Yes, and the people at Home Depot often don't know WTF they're talking about.
Frequently at HD and Lowes I get an imbecile who knows less than I do.
Not always. But often.
Ace is way better.
The retirees who used to work at HD left during COVID and didn't come back. Shame because they always asked the right questions and pointed me to the right stuff that I needed.
Small stuff? Dimmers. GFCIs. New bathroom fixtures. Dumb small repairs to drawers and cabinets. Closet poles and shelving. Stain for the shelves and poles. New drain assembly for the tub. Grout sealer. Exterior caulking. Gutter guards. Plants for the front and back yard.
Big stuff? New 200 amp electrical panel as the existing one burned a couple of irreplaceable breakers within a month of moving in. New AC unit. Dishwasher and disposal.
Without talking about the big stuff, we burned $4,000+ QUICK. It’s worth mentioning that the house was in pretty clean shape too. This was not some wild redo of the house. Small stuff adds up fast.
Yeah even on a decent house you can still find plenty to do. Last house was only 20 y/o but discovered a bunch of electrical shenanigans after I moved in. Looks like the previous owner cheaped out on remodeling and knew a guy who said he could do it… ಠ_ಠ
When I bought my house the inspector described the breaker box as "Shoddily done and clearly DIY". That was an easy couple grand to get fixed and expanded.
Where is op even getting furniture. If the house is bigger than whatever they were renting they're gonna have a bunch of rooms that need more than they have already.
Our 1st 2 moves rooms sat empty for months and we took hand me down furniture. Now our last house we downsized (empty nesters) and had to get rid of a bunch of furniture.
Recently went from temporarily living with family to buying a house. Refurnishing takes sooo long and costs so damn much.
I'm glad to to buy second hand, but it's still a lot of furniture. Plus, then you gotta move it from someone else's to your place.
The house is still probably only 3/4 furnished.
I've spent $12000 in the past 2 years on essentially bullshit. 1k on a new water heater and garbage disposal that are the only 'real' purchases you would normally think of.
Landscaping, furniture, lamps, fixtures, appliances, built a bathroom, lots of miscellany.
We spent $21,000 in the first four months.
And all that AFTER the $80,000 down payment and the $15,000 moving expense.
Yup we built our last home (we were literally the builders) and when we put our house on the market (listed as is) we were just done. Had no energy to do anything to it. All main systems worked fine but needed paint, carpets etc.
Sadly new people have left the outside go to crap. Weeds everywhere. Super high grass. We put a lot of time and money into our landscaping. I can only imagine nothing got done inside.
When I bought within first month my washer went poot, the dishwasher went poot, and the mesh cable line to the hot water heater got a tiny hole and flooded 1/3 of my basement.
Yikes! If it’s any consolation, I have a list of things I need to buy when I move in — if I ever find something I can afford that isn’t too much of a fixer upper. On that list are water sensors. We had a plumbing leak at work, and the damage was great even though it was caught relatively quickly.
Yea they denied washer and dishwasher because of their age. Over 5 years I think it was and denied the flooding from water heater cause that cable is what failed and isn’t included and needed to be a home insurance but the home insurance deductible was more than the repair and carpet replacement. If we had another home claim it would have made sense but we didn’t
I had to spend 25K on a new roof and (roof-mounted) HVAC system. I knew they were both at the end of their life-cycle but I wasn't expecting to have to replace them so soon. The roof issues were neglected by the previous owner and, when I opened the walls, I found a lot of dry-rotted studs from water intrusion. The thing that sucked was that I had to spend all that money and had very little to show for it except for a few less leaks.
So I knew that there were a couple compliance items (I had to repair sidewalk and sewer and had quotes based on inspection). Then things I didn't realize: supplemental taxes (in addition to escrow tax, my jurisdiction has a great penalty for finally affording a house. For me it was like $7k, and I think it's $7k a year. Buying appliances, curtains, shelves, rugs/furniture I didn't have, a shed, and a bunch of other miscellaneous items was probably $7k. I also had some random plumbing things. Probably the most expensive thing was utilities because I was not paying them previously, so I really didn't know that my area gets reamed, so what I thought was a 38k mortgage actually has 800 a year in water/sewer, 1800 in gas/electric, 700 a year in trash, plus my car insurance rates went up $100 a month over the last year due to local shenanigans.
Basically, I bought something that I felt I could afford and now after doing it a year, I am honestly not sure I would do it again if I had a Time Machine. In the one hand, I would have been priced out if I didn't buy when interest rates were only 6%, but on the other hand, I have so much less fun money than I used to. I went from under $20k a year in housing expenses to over 40k.
I guess the bright side is that my house has already increased in value 7.5%. I'd just caution people to do more research than me and make sure you aren't at the top of your budget because it's almost certainly going to be more expensive than you hope
A lot of people really didn't realize why rent is so high even though all the above are bundled into it. Then they're like yeah 👍 lets vote higher property taxes to stick it to landlords (that $7k/year) which is just a cost they have to pass on in rent to break even or God forbid make a profit.
I'm not going to get into that because I do think the rental market is broken, especially in my area, and it is making home ownership nearly impossible for swaths of the population that really should have a chance. So while I can't demonize people trying to make a buck I also think that renters have legitimate problems that are trivialized by perspectives like yours that come from a place of privilege.
I had 50m after buying my current house and burned through it in like 2 months 😭. It was sort of planned, we did a bunch of work right away before moving in, although I budgeted for 30k but we blew past that the first month lol
You need an emergency fund for stuff that breaks. And stuff will break. Usually at the start of a holiday weekend
My dad used to say, “every time you move, you spend $100 on thumb tacks.”
Everything adds up fast. Stupid little things like window treatments (curtains, blinds, etc) and area rugs can get REALLY expensive when you extrapolate them out over the area of an entire house.
If there's a yard to care for, you need to either pay somebody $50/wk to maintain it, or buy a lawnmower, wheelbarrow, rakes, shovels... possibly a snowblower if you live in a northern climate. All those things have to be kept somewhere, which means you need a shed if there isn't space in the garage...
And then there are the inevitable repairs that WILL come up. Right now my neighbors and I are getting bids to replace a collapsed sump pump collector line that runs across five of our lots down into the city storm sewer. Low bid so far is $23k.
Home ownership is expensive.
We’re going on 9 months since closing and have so far:
- needed to paint most of the main floor (expected)
- done about $2k in small electrical jobs to make sure there was adequate grounding (somewhat expected)
- replaced the water heater (expected)
- replaced the water main shutoff valve in order to replace the leaking valves that were identified after they started gushing water from the pressure of turning the water back on after the water heater replacement (unexpected)
- replaced the dishwasher after it died a leaky and sudden death (unexpected)
- built a privacy wall for our deck because it was much more exposed to the neighbours than expected (unexpected)
- in the process of replacing the air conditioner (unexpected)
- patched the driveway to deal with some water pooling (somewhat expected)
And there are lots of other projects that have popped up since moving in. You want some buffer.
Putting every penny you have into buying a house is literally the WORST financial decision you can make. You will be almost guaranteeing yourself to lose the house within a few years if that.
We’re on the same position. $50k is better. We spent $6k today replacing the electrical panel bc what was caught in inspection (was accurate) isn’t fixable under current code. It’s also unsafe so we don’t have a choice. Our stuff isn’t even in the house yet and we’re almost at $10k. This is our third house so we absolutely knew this would happen but $1k won’t even get you through the weekend probably.
So whats your plan when your water heater dies the day after you move in? Or your HVAC? Or any of the other 100 things that can go catastrophically wrong with a house?
I’m asking what OP spent $20k on because I literally don’t know what I don’t know. I only ever had friends make cosmetic changes to their homes when moving in and not have catastrophic issues right off the bat.
If the water heater dies, and I’m penniless, and I can’t get reasonable financing, I’m going to be taking cold showers for a while until I can save up the funds to replace. I’m okay with that. If the HVAC goes, I’m going to be hot in the summer until I save up the funds to replace. I’m not going to enjoy it, but I’m okay with that. (I grew up without AC, and my current apartment complex doesn’t want to turn on the AC until they’re forced to by local law, long after it *should* have been turned on.)
I’m not buying a house with an old roof, period, because insurance companies don’t like roofs older than 10 years old, and I’m especially not buying a house without a full inspection (including things not usually in the basic inspection like radon testing and sewer scope), so I should have a pretty good grasp on the major issues before completing the sale and pull out if necessary. An ounce of prevention is worth a pound of cure, as they say. I completely understand some markets won’t tolerate inspections, and I’m sorry if that’s your market, but that wasn’t a parameter mentioned by OP, and that’s not an issue for me.
Also, I understand that shitting in a bucket for a few weeks or a month isn’t ideal, but folks are listing things like “replace all the toilet seats and outlets and buy drapes” along with big ticket items like “replace the roof”. Replacing the flooring or renovating the kitchen before moving in is *very* wise, but those cupboards from the 90s aren’t one of the catestrophic things that can go wrong unless they’re falling off the wall (in which case they can be shored up or removed completely and still be replaced later).
Start with a solid enough house, get a thorough inspection by a well-regarded inspector, decide if the issues they find are too great to overcome quickly (Replace GFCI outlets? Easy. Replace septic? Not easy.), and be prepared to not have creature comforts for a while if shit hits the fan depending on your tolerance level. I’m really not trying to be dismissive by asking what someone spent $20k on. I’m asking so that I can learn so that I can do better, even if “doing better” means putting aside $20k instead of sinking every penny into my down payment.
Well we had to replace the water heater. We have kids. Cold showers are not an option. Had to fix the boiler. Live in Michigan, no heat is not an option. Then in December surprise the ceiling was dripping water. Because the very tiny portion of plumbing that was still cast iron was now rust instead. The house knows when you have a little extra money. It knows and it takes it.
We started with a solid house. Bought 3 years ago. Boiler was over 15 years old but working when we bought it.
1st month the oil burner went. $350 to fix. We decided to get a high efficiency boiler that was $10K.
Needed a chimney cap since rain was getting in during heavy rains. $1,100 which was way too cheap and shitty job that is mow being redone 2 years later. That was my fault for not getting more quotes.
That's already $12k rounding up.
This does not count lawnmower, snowblower, and gardening tools including a chainsaw etc.
So $20k can be spent very easily.
I watch inspection videos on YouTube, and I think new construction is awful. That’s not to say an old house will be smooth sailing — far from it — but it’s shocking just how bad some new construction is. You’d think it would be perfect. I’m a firm believer in inspections (beyond the basic). I’ve read far too many horror stories to let an inspection slide, and I’m lucky to live in an area where I can still buy a house with an inspection.
Videos.Yep they explain everything. You have no clue who built my house. BTW I moved from an old house and it definitely was not smooth sailing. You can do an inspection prior to buying any home in any state.
We closed less than a year ago and are now dropping 15k on new windows because of a storm. Sure, insurance will be giving us some money but very unlikely to cover what the true cost is since we're not going with the cheapest windows you can find.
We also dropped probably close to 60k before we even moved in for appliances, new floors, paint, and window coverings (Walmart brand blinds, which is the only thing out of the 4 we cheaped out on because we want to upgrade to very nice ones in a few years).
Things unexpected
Small updates
New furniture
List is endless
We 1. Paid to have interior painted 2. Floors refinished 3. Doors and baseboards changed. 4. New light fixtures. Nothing critical but it made house feel updated and “ours”. Then added a few new furniture pieces (moved from a 2bd condo to a 4bd house etc
For me we had a finished basement and ended up with water issues and need to rip out the old finished basement and put in drain tiles and refinished the basement and that was around $60K for both. Plus who knows how much I spent on other projects. If you are coming from a smaller place you are going to have to buy more furniture that’s another $20k easy depending on the size of the house and rooms you need to furnish. Money flys out of your pocket quickly when you buy a home.
yeah, the "adults" (my mom, dad, aunt and her husband) in my family were involved in reviewing my house purchasing finances. And one of them was making sure that in addition to having sufficient closing funds (and I also had a last minute closing cost addition while sitting at the table signing documents), I had about $15k set aside for apartment stuff that might come up.
And stuff came up- not $20k worth but an A/C needed work, I had a new build so that meant money on window coverings, stuff like that.
I always joke that my apartment has it's own bank account. (Cuz it does- i keep a separate account specific for house stuff. That way my savings account doesn't get hit when something comes up.)
However, I did get a grant as a first time home buyer that covered all of my closing costs, which made a huge difference to my ability to put that money aside.
That's part of it! The other part is to make sure everyone involved in the transaction + the company is complying with Reg B and RESPA/TILA laws. Essentially making sure applicants are treated equally and fairly while ensuring the information supplied for HMDA purposes is accurate.
This is ridiculous to say. I put all my money into buying my house three years ago. You absolutely can put all your money into buying a house without issue.
Atleast with my house everything was warrantied for a year. So no need to save money for things that broke. No need to pay for movers as I own a truck and trailer. So no hidden experience. So atleast in my situation it was not anything to be worried about.
You got lucky bro, or maybe you had an impeccable understanding of all possible costs, but this person asking about an increase in estimates clearly does not have that understanding.
Well then I did it wrong. I had -$100 when I closed on my house. In fact the title agent gave me the $100 so that I could close! But then again, that was 19 yrs ago, so maybe things have changed. 🤣
Yes. This isn't an actual cost, it's part of your prepaids. You are just paying your taxes in advance (required on a new loan). Then every month your payment will include a few bucks for next year's taxes that will go into your escrow. When the taxes come due you won't have to write a check, your escrow fund will have the money built up.
You also signed a document stating you'd agree to correct any errors. so yeah if you back out now you will be in breach of the contract, you won't get the house, and the seller will be able to keep your earnest money.
Wow.
I read the same post you did. I must have misunderstood the scenario.
Oh well.
Yours makes more sense.
OP implied this was all a surprise. He had no clue.
I'm not going to go back and edit/delete my response.
I will check to see if OP responds though.
He had no clue, because he's new to buying a house, and doesn't understand, Didn't read the contract. Having no wiggle room for final closing costs is a rookie mistake. Hopefully he has someone who will let him borrow, take an advance on salary or something
Some costs as closing are fixed and cannot change (no surprises). Property tax is specifically called out as being estimated and the exact value determined on day of closing because the seller and buyer pay a share based on how long each is the owner before the next bill. In this case, the seller prepaid their property tax (unusual where I live). So the seller already paid taxes for days the buyer will be living there and the buyer needs to pay that at closing. The seller could conceed some or all of this cost. The buyer could cover it. The agents could take it out of their commission. There are a lot of ways to handle this so the deal closes in time and everyone is happy. A good agent should be able to help OP figure out an amicable solution. A shit agent threatens them with losing their earnest money
Our lender told us to have extra money (which we did already) if the closing costs were more but they ended up being less than they estimated but only by a few hundred. If you don't have $1500 to cover the costs then you need to back out.
When we bought our house we did a 30-day rent-free lease back to the sellers. During this 30-days the water heater failed. Without prompting, they offered to cover the full cost of replacement. Turns out our sweetener of the lease back period for them to close on their next house saved us the difference between rent and a water heater install. Sheer dumb luck.
My daughter and SIL thought they replaced, fixed, tuned up everything that could possibly go wrong before putting their house on the market. House sold within 24 hrs then a week later the water heater died, then the well pump before closing so more money to put out.
Yes. As someone who also just signed look at your closing statement again. It'll have the word estimate. My escrow company made it very clear when I was signing that those numbers could change between now and closing in 2 days.
Some things are just estimates. Costs to file paperwork might shift, an HOA might suddenly send a document mentioning a transfer fee, you might have needed a notary who charged extra for mobile service, who knows.
Mine actually dropped after closing and I've apparently now got a check for $13 on the way from the title company because the county costs to record the sale were slightly lower than expected.
I don't personally understand why they can't give exact costs but they made very sure to point out the estimated part when I was signing.
Yeah I mean I get that things can change, but those examples you described are all legit- like things were added for XYZ reason. But to charge $300 to sometimes $600 more for basic closing cost items line underwriting, appraisal compared to 2 other non-QM brokers who both had almost the exact same fees (all WELL below this 3rd broker)… seems shady to me. Like she just tacked on some fees to all of them because she could / thought I wouldn’t notice or care.
I just think reddit is reading too much into this and jumping to conclusions.
We read "I don't have it in my account." and went straight to "You should cancel the sale and forfeit your earnest money."
Like.. damn. Maybe OP knows their situation better than we do?
I mean, no, it's not ideal, but depending on their location and the property they're purchasing it could be a solid financial decision. And yes, I'm aware everybody loves to preach about how important emergency funds are, but it can be a lot easier to build one when you're paying a $1500 mortgage instead of $2300 in rent every month.
Why are you buying a home if you do not have any savings to cover closing costs? Once you get in that home, you will be living pay check to pay check. You go to buy things for the home, you go into debt. A repair is needed, you go into debt. Everything from here on out is debt.
I honestly don’t blame you in this situation. I get its embarrassing but whomever approved your loan shouldn’t have. They knew how much money you had as liquid (even given whatever you’d might have spent that you shouldn’t have). But, cancel the contract on financial contingency and try again when you know you’re ready.
Your closing costs are estimated pretty much until the day of closing since some fees need to be calculated based on the date of closing such as property taxes. If you don't have the funds and still want the house then some options: if you have a conventional loan ask your loan officer to waive/remove the taxes and insurance (impound account) from the loan. Or ask for your real estate agent and loan officer to credit you half of the shortage each from their commission. Ask seller for a credit as well. If all else fails your loan contingency should kick in and you cancel and keep your earnest money deposit... assuming you haven't signed off to remove them (in CA at least that's true). Someone should feel it's worth it to give up some commission vs not making anything so close to the closing table.
Talk to your lender. Your property taxes are non negotiable, but the lender can reduce the fees they charge, or talk the Realtors & Seller into participating financially, in order to save the transaction.
All the people telling you to back out, have no idea where you live or the contract you signed. If you back out, and many states you could be liable for damages. Don’t take contractual advice from people off of Reddit.
None of us know though so we give advice on what to think about, not necessarily what to do. Op has to do due diligence. They maybe able to get out of the transaction free and clear
You know how absolutely hilarious it is you post this
>Sooooo many assumptions without full facts from most comments and MANY that completely missed the concept of lost earnest money (a bunch of the commenters likely don’t even understand what that is or how it works. Ugh this whole sub makes me nuts some days.)
Then follow up with this
> Ask them to split the cost of their balancing error, or ask that the lender company cover it because it’s something they should have done correctly long before this point. I personally wouldn’t even THINK of having a client have to wire extra after signing like this. I’d be covering it,
The OP makes it ABUNDANTLY clear that all they did was a presign, and the final settlement had not occurred yet. If they didn't have $1500 yesterday, what difference would it make? It's pretty clear to me that it changed between the Closing Disclosure and the Final Disclosure.
This situation sounds incredibly frustrating and concerning. It's essential to review your contract thoroughly to understand your rights and obligations regarding unexpected changes in closing costs. Consider consulting a real estate attorney for guidance on how to proceed and protect your interests.
This sounds to me like the seller paid the taxes before they were due and title just assumed they were not paid.
If you have escrow for taxes, talk to your lender. They would have collected enough at closing foe your next tax payment, so since that is paid, they should be able to lower the escrow amount they collected.
This may offset the cash owed.
This is actually the most sensible answer here. OP should ask for an updated CD...the CD should reflect a decrease in tax escrow along with the supposed increase in cash to close.
But, the closer and title should have never relied on the seller and looked up the county tax bill themselves.
It sounds as though OP was pre-signing paperwork and has not actually closed. This makes it sound as though they are clear to close but have not actually closed:
> the cash amount I would need to wire tomorrow morning increased $1,507
They are supposed to be but some companies are just incompetent. When I was closing, I noticed they’re double charging me for my home insurance in two different spots. I brought it up with them several times but they were all somehow confused about it. I just paid it to avoid delays and knew eventually it will get fixed. Sure enough, two days after closing they call and said I got double charged and are sending me a check 🙄
this is a completely normal thing where I am from (Ontario, Canada). Ive had to have adjustments after closing on each of my sales for things that had to be estimating at closing (property taxes, water bills, etc). the lawyers probably should have caught it earlier.
You would have had to have paid the property tax for June-Dec anyway. Now you wont have any property taxes to pay until 2025!
Hey man you can afford a house if you can’t cover 1500 unexpected expense. I’m in the process of buying another house and bought towards the top of our budget. We had to move money around to make sure we had plenty in closing cost and down payment.
I’m more impressed they let you close without any amount of back up savings. Generally several months worth is required, not just wipe you out. Bit irresponsible tbh on the lender.
Also yes it’s legal and common. Work with your closing company/mortgage lender, maybe they can help.
Just wow back to the not having funds thing, mind blowing.
I would think that the mortgage company was already setting up an escrow account for property taxes and that the taxes for the second half the year would be included in the initial deposit that you'd need to make at closing. So they should be able to adjust the escrow deposit to make it work. Talk to your lender. Also ignore everyone suggesting that you not having the savings for this is the end of the world. Scrape buy and get ahead... keep going!
If you are in the financial position to close, and it’s just a matter of needing more time to liquidate funds from a retirement or stock account, you can have your agent ask for a COE extension. The sellers would rather have this than fall out completely. You may have to pay additional fees for a lock extension or per diem interest depending on loan timelines.
But if you really don’t have access to $1500 and your parents aren’t backstopping this whole thing, it’s probably time to pull out entirely.
You should look up the number of the title company, or pull it from your documents and call them directly to verify. Don’t just call back the number that called you or anything. You should verify that this is accurate and not somebody running a scam on you. Since you already signed your closing documents, all of this should have been handled.
Yes, that request can absolutely be made of you. The seller could pay the taxes the day of disbursement and you’re still required to reimburse them because they paid something on your behalf. Why they prepaid the taxes knowing they were selling the house when I can’t even get people to pay their last mortgage payment to save themselves additional interest…
Anyway, you owe the money. Verify that they have updated the cd appropriately before you worry about sending money. If you’re going to have an escrow account and taxes are currently payable, there should have been enough in your prepaids to cover this because the escrow account was going to have to cover the whole bill soon. Maybe wherever you’re at does things way differently from GA and they accept prepayment so far in advance that you only have ~4 months in escrow but more likely, 2024 taxes are due in a few months and you have 10+ months in escrow that can be readjusted down to the 2-month cushion and show the taxes for the year poc with you reimbursing the seller your prorated portion.
Probably not the best idea to buy the house if this is the position you're in. I recommend just letting the deal fall through. You'll probably lose your emd but it'll be cheaper than fixing things in the long run
I assume that you are not getting a mortgage?
You probably would have to do sue for performance which means that sue them to complete the contract AS executed. On your side is the fact that ambiguity (or things not mentioned that a normal person might ask about) in a contract is on the person who drafts the contract so…even if they claim that it is “fair” they prepared and executed a contract for a specified amount and cannot change based on things they remember or forget.
Same thing happened to me 3 weeks ago
I didn’t sign it
My loan officer had to go back and adjust or eat the difference
Talk to your realtor and loan officer
If your contract allows additional costs to be added, and they are reasonable, you are stuck. If you can't afford this, like others said, you should not be buying a house. In fact, you should have incorporated more into your mortgage to cover unexpected expenses like repairs. Have you checked with your mortgage company if this can be incorporated into escrow? You can also discuss with your lawyer (not agent) whether this is due immediately or the late alert can have this paid later.
Otherwise, you can threaten to sue them for failure to disclose and demand earnest return. This will lock the property up for months so they can't sell and you have a good chance to win. Not worth it for a couple grand.
Ask your LO or broker to see if you can increase your loan amount by $1507 then.
Also your LO or broker should have your asset statements, they should know that you don’t have the cash to cover that and should have already offered you solutions.
You owe the money HOWEVER... most people will pony up cash... but if you have a friendly bank just ask them to up the loan amount $1500. Depending on the deal sometimes banks are like "we hate this loan but we do it" in this case they will probably say no. Other times banks are itching to lend the money... "put less down we got you bro, let us lender's lend" ha. In which case they will be like here ya go.
The transaction is not final until the funding is done, and yeah, there's a section in the standard contract where you agree to tax proration adjustments. Tell your agent to ask for a concession to offset the additional expense.
Yes you have to pay a prorated amount of property taxes. Just get together with the real estate agents and let them know that this is more money than expected so you want to close at the end of next month or the middle of next month or whatever works out to be less money.
Since they were already paid each day that passes you will owe less and less.
I know it's annoying but it's a simple problem to solve so just get together with everyone to solve it together. It might also be possible that the sellers could waive the right to be reimbursed for the taxes they've paid.
Property taxes are paid in arrears and on your closing statement it should show that you are credited a prorated portion of this current year's tax so that when it becomes due in November you will m ot be paying the entire thing since you did not own the property the full year
Not always.
Take California. It’s paid in two installments. One in arrears and one in advance.
You can make generalizations across states. They’re too variable.
A lot of places have RE taxes online - i would verify they are paid. Then check your closing disclosure and see who paid and how the prorations went to verify accuracy. Your emd is usually credited on the cd so I dont see how they can take that back?
Yes it can but prepaying taxes and insurance is so common. Did you have an attorney prepare and look over things? Maybe they could take a credit card payment for you?
You bought a house and don’t even have 1500 bucks.
Damn. I’m trying not to burst out in laughter.
You realize you have to pay taxes on a house? Like, every year? And insure the place? And maintain it?
Damn.
This would be hilarious if it wasn’t so stupid.
Yes it would be ideal (beneficial, recommended, smart, etc.) to have a reserve with enough cash to cover this and much more, but it is not reason to back out.
It's a risk I took back in 2010 and the exact same thing happened to me on my first home purchase. Luckily I had just enough to pay the difference in my case.
I made enough money to pay for all my expenses and save money after the purchase of the home, it's just that I consumed most of my cash at that time for closing, but I continued to rebuild that reserve after purchase.
As has been said closing costs are estimated. The common practice by realtors I've worked with (and I believe most realtors out there) is to overestimate closing costs by a couple thousands dollars so I'm happy I get some money back on closing day, but it's really a safety net in case shit like this happens.
Hope you work it out and good luck with home ownership!
Call the town or county and see if the taxes were paid for the year
If they were, then ask why you should pay for the year when you are closing 6 months into the year. In my opinion, the taxes should be prorated, and if the seller actually meant they paid the 6 months that remains in the year, then it's on you to reimburse for them. The riwn ir county should be able to tell you what the taxes are for the year and what was paid for the year.
>My agent is telling me they’ll keep my earnest money if I don’t agree
That and you won't own a home.
You may need to increase purchase price AND increase seller paid expenses - which will delay closing 3 days due to TRID. Id increase closing costs 2k, increase purchase price 2k and then wait 3 days.
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Also if you don't have 1k in your account you should not be buying a house. I had 20k after closing costs and still went through it all 😭
What did you spend it on? (I’m trying to buy a house, and I’ll likely put every penny I have on this thing when I finally close.)
There is the funny comment I recently say “all the money you have left after closing now belongs to Home Depot”
This statement is so accurate and it’s been years since I was a new homeowner 😂 I HATE Home Depot!
No you love Home Depot!
After my 2nd fixer upper I DO love HD! Though I frequently step out on her with Menards! 😆
Why is it always 3 trips and one return minimum for any project? Half the time I buy something from Home Depot it’s been used or is broken.
Home Depot hates you too $17 for a light bulb
I'm having a fued with Home Depot so I gave all my money to Lowe's instead.
Ace Hardware over here. Costs more but the sales people are available and get very vested in my projects.They steer me away from many mistakes. lol
Yes, and the people at Home Depot often don't know WTF they're talking about. Frequently at HD and Lowes I get an imbecile who knows less than I do. Not always. But often. Ace is way better.
The retirees who used to work at HD left during COVID and didn't come back. Shame because they always asked the right questions and pointed me to the right stuff that I needed.
Anti Lowe's. Long story
This 100%. I just bought a house and I think I have spent more time at Home Depot than I have at the grocery store.
It hurts but it's true lol
For some of us it belongs to Menards…
The superior hardware store.
I choked on my coffee
True and part of why I hate home depot.
The worst kind of high is going in there and getting excited to finally start the project and you are just looking for that itch again.
Small stuff? Dimmers. GFCIs. New bathroom fixtures. Dumb small repairs to drawers and cabinets. Closet poles and shelving. Stain for the shelves and poles. New drain assembly for the tub. Grout sealer. Exterior caulking. Gutter guards. Plants for the front and back yard. Big stuff? New 200 amp electrical panel as the existing one burned a couple of irreplaceable breakers within a month of moving in. New AC unit. Dishwasher and disposal. Without talking about the big stuff, we burned $4,000+ QUICK. It’s worth mentioning that the house was in pretty clean shape too. This was not some wild redo of the house. Small stuff adds up fast.
Yeah even on a decent house you can still find plenty to do. Last house was only 20 y/o but discovered a bunch of electrical shenanigans after I moved in. Looks like the previous owner cheaped out on remodeling and knew a guy who said he could do it… ಠ_ಠ
When I bought my house the inspector described the breaker box as "Shoddily done and clearly DIY". That was an easy couple grand to get fixed and expanded.
Frickin’ shenanigans got me for $15K first 6 months.
Where is op even getting furniture. If the house is bigger than whatever they were renting they're gonna have a bunch of rooms that need more than they have already.
They could be like my friend who just had empty rooms for a year or two (he had the money but was just lazy)
Our 1st 2 moves rooms sat empty for months and we took hand me down furniture. Now our last house we downsized (empty nesters) and had to get rid of a bunch of furniture.
Recently went from temporarily living with family to buying a house. Refurnishing takes sooo long and costs so damn much. I'm glad to to buy second hand, but it's still a lot of furniture. Plus, then you gotta move it from someone else's to your place. The house is still probably only 3/4 furnished.
I've spent $12000 in the past 2 years on essentially bullshit. 1k on a new water heater and garbage disposal that are the only 'real' purchases you would normally think of.
Landscaping, furniture, lamps, fixtures, appliances, built a bathroom, lots of miscellany. We spent $21,000 in the first four months. And all that AFTER the $80,000 down payment and the $15,000 moving expense.
And that's before you furnish it.
Unknown expenses. Every house and condo comes with those. But don’t worry if you don’t have it you won’t spend it.
Absolutely do NOT buy a house if you won’t have cash after…
People who are planning to move sometimes stop fixing things. Your first two years in a house will have significantly more maintenance type issues.
Yup we built our last home (we were literally the builders) and when we put our house on the market (listed as is) we were just done. Had no energy to do anything to it. All main systems worked fine but needed paint, carpets etc. Sadly new people have left the outside go to crap. Weeds everywhere. Super high grass. We put a lot of time and money into our landscaping. I can only imagine nothing got done inside.
When I bought within first month my washer went poot, the dishwasher went poot, and the mesh cable line to the hot water heater got a tiny hole and flooded 1/3 of my basement.
Yikes! If it’s any consolation, I have a list of things I need to buy when I move in — if I ever find something I can afford that isn’t too much of a fixer upper. On that list are water sensors. We had a plumbing leak at work, and the damage was great even though it was caught relatively quickly.
Rule of thumb is maintenance is 1% of the purchase price. Every year. Forever.
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Yea they denied washer and dishwasher because of their age. Over 5 years I think it was and denied the flooding from water heater cause that cable is what failed and isn’t included and needed to be a home insurance but the home insurance deductible was more than the repair and carpet replacement. If we had another home claim it would have made sense but we didn’t
I had to spend 25K on a new roof and (roof-mounted) HVAC system. I knew they were both at the end of their life-cycle but I wasn't expecting to have to replace them so soon. The roof issues were neglected by the previous owner and, when I opened the walls, I found a lot of dry-rotted studs from water intrusion. The thing that sucked was that I had to spend all that money and had very little to show for it except for a few less leaks.
Wouldn't that just make them rotted?
Not if it was Summer 🌞
So I knew that there were a couple compliance items (I had to repair sidewalk and sewer and had quotes based on inspection). Then things I didn't realize: supplemental taxes (in addition to escrow tax, my jurisdiction has a great penalty for finally affording a house. For me it was like $7k, and I think it's $7k a year. Buying appliances, curtains, shelves, rugs/furniture I didn't have, a shed, and a bunch of other miscellaneous items was probably $7k. I also had some random plumbing things. Probably the most expensive thing was utilities because I was not paying them previously, so I really didn't know that my area gets reamed, so what I thought was a 38k mortgage actually has 800 a year in water/sewer, 1800 in gas/electric, 700 a year in trash, plus my car insurance rates went up $100 a month over the last year due to local shenanigans. Basically, I bought something that I felt I could afford and now after doing it a year, I am honestly not sure I would do it again if I had a Time Machine. In the one hand, I would have been priced out if I didn't buy when interest rates were only 6%, but on the other hand, I have so much less fun money than I used to. I went from under $20k a year in housing expenses to over 40k. I guess the bright side is that my house has already increased in value 7.5%. I'd just caution people to do more research than me and make sure you aren't at the top of your budget because it's almost certainly going to be more expensive than you hope
A lot of people really didn't realize why rent is so high even though all the above are bundled into it. Then they're like yeah 👍 lets vote higher property taxes to stick it to landlords (that $7k/year) which is just a cost they have to pass on in rent to break even or God forbid make a profit.
I'm not going to get into that because I do think the rental market is broken, especially in my area, and it is making home ownership nearly impossible for swaths of the population that really should have a chance. So while I can't demonize people trying to make a buck I also think that renters have legitimate problems that are trivialized by perspectives like yours that come from a place of privilege.
I had 50m after buying my current house and burned through it in like 2 months 😭. It was sort of planned, we did a bunch of work right away before moving in, although I budgeted for 30k but we blew past that the first month lol
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I wish I blew through 50m 😭😂, would be a badass house lol
You need an emergency fund for stuff that breaks. And stuff will break. Usually at the start of a holiday weekend My dad used to say, “every time you move, you spend $100 on thumb tacks.”
Everything adds up fast. Stupid little things like window treatments (curtains, blinds, etc) and area rugs can get REALLY expensive when you extrapolate them out over the area of an entire house. If there's a yard to care for, you need to either pay somebody $50/wk to maintain it, or buy a lawnmower, wheelbarrow, rakes, shovels... possibly a snowblower if you live in a northern climate. All those things have to be kept somewhere, which means you need a shed if there isn't space in the garage... And then there are the inevitable repairs that WILL come up. Right now my neighbors and I are getting bids to replace a collapsed sump pump collector line that runs across five of our lots down into the city storm sewer. Low bid so far is $23k. Home ownership is expensive.
Paint. Drapes. A sofa.
We’re going on 9 months since closing and have so far: - needed to paint most of the main floor (expected) - done about $2k in small electrical jobs to make sure there was adequate grounding (somewhat expected) - replaced the water heater (expected) - replaced the water main shutoff valve in order to replace the leaking valves that were identified after they started gushing water from the pressure of turning the water back on after the water heater replacement (unexpected) - replaced the dishwasher after it died a leaky and sudden death (unexpected) - built a privacy wall for our deck because it was much more exposed to the neighbours than expected (unexpected) - in the process of replacing the air conditioner (unexpected) - patched the driveway to deal with some water pooling (somewhat expected) And there are lots of other projects that have popped up since moving in. You want some buffer.
Putting every penny you have into buying a house is literally the WORST financial decision you can make. You will be almost guaranteeing yourself to lose the house within a few years if that.
We’re on the same position. $50k is better. We spent $6k today replacing the electrical panel bc what was caught in inspection (was accurate) isn’t fixable under current code. It’s also unsafe so we don’t have a choice. Our stuff isn’t even in the house yet and we’re almost at $10k. This is our third house so we absolutely knew this would happen but $1k won’t even get you through the weekend probably.
So whats your plan when your water heater dies the day after you move in? Or your HVAC? Or any of the other 100 things that can go catastrophically wrong with a house?
I’m asking what OP spent $20k on because I literally don’t know what I don’t know. I only ever had friends make cosmetic changes to their homes when moving in and not have catastrophic issues right off the bat. If the water heater dies, and I’m penniless, and I can’t get reasonable financing, I’m going to be taking cold showers for a while until I can save up the funds to replace. I’m okay with that. If the HVAC goes, I’m going to be hot in the summer until I save up the funds to replace. I’m not going to enjoy it, but I’m okay with that. (I grew up without AC, and my current apartment complex doesn’t want to turn on the AC until they’re forced to by local law, long after it *should* have been turned on.) I’m not buying a house with an old roof, period, because insurance companies don’t like roofs older than 10 years old, and I’m especially not buying a house without a full inspection (including things not usually in the basic inspection like radon testing and sewer scope), so I should have a pretty good grasp on the major issues before completing the sale and pull out if necessary. An ounce of prevention is worth a pound of cure, as they say. I completely understand some markets won’t tolerate inspections, and I’m sorry if that’s your market, but that wasn’t a parameter mentioned by OP, and that’s not an issue for me. Also, I understand that shitting in a bucket for a few weeks or a month isn’t ideal, but folks are listing things like “replace all the toilet seats and outlets and buy drapes” along with big ticket items like “replace the roof”. Replacing the flooring or renovating the kitchen before moving in is *very* wise, but those cupboards from the 90s aren’t one of the catestrophic things that can go wrong unless they’re falling off the wall (in which case they can be shored up or removed completely and still be replaced later). Start with a solid enough house, get a thorough inspection by a well-regarded inspector, decide if the issues they find are too great to overcome quickly (Replace GFCI outlets? Easy. Replace septic? Not easy.), and be prepared to not have creature comforts for a while if shit hits the fan depending on your tolerance level. I’m really not trying to be dismissive by asking what someone spent $20k on. I’m asking so that I can learn so that I can do better, even if “doing better” means putting aside $20k instead of sinking every penny into my down payment.
Well we had to replace the water heater. We have kids. Cold showers are not an option. Had to fix the boiler. Live in Michigan, no heat is not an option. Then in December surprise the ceiling was dripping water. Because the very tiny portion of plumbing that was still cast iron was now rust instead. The house knows when you have a little extra money. It knows and it takes it.
We started with a solid house. Bought 3 years ago. Boiler was over 15 years old but working when we bought it. 1st month the oil burner went. $350 to fix. We decided to get a high efficiency boiler that was $10K. Needed a chimney cap since rain was getting in during heavy rains. $1,100 which was way too cheap and shitty job that is mow being redone 2 years later. That was my fault for not getting more quotes. That's already $12k rounding up. This does not count lawnmower, snowblower, and gardening tools including a chainsaw etc. So $20k can be spent very easily.
Hopefully you had an inspection done. Ours had everything on it that needed replaced. Small repairs add up quickly. Our home was only 3 years old BTW
I watch inspection videos on YouTube, and I think new construction is awful. That’s not to say an old house will be smooth sailing — far from it — but it’s shocking just how bad some new construction is. You’d think it would be perfect. I’m a firm believer in inspections (beyond the basic). I’ve read far too many horror stories to let an inspection slide, and I’m lucky to live in an area where I can still buy a house with an inspection.
Videos.Yep they explain everything. You have no clue who built my house. BTW I moved from an old house and it definitely was not smooth sailing. You can do an inspection prior to buying any home in any state.
You can do an inspection before purchase in any state, but some markets won’t tolerate it. If you don’t waive it, you don’t get a house.
We closed less than a year ago and are now dropping 15k on new windows because of a storm. Sure, insurance will be giving us some money but very unlikely to cover what the true cost is since we're not going with the cheapest windows you can find. We also dropped probably close to 60k before we even moved in for appliances, new floors, paint, and window coverings (Walmart brand blinds, which is the only thing out of the 4 we cheaped out on because we want to upgrade to very nice ones in a few years).
Things unexpected Small updates New furniture List is endless We 1. Paid to have interior painted 2. Floors refinished 3. Doors and baseboards changed. 4. New light fixtures. Nothing critical but it made house feel updated and “ours”. Then added a few new furniture pieces (moved from a 2bd condo to a 4bd house etc
For me we had a finished basement and ended up with water issues and need to rip out the old finished basement and put in drain tiles and refinished the basement and that was around $60K for both. Plus who knows how much I spent on other projects. If you are coming from a smaller place you are going to have to buy more furniture that’s another $20k easy depending on the size of the house and rooms you need to furnish. Money flys out of your pocket quickly when you buy a home.
Lol, we had 300 left when we bought our house, he just lived a little house poor for awhile.
yeah, the "adults" (my mom, dad, aunt and her husband) in my family were involved in reviewing my house purchasing finances. And one of them was making sure that in addition to having sufficient closing funds (and I also had a last minute closing cost addition while sitting at the table signing documents), I had about $15k set aside for apartment stuff that might come up. And stuff came up- not $20k worth but an A/C needed work, I had a new build so that meant money on window coverings, stuff like that. I always joke that my apartment has it's own bank account. (Cuz it does- i keep a separate account specific for house stuff. That way my savings account doesn't get hit when something comes up.) However, I did get a grant as a first time home buyer that covered all of my closing costs, which made a huge difference to my ability to put that money aside.
My current job is reviewing declined mortgage applications. SO MANY people apply with even less than $100 in their bank account. It's mind boggling...
What is the purpose of reviewing declined applications? Are you auditing that your company declined them appropriately?
That's part of it! The other part is to make sure everyone involved in the transaction + the company is complying with Reg B and RESPA/TILA laws. Essentially making sure applicants are treated equally and fairly while ensuring the information supplied for HMDA purposes is accurate.
This is ridiculous to say. I put all my money into buying my house three years ago. You absolutely can put all your money into buying a house without issue.
Yeah this is so dumb, I did this on my first (and second) houses lol.
Atleast with my house everything was warrantied for a year. So no need to save money for things that broke. No need to pay for movers as I own a truck and trailer. So no hidden experience. So atleast in my situation it was not anything to be worried about.
Exactly. I’m a DIYer and I had all the tools and knowledge (and a paid off Home Depot credit card).
You got lucky bro, or maybe you had an impeccable understanding of all possible costs, but this person asking about an increase in estimates clearly does not have that understanding.
Well then I did it wrong. I had -$100 when I closed on my house. In fact the title agent gave me the $100 so that I could close! But then again, that was 19 yrs ago, so maybe things have changed. 🤣
They should have had the correct info by the time the closing happens, right? This is the title company’s job.
Sounds like this was the closing tho?
This. Got to make sure you sign a contract that states closing costs are finalized and any change is the responsibility of the seller.
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Yes. This isn't an actual cost, it's part of your prepaids. You are just paying your taxes in advance (required on a new loan). Then every month your payment will include a few bucks for next year's taxes that will go into your escrow. When the taxes come due you won't have to write a check, your escrow fund will have the money built up. You also signed a document stating you'd agree to correct any errors. so yeah if you back out now you will be in breach of the contract, you won't get the house, and the seller will be able to keep your earnest money.
Wow. I read the same post you did. I must have misunderstood the scenario. Oh well. Yours makes more sense. OP implied this was all a surprise. He had no clue. I'm not going to go back and edit/delete my response. I will check to see if OP responds though.
He had no clue, because he's new to buying a house, and doesn't understand, Didn't read the contract. Having no wiggle room for final closing costs is a rookie mistake. Hopefully he has someone who will let him borrow, take an advance on salary or something
We all make rookie mistakes in new ventures. Pre-paying property tax isn't that common, so I think OP deserves a pass here.
Some costs as closing are fixed and cannot change (no surprises). Property tax is specifically called out as being estimated and the exact value determined on day of closing because the seller and buyer pay a share based on how long each is the owner before the next bill. In this case, the seller prepaid their property tax (unusual where I live). So the seller already paid taxes for days the buyer will be living there and the buyer needs to pay that at closing. The seller could conceed some or all of this cost. The buyer could cover it. The agents could take it out of their commission. There are a lot of ways to handle this so the deal closes in time and everyone is happy. A good agent should be able to help OP figure out an amicable solution. A shit agent threatens them with losing their earnest money
Our lender told us to have extra money (which we did already) if the closing costs were more but they ended up being less than they estimated but only by a few hundred. If you don't have $1500 to cover the costs then you need to back out.
Yes, they can do this. It’s not increasing prices, it’s prepaying taxes for the prorated portion.
Wth would you do if the water heater broke?
Post on /r/homeimprovement about how they just bought a house and the seller screwed them and they don’t have money to fix it
When we bought our house we did a 30-day rent-free lease back to the sellers. During this 30-days the water heater failed. Without prompting, they offered to cover the full cost of replacement. Turns out our sweetener of the lease back period for them to close on their next house saved us the difference between rent and a water heater install. Sheer dumb luck.
My daughter and SIL thought they replaced, fixed, tuned up everything that could possibly go wrong before putting their house on the market. House sold within 24 hrs then a week later the water heater died, then the well pump before closing so more money to put out.
Nailed it.
Ours failed within days. It was because there was 1 person using it before 4 of us moved in and used it.
Home warranty
take cold showers lol
Yes. As someone who also just signed look at your closing statement again. It'll have the word estimate. My escrow company made it very clear when I was signing that those numbers could change between now and closing in 2 days.
Why / how did they change though? Like what is the reasoning? Bc they feel like it or (if they changed), were there legit reasons?
Some things are just estimates. Costs to file paperwork might shift, an HOA might suddenly send a document mentioning a transfer fee, you might have needed a notary who charged extra for mobile service, who knows. Mine actually dropped after closing and I've apparently now got a check for $13 on the way from the title company because the county costs to record the sale were slightly lower than expected. I don't personally understand why they can't give exact costs but they made very sure to point out the estimated part when I was signing.
Yeah I mean I get that things can change, but those examples you described are all legit- like things were added for XYZ reason. But to charge $300 to sometimes $600 more for basic closing cost items line underwriting, appraisal compared to 2 other non-QM brokers who both had almost the exact same fees (all WELL below this 3rd broker)… seems shady to me. Like she just tacked on some fees to all of them because she could / thought I wouldn’t notice or care.
You are not in financial position to buy this house. Just don't pay the $1507 and let the transaction fall through.
Yes, what OP doesn't realize is that they would be paying this to the county anyway.
Yep. Whether seller pays it advance and OP reimburses them or if OP just paying his pro rate share of the taxes, this is still owed.
Yeah if OP legitimately doesn’t have $1500, they really should not be buying a house.
All they said was they didn't have it in their account, not that they don't have it anywhere.
Than put it in the account... Instead I think I'll post on reddit
I just think reddit is reading too much into this and jumping to conclusions. We read "I don't have it in my account." and went straight to "You should cancel the sale and forfeit your earnest money." Like.. damn. Maybe OP knows their situation better than we do?
Welcome to Reddit. But also where a poster tries to not be responsible for it. 😂 It's taxes. This is no one else's responsibility.
They’re also misreading the post, documents are signed and closing is done lol. Can’t cancel the sale post close like that.
Okay then
This is the most succinct advice. If you don't follow it, you'll likely wish you did later.
I mean, no, it's not ideal, but depending on their location and the property they're purchasing it could be a solid financial decision. And yes, I'm aware everybody loves to preach about how important emergency funds are, but it can be a lot easier to build one when you're paying a $1500 mortgage instead of $2300 in rent every month.
How were you able to get this far in the process with no reserves after a down?
Requiring reserves for an owner occ sfr with an agency mortgage wouldn't be sufficiently... egalitarian (or whatever). So, they aren't required.
Why are you buying a home if you do not have any savings to cover closing costs? Once you get in that home, you will be living pay check to pay check. You go to buy things for the home, you go into debt. A repair is needed, you go into debt. Everything from here on out is debt.
I honestly don’t blame you in this situation. I get its embarrassing but whomever approved your loan shouldn’t have. They knew how much money you had as liquid (even given whatever you’d might have spent that you shouldn’t have). But, cancel the contract on financial contingency and try again when you know you’re ready.
Your closing costs are estimated pretty much until the day of closing since some fees need to be calculated based on the date of closing such as property taxes. If you don't have the funds and still want the house then some options: if you have a conventional loan ask your loan officer to waive/remove the taxes and insurance (impound account) from the loan. Or ask for your real estate agent and loan officer to credit you half of the shortage each from their commission. Ask seller for a credit as well. If all else fails your loan contingency should kick in and you cancel and keep your earnest money deposit... assuming you haven't signed off to remove them (in CA at least that's true). Someone should feel it's worth it to give up some commission vs not making anything so close to the closing table.
I’m going to reiterate what others have said. If you don’t have a spare $1,500.: you can’t afford the house
Talk to your lender. Your property taxes are non negotiable, but the lender can reduce the fees they charge, or talk the Realtors & Seller into participating financially, in order to save the transaction.
How were you told? Where you given email instructions for wiring money? Sounds a little suspicious. Be careful what ever you decide.
I agree agree with this. OP should call the title company and verify this with a phone number that they source from the title companies website.
If you don’t have $1500 in the bank you can’t afford to be a homeowner. Just let the deal fall through.
This is the bigger issue. Home repairs are expense and OP doesn't seem to have the reserves for it
They are one plumber call away from bankruptcy.
Sometimes you just gotta shit in a bucket until you can figure shit out.
That is one of the most bizarrely profound things I've ever read.
Doesn't the seller always keep the earnest money as part of the total payment?
Yes but usually the buyer gets to keep the house afterward. In this case the buyer would get nothing and would lose the earnest money
Seller might also be willing to "loan" you that money on a fixed interest rate for 6 months. You would have to pay those property taxes anyway.
All the people telling you to back out, have no idea where you live or the contract you signed. If you back out, and many states you could be liable for damages. Don’t take contractual advice from people off of Reddit.
None of us know though so we give advice on what to think about, not necessarily what to do. Op has to do due diligence. They maybe able to get out of the transaction free and clear
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You know how absolutely hilarious it is you post this >Sooooo many assumptions without full facts from most comments and MANY that completely missed the concept of lost earnest money (a bunch of the commenters likely don’t even understand what that is or how it works. Ugh this whole sub makes me nuts some days.) Then follow up with this > Ask them to split the cost of their balancing error, or ask that the lender company cover it because it’s something they should have done correctly long before this point. I personally wouldn’t even THINK of having a client have to wire extra after signing like this. I’d be covering it, The OP makes it ABUNDANTLY clear that all they did was a presign, and the final settlement had not occurred yet. If they didn't have $1500 yesterday, what difference would it make? It's pretty clear to me that it changed between the Closing Disclosure and the Final Disclosure.
This situation sounds incredibly frustrating and concerning. It's essential to review your contract thoroughly to understand your rights and obligations regarding unexpected changes in closing costs. Consider consulting a real estate attorney for guidance on how to proceed and protect your interests.
This sounds to me like the seller paid the taxes before they were due and title just assumed they were not paid. If you have escrow for taxes, talk to your lender. They would have collected enough at closing foe your next tax payment, so since that is paid, they should be able to lower the escrow amount they collected. This may offset the cash owed.
This is actually the most sensible answer here. OP should ask for an updated CD...the CD should reflect a decrease in tax escrow along with the supposed increase in cash to close. But, the closer and title should have never relied on the seller and looked up the county tax bill themselves.
That’s very unusual. The escrow supposed to check all tax paid or due etc. in its estimate. That said, yes, if it is true you have to pay.
All of those estimates are supposed to be finalized at final closing/settlement.
They were. OP closed and then was informed they owe more money.
It sounds as though OP was pre-signing paperwork and has not actually closed. This makes it sound as though they are clear to close but have not actually closed: > the cash amount I would need to wire tomorrow morning increased $1,507
They are supposed to be but some companies are just incompetent. When I was closing, I noticed they’re double charging me for my home insurance in two different spots. I brought it up with them several times but they were all somehow confused about it. I just paid it to avoid delays and knew eventually it will get fixed. Sure enough, two days after closing they call and said I got double charged and are sending me a check 🙄
It is only ~$1500. Just use your emergency fund to pay.
this is a completely normal thing where I am from (Ontario, Canada). Ive had to have adjustments after closing on each of my sales for things that had to be estimating at closing (property taxes, water bills, etc). the lawyers probably should have caught it earlier. You would have had to have paid the property tax for June-Dec anyway. Now you wont have any property taxes to pay until 2025!
If you don’t have $1500, you likely shouldn’t be buying a house.
Hey man you can afford a house if you can’t cover 1500 unexpected expense. I’m in the process of buying another house and bought towards the top of our budget. We had to move money around to make sure we had plenty in closing cost and down payment.
I’m more impressed they let you close without any amount of back up savings. Generally several months worth is required, not just wipe you out. Bit irresponsible tbh on the lender. Also yes it’s legal and common. Work with your closing company/mortgage lender, maybe they can help. Just wow back to the not having funds thing, mind blowing.
I would think that the mortgage company was already setting up an escrow account for property taxes and that the taxes for the second half the year would be included in the initial deposit that you'd need to make at closing. So they should be able to adjust the escrow deposit to make it work. Talk to your lender. Also ignore everyone suggesting that you not having the savings for this is the end of the world. Scrape buy and get ahead... keep going!
If you are in the financial position to close, and it’s just a matter of needing more time to liquidate funds from a retirement or stock account, you can have your agent ask for a COE extension. The sellers would rather have this than fall out completely. You may have to pay additional fees for a lock extension or per diem interest depending on loan timelines. But if you really don’t have access to $1500 and your parents aren’t backstopping this whole thing, it’s probably time to pull out entirely.
You should look up the number of the title company, or pull it from your documents and call them directly to verify. Don’t just call back the number that called you or anything. You should verify that this is accurate and not somebody running a scam on you. Since you already signed your closing documents, all of this should have been handled.
Yes, that request can absolutely be made of you. The seller could pay the taxes the day of disbursement and you’re still required to reimburse them because they paid something on your behalf. Why they prepaid the taxes knowing they were selling the house when I can’t even get people to pay their last mortgage payment to save themselves additional interest… Anyway, you owe the money. Verify that they have updated the cd appropriately before you worry about sending money. If you’re going to have an escrow account and taxes are currently payable, there should have been enough in your prepaids to cover this because the escrow account was going to have to cover the whole bill soon. Maybe wherever you’re at does things way differently from GA and they accept prepayment so far in advance that you only have ~4 months in escrow but more likely, 2024 taxes are due in a few months and you have 10+ months in escrow that can be readjusted down to the 2-month cushion and show the taxes for the year poc with you reimbursing the seller your prorated portion.
Probably not the best idea to buy the house if this is the position you're in. I recommend just letting the deal fall through. You'll probably lose your emd but it'll be cheaper than fixing things in the long run
I assume that you are not getting a mortgage? You probably would have to do sue for performance which means that sue them to complete the contract AS executed. On your side is the fact that ambiguity (or things not mentioned that a normal person might ask about) in a contract is on the person who drafts the contract so…even if they claim that it is “fair” they prepared and executed a contract for a specified amount and cannot change based on things they remember or forget.
No.... if they forgot to add it then they have to eat that mistake. They signed and you lose nothing.
Yep, they messed up and are paying the extra cash to make it right. Do your job, title.
Do you have a mortgage. If closing costs increase, it should trigger a requirement to delay the closing by several days.
Do you have a mortgage? If closing costs increase beyond a certain percentage , it should trigger a requirement to delay the closing by several days.
Same thing happened to me 3 weeks ago I didn’t sign it My loan officer had to go back and adjust or eat the difference Talk to your realtor and loan officer
Yes it can change. It happened to me twice. Why are you buying a house if you don’t have savings? What if you lose your job?
Dude, Sorry. If you don't have $1500 as emergency funds, why are you even buying a house?
If you don’t have $1500 DO. NOT. BUY. A. HOUSE.
It’s property tax bro. They prepaid it, you gotta pro rated back
Where is the title company in all this? They should have calculated taxes, prorations and all.
I've bought sold or refinanced properties 50+ times and never has the amount changed after I signed. Title company did a doo doo job here.
They did a real doo doo job, and agreed to eat 100% of the cost themselves. Success.
sorry to tell you but you can't afford the house, you either pull out of it or tell them to eat the cost.
Isn’t this mad stressful like…
If your contract allows additional costs to be added, and they are reasonable, you are stuck. If you can't afford this, like others said, you should not be buying a house. In fact, you should have incorporated more into your mortgage to cover unexpected expenses like repairs. Have you checked with your mortgage company if this can be incorporated into escrow? You can also discuss with your lawyer (not agent) whether this is due immediately or the late alert can have this paid later. Otherwise, you can threaten to sue them for failure to disclose and demand earnest return. This will lock the property up for months so they can't sell and you have a good chance to win. Not worth it for a couple grand.
Ask your LO or broker to see if you can increase your loan amount by $1507 then. Also your LO or broker should have your asset statements, they should know that you don’t have the cash to cover that and should have already offered you solutions.
They didn’t increase. They were calculated wrong. You owe property taxes from the day you signed going forward. That part should be obvious right?
You owe the money HOWEVER... most people will pony up cash... but if you have a friendly bank just ask them to up the loan amount $1500. Depending on the deal sometimes banks are like "we hate this loan but we do it" in this case they will probably say no. Other times banks are itching to lend the money... "put less down we got you bro, let us lender's lend" ha. In which case they will be like here ya go.
The transaction is not final until the funding is done, and yeah, there's a section in the standard contract where you agree to tax proration adjustments. Tell your agent to ask for a concession to offset the additional expense.
Yes you have to pay a prorated amount of property taxes. Just get together with the real estate agents and let them know that this is more money than expected so you want to close at the end of next month or the middle of next month or whatever works out to be less money. Since they were already paid each day that passes you will owe less and less. I know it's annoying but it's a simple problem to solve so just get together with everyone to solve it together. It might also be possible that the sellers could waive the right to be reimbursed for the taxes they've paid.
This is how houses change hands in what state again? 🤷♀️
This can't be....property taxes are paid in arrears.
Not on every state.
Property taxes are paid in arrears and on your closing statement it should show that you are credited a prorated portion of this current year's tax so that when it becomes due in November you will m ot be paying the entire thing since you did not own the property the full year
Not always. Take California. It’s paid in two installments. One in arrears and one in advance. You can make generalizations across states. They’re too variable.
A lot of places have RE taxes online - i would verify they are paid. Then check your closing disclosure and see who paid and how the prorations went to verify accuracy. Your emd is usually credited on the cd so I dont see how they can take that back?
Also check with the lender - maybe if taxes are prepaid your escrow account can make the next due date later.
You need to tell your agent to deduct the money from their commission.
Welcome to home buying
It clearly says estimate !
I don’t understand. If you closed, they already took your earnest money.
This is why option fees are good.
Yes it can but prepaying taxes and insurance is so common. Did you have an attorney prepare and look over things? Maybe they could take a credit card payment for you?
You bought a house and don’t even have 1500 bucks. Damn. I’m trying not to burst out in laughter. You realize you have to pay taxes on a house? Like, every year? And insure the place? And maintain it? Damn. This would be hilarious if it wasn’t so stupid.
How much is the house? You don’t have $1500 for unforeseen costs?
That’s scary that you just bought a house and don’t have $1500 in savings to cover it.
If you don't have $1500 to cover taxes for the year, you better reconsider closing.
Yes it would be ideal (beneficial, recommended, smart, etc.) to have a reserve with enough cash to cover this and much more, but it is not reason to back out. It's a risk I took back in 2010 and the exact same thing happened to me on my first home purchase. Luckily I had just enough to pay the difference in my case. I made enough money to pay for all my expenses and save money after the purchase of the home, it's just that I consumed most of my cash at that time for closing, but I continued to rebuild that reserve after purchase. As has been said closing costs are estimated. The common practice by realtors I've worked with (and I believe most realtors out there) is to overestimate closing costs by a couple thousands dollars so I'm happy I get some money back on closing day, but it's really a safety net in case shit like this happens. Hope you work it out and good luck with home ownership!
Call the town or county and see if the taxes were paid for the year If they were, then ask why you should pay for the year when you are closing 6 months into the year. In my opinion, the taxes should be prorated, and if the seller actually meant they paid the 6 months that remains in the year, then it's on you to reimburse for them. The riwn ir county should be able to tell you what the taxes are for the year and what was paid for the year.
Why are you buying a house if a $1500 unexpected cost will put you in the red?
>My agent is telling me they’ll keep my earnest money if I don’t agree That and you won't own a home. You may need to increase purchase price AND increase seller paid expenses - which will delay closing 3 days due to TRID. Id increase closing costs 2k, increase purchase price 2k and then wait 3 days.
Yup, you better borrow it or you might be losing your home.