Is it a Good Day When the Bad News Protects you from the Worse News Caused By The Stupid Thing?

[Note: more of you seem to be interested in my house hunt than I thought, so here is the latest drama. From an email I sent out a few days ago….]

WARNING: This post contains me whining about some difficulties involved while buying a house in San Francisco. This is very similar to Sting complaining about getting hit on too much. My bourgeois-detector is bleeping like mad.

Here is a pic of the place this post is about…

So as you know, I made an offer on a place yesterday. We put together my loan application (from a month ago), and sent it in. Well, this morning I found out I didn’t get it (someone preemptively overbid even higher than my preemptive overbid) That’s bad & sucky. But it turned out to save my ass from the worse news (read on, gentle viewer….)

This morning (at 8:30 – BEFORE I found out my offer didn’t get taken), I went to meet with the mortgage guy to sign loan application papers. Mostly a formality since he already had my financial documents AND MY MONTH OLD CREDIT REPORT. When we ran my application, we found that my credit scores had DROPPED 50 POINTS since last month. This meant that no one would give me the loan I was planning on. WORSE STILL, IF MY OFFER HAD BEEN ACCEPTED, I would unable to actually put up the money AND WOULD BE LIABLE FOR BIG BUCKS (guesstimate: $30-$50K).

So what caused my credit score to plummet since last month? Well, I have a home equity loan. In February, I had a few thousand dollars on that loan I had to pay off. So I did. On time. But I neglected to note that right AFTER I paid it off, the interest charges for that balance were added to the account. We’re talking $6.16. I didn’t notice for a month that I had a balance of $6.16. When I did, I paid it off immediately. BUT MY LOAN AGENCY NOTED THAT I HAD AN UNPAID BALANCE FOR A MONTH AND SENT OUT A REPORT TO THE CREDIT AGENCIES. Missing a payment on a home equity loan is evidently the same as missing a mortgage payment. EVEN IF THE PAYMENT IS FOR 6 $#%^ dollars.

So anyway, I spent all day, 8:30 – 2:30 talking with the loan company, trying to get something done about this. They agreed to tell the credit report people to remove the notice – THIS TAKES 30-90 DAYS. We also spent the day crafting a letter that explains the situation more or less. The mortgage guy is hopeful that this will be good enough to get my mortgage preapproved.

So here is where I stand:

Best case:
– Mortgage companies are ok with my letter & I get preapproved. Everything proceeds as before. I can look for places and make offers if I find something.

Middle case:
– If I find a place I like, it has to be cheaper than expected, and/or I get a really bad loan for a little while (bad loan = HIGH interest rate)

Bad case:
– I wait 30 days for this mark to get removed from my records and then can buy a place. If something good comes by inside a month, no can do. I definitely need to move to temporary housing in this case.

Worse case:
– I wait 90 days for this mark to get removed from my records and then can buy a place. If something good comes by inside 3 months, no can do. I definitely need to move to temporary housing in this case.

Unlikely Uber-Worse Case
– I wait a year for this incident to stop effecting my credit score.

Well, wait & see……. No house. But not $50k liability.


UPDATE All that happened a few days ago. The good news is that the loan company says it can work with me: with a letter from me saying what happened & including the phrase “I swear I’m not a deadbeat, or you can poke my eyes out with a stick” everything will be fine & they will approve me for a the loan.

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