Avoid Real Estate Problems
Don’t let this happen to you!
by Karen Bates, CPA
Mike and Sarah were thrilled that their move was almost complete. The kids were registered for school, the moving truck was arriving in three days, and Mike was scheduled to report for duty on Monday. The move had been stressful, but the couple was buying their first home and it was worth it. The only remaining steps were signing their final loan paperwork and picking up their keys.
They were confident they’d found the perfect real estate agent, Barbara. She was recommended by a local friend. Barbara was a great negotiator and a hard worker. As promised, they got a great deal in a neighborhood with the right school district. The idea of buying had been a little scary at first, but Barbara kept in constant contact with them and had answered every question along the way.
Mike and Sarah arrived early to sign the final paperwork. But there was a catch: The final loan paperwork’s numbers differed from the original quote. The interest rate, monthly payment and closing costs were higher. What happened?
The couple had chosen a different loan company than the one their friend recommended. Instead, they found a company on the Internet. The online advertisement stated you could compare loan options and loan companies to help you pick the best deal. According to the comparison, the company they selected was supposed to be cheaper than everyone else. But they didn’t truly know who they were dealing with.
So what happened to Mike and Sarah? The loan officer pointed out that the lender costs were the same as quoted, but that the original quote did not include third party costs associated with the loan. The online form pointed this out in the fine print. As for the interest rate and payment increase, the loan officer apologized but said it was the best he could do.
This left Mike and Sarah with two choices: sign the paperwork with the higher payment and closing costs, or walk away from the home completely and find another place to live in the next five days.