The Financial Mistake That Almost Cost Me My Dream Home

The Financial Mistake That Almost Cost Me My Dream Home

We all remember our first time … reaching a big financial goal. The planning! The stress! The self-doubt! And then, finally, that massive sense of accomplishment (and relief). In our “My First Time … ” series, LearnVest asks people who’ve reached huge money milestones how they did it — and for lessons they learned along the way.

Here, a real estate agent in Arlington, Virginia, with four years in the biz shares the mishap that almost cost him his first home. Translation: The struggle is real, even for the pros.

Some homebuyers spend months scouring the market looking for the perfect house. I found mine in a day — and I had no plans to become a homeowner at the time. I was only 26, living outside Washington, D.C., in a spacious apartment with a great roommate. Renting was comfortable.

But that changed on a warm, sunny Easter Sunday two years ago, when my alarm clock went off for work. Dressed in my best gray suit, I drove to a small brick condo building a couple miles from my apartment.

I had offered to do an open house for a fellow agent in my office. The condo was her listing, so I wouldn’t get the sale, but it was still an opportunity to pick up prospective buyers as my own clients. After posting open house signs — with balloons! — throughout the neighborhood, I went inside the home to set up.

The property was a two-bedroom, two-and-a-half bathroom condo, and it was beautiful. It was two stories and had been recently remodeled top to bottom by the seller: new cherry hardwood floors, new kitchen, new bathrooms, new everything. I was gobsmacked.

Although I wasn’t actively looking to buy a home at the time, this was the perfect place for me to dive into homeownership — it was a move-in ready condo in a great neighborhood at a price that I could afford.

Even before the first buyer arrived at the open house, my mind was made up: “I. Want. This. Home.” The next 24 hours, however, proved to be a logistical nightmare — not to mention, I nearly risked everything with one rookie mistake.

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Daniel Bortz's living room

The Problem When Your Dream Home Appears Out of Nowhere

Time — or lack thereof — was going to be an issue. The first thing I had to do was get pre-approved for a home loan, but the clock was ticking because a woman from the open house planned to submit an offer the next day. She was among the roughly 20 prospective homebuyers who came through that day — and yes, showing the property to so many other people, knowing that I wanted to buy it, was torture. Fortunately, I had a loan officer on speed-dial.

Frantic, I called and explained the situation: “If I don’t get pre-approved within 24 hours, I’m going to lose out on my dream home!” He told me not to panic.

My stepfather graciously offered to co-sign the loan for me to strengthen the offer. Together, we scrambled to assemble the necessary paperwork, including two years of federal tax returns, one year of business returns from both of us (since we were both self-employed), and recent statements of all asset accounts, like checking, savings, CDs, IRAs, stocks, bonds and other investments. It was a sprint, but we managed to submit everything by the end of night and were pre-approved the following morning. (Note: Pre-approval doesn’t usually happen overnight. It typically takes one to three business days to process an application.)

Then, I had to write an offer for the property. The housing market in Arlington — like many other cities throughout the U.S. — was tight as a tick. Buyers were scooping homes up as soon as they hit the market, and a lot of people were paying above listing price. This home was priced well based on comparable properties, so I knew I had to make a competitive offer. Read: Submitting a lowball bid was not an option.

I offered full listing price — $525,000, with a 20% down payment and a 30-day closing period. The other buyer offered $526,000 with similar terms.

I figured that was it; my offer had been beat. As a last-ditch effort, I wrote a personal letter to the seller. It was just a few paragraphs and explained why I loved the property (it was move-in ready) and why he should sell to me (“I held your open house, man!”).

I don’t know if it was the letter that clinched the deal — I know my co-worker, the listing agent, also vouched for me — but the seller chose my offer. The 24-hour stress marathon was over, and I was going to be a first-time homeowner! Everything was set — or so I thought.

RELATED: How to Win a Home-Bidding War When Competition Is Stiff

My Nearly Fatal Flaw

The home appraised for the agreed-upon sales price, the home inspection didn’t uncover any major problems, and the seller agreed to make our request of repairs. But there was a bump in the road during underwriting.

Admittedly, it was my fault. As a real estate agent, I should have known the do’s and don’ts of putting together a down payment, but I made what could have been a fatal mistake. I had sold some stocks shortly before closing to have enough funds for the down payment. No big deal, right?

Wrong.

From an underwriter’s perspective, your financial portfolio should remain the same between when you get pre-approved for the home loan and when you close on the home. The fact that I had shuffled money around for the down payment meant the underwriter needed to verify where the cash was coming from. Normally, this wouldn’t be a tough problem to fix, but the issue literally popped up on the morning of our settlement day, and investigating the moving cash could’ve caused delays. I placed a frantic phone call to my loan officer. Fortunately, he jumped in and got everything squared away at the eleventh hour. We closed on time.

Getting the keys to my new home triggered a strange mix of emotions in me. On the one hand, I was stoked to become a homeowner. But I was also nervous. “I have a mortgage now. This is serious!” I said to my parents after I signed the last piece of paperwork.

Daniel Bortz in front of Arlington, VA, condo

How I View Real Estate Now That I’m a Homeowner Myself

The best piece of advice I have for homebuyers based on my experience? Don’t look at only one home before you make an offer on a property. I did it, but I also knew what types of properties were on the market since it’s literally my job. I recommend viewing at least five houses in person before you bid on a property so you have a good idea of what’s available in your price range. That way you also give yourself ample time to make a fact-based decision rather than an emotional one.

As an agent who found himself on the other side of the closing table for the first time, it became clear that buying a home is a challenge for everyone — no matter how many years you’ve been in the business. That said, even with the inevitable hurdles, staking a claim in a house to call my own was worth the roller-coaster ride. After all, I found a great home where I can build equity in a friendly neighborhood at a price that I can comfortably afford. What more can you ask for? And rest assured, I’m making sure my next experience isn’t such a whirlwind.

RELATED: Tell-Tale Signs You’ve Found the Perfect Neighborhood

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