstory Part 1: Home Search!

Searching for a home is very different than searching for an investment property.  After buying our second building in July 2011, Adrian and I knew our next purchase was going to be a house, and I think we were both excited and a little anxious about the time commitment this would entail. When we bought our first building in Jan 2008, we had looked at over 50 two flats before finally choosing one, and it was a solid 25 viewings before selecting our second property.  Knowing that, I expected it would take us about 8-10 months before we found a house we both liked.

We decided to start with some casual searching in September 2011 and hit up Redfin  (our usual source for listings).  Now searching Redfin for investment properties is one thing, but looking for your own home can become quite addicting (so we discovered). We didn’t expect to buy anything until spring/summer, but figured we might as well start looking. 

In November 2011, I was searching Redfin one morning and came across a house that had just been on the market for 2 days.  It was in one of the areas we were interested in and it was unlike anything we had seen before.  I waited until the afternoon to show Adrian, and to my surprise he actually was interested as well.  Sounds great, right?  Well, I forgot to mention we were in Vegas at the time.  Yes, I hate to admit this, but I was checking Redfin while in Sin City (I said Redfin was addicting!).  So Adrian called our real estate agent and setup a time to go take a look at the house when we returned home in a couple days.

Flash forward two days and Adrian and I are back in Chicago and ready to see this home.  Now, this property was a foreclosure and the MLS listing warned us that it had been vacant for a few years and stripped of pretty much everything inside, but rather than scaring us away, I think that intrigued us more.  Adrian and I seem to have this attraction towards projects for some reason. Take our first building for instance, out of the 50 buildings we looked at, the one we finally selected was, hands down, the one that needed the most work., but for some reason we both fell in love with it.

So, Adrian and I drive over to the house (its 5th day on the market) and were immediately impressed by the outside.  A Queen Anne Victorian!  It was unlike anything we had ever looked at or even thought we would look at. The condition of the exterior was a bit ragged, but that didn’t take away too much from the beauty of this home.  Adrian and I walked inside and fell in love even more. Vandalized walls and all, we knew we wanted this project. After walking through all 3 floors and checking out each of the 6 bedrooms and 4 bathrooms, we were officially hooked and decided to put an offer in immediately!

Clear to Close!!!

Looks like it's safe to announce now...Adrian and I have received the clear to close on our new home!  We are scheduled to close next Friday, February 17, and we're extremely happy and relieved considering that today was the final day to receive approvals or else the deal would have fallen through.

Over the next few days leading up to the closing I will write a few posts explaining the back story of this house and mortgage process, so you can get an idea of what we've been dealing with that past few months :)