Southeast Texas Cliff Jumping
A leisurely home-shopping adventure my wife and I embarked upon months ago recently crested the first hill of the roller coaster and began a wild, white-knuckle plunge into a breakneck series of turns and more hills.
In other words, we put a contract on another home.
This isn't the first contract during this recent odyssey, but it has produced more stress than the sum of our previous home buys and sales.
However, much of our motivation for this one grew out of the first one, in which some sinister flippers came along and effectively booted our offer, which contained a contingency, meaning our current home had to sell first before a purchase could be made.
A contingency is a nice safety net, but in this market, it is little more than a fancy way of saying "I want to buy your house!"
Our current contract has no contingency. We are walking out onto the tightrope with nothing between us and the rapids to financial ruin raging below.
We have backup plans to backup plans, and then fallback positions to those, but it keeps the stomach churning and the mind whirling, sometimes at the expense of sleep.
If all this comes to pass, the longer our house sits on the market, the longer we'll have to pay two mortgages, two insurances, etc.
That's stressful enough, but analyzing mortage and insurance companies has become an exercise in juggling a roaring chainsaw, an angry badger and a flaming log.
Here are some highlights:
1.) All State, my current car and home insurer, won't insure the new home because it is a frame and not brick house. This is the new Southeast Texas policy, apparently. So All State is off the list, and that takes the car insurance with it, because most insurance companies offer discounts for doing the auto-home thing with them. We need discounts. In addition, now I see the real-estate world as brick vs. frame.
2.) We had USAA until we came to Beaumont. However, because Jefferson County touches the Gulf of Mexico, it is considered a "coastal county," and USAA won't cover wind and hail. Never mind the fact that residents 15-20 miles closer to the coast in southern Harris County can get USAA wind and hall. So if you have USAA in Jefferson County, you have to go outside the insurance company, and that can be very expensive. Obviously, wind was a good thing to cover last year.
3.) Hardin County, where we have a contract on a house, is not a coastal county, so that qualifies us to go back to the USAA family. However, USAA requires way more coverage than one might want. Let's say, for example, you're buying a $200,000 home. USAA will not budge from its requirement of the customer carrying enough to replace the home at a cost of almost $300,000. They're the same way with home contents. Never mind that our home contents might be worth only $25,000. USAA wants to insure it for almost a quarter million. Subsequently, the customer might be paying a much higher premium than desired for more coverage than he feels he needs.
4.) I'm tussling with other insurance companies now, but I won't go into all that. It is too painful.
5.) The lending front is far bloodier than the insurance front of this residential war. The Houston folks who backed the last two mortgages say they won't touch this one until we sell our house, because of a "debt ratio" they feel would be too much. Debt ratio is the monthly gross income that the lender allows for housing expenses plus recurring debt. The Beaumont mortgage companies I've recruited into the lending rodeo say they'll be happy to get the financing.
6.) I'm still grappling with the myriad ways a home can be financed: 30-year fixed, 80-20, bridge loans, etc.
7.) Rather than wait until closing day to be in financial shock and awe, I'm grinding through the numbers now and getting all shocked and awed while we're still in the 10-day option period in which we can run away and risk only losing $100 in good-faith money. All kinds of crazy fees get tacked on to the closing costs: Loan origination fee, appraisal fee, tax related service fee, application fee, administrative fee, closing fee, attorney fee, fee fee, stamp-lickin' fee, etc.
If they raise a pen or flex a muscle, there is a fee for it.
So this is where it all stands right now. I should charge everyone a stress fee.
In other words, we put a contract on another home.
This isn't the first contract during this recent odyssey, but it has produced more stress than the sum of our previous home buys and sales.
However, much of our motivation for this one grew out of the first one, in which some sinister flippers came along and effectively booted our offer, which contained a contingency, meaning our current home had to sell first before a purchase could be made.
A contingency is a nice safety net, but in this market, it is little more than a fancy way of saying "I want to buy your house!"
Our current contract has no contingency. We are walking out onto the tightrope with nothing between us and the rapids to financial ruin raging below.
We have backup plans to backup plans, and then fallback positions to those, but it keeps the stomach churning and the mind whirling, sometimes at the expense of sleep.
If all this comes to pass, the longer our house sits on the market, the longer we'll have to pay two mortgages, two insurances, etc.
That's stressful enough, but analyzing mortage and insurance companies has become an exercise in juggling a roaring chainsaw, an angry badger and a flaming log.
Here are some highlights:
1.) All State, my current car and home insurer, won't insure the new home because it is a frame and not brick house. This is the new Southeast Texas policy, apparently. So All State is off the list, and that takes the car insurance with it, because most insurance companies offer discounts for doing the auto-home thing with them. We need discounts. In addition, now I see the real-estate world as brick vs. frame.
2.) We had USAA until we came to Beaumont. However, because Jefferson County touches the Gulf of Mexico, it is considered a "coastal county," and USAA won't cover wind and hail. Never mind the fact that residents 15-20 miles closer to the coast in southern Harris County can get USAA wind and hall. So if you have USAA in Jefferson County, you have to go outside the insurance company, and that can be very expensive. Obviously, wind was a good thing to cover last year.
3.) Hardin County, where we have a contract on a house, is not a coastal county, so that qualifies us to go back to the USAA family. However, USAA requires way more coverage than one might want. Let's say, for example, you're buying a $200,000 home. USAA will not budge from its requirement of the customer carrying enough to replace the home at a cost of almost $300,000. They're the same way with home contents. Never mind that our home contents might be worth only $25,000. USAA wants to insure it for almost a quarter million. Subsequently, the customer might be paying a much higher premium than desired for more coverage than he feels he needs.
4.) I'm tussling with other insurance companies now, but I won't go into all that. It is too painful.
5.) The lending front is far bloodier than the insurance front of this residential war. The Houston folks who backed the last two mortgages say they won't touch this one until we sell our house, because of a "debt ratio" they feel would be too much. Debt ratio is the monthly gross income that the lender allows for housing expenses plus recurring debt. The Beaumont mortgage companies I've recruited into the lending rodeo say they'll be happy to get the financing.
6.) I'm still grappling with the myriad ways a home can be financed: 30-year fixed, 80-20, bridge loans, etc.
7.) Rather than wait until closing day to be in financial shock and awe, I'm grinding through the numbers now and getting all shocked and awed while we're still in the 10-day option period in which we can run away and risk only losing $100 in good-faith money. All kinds of crazy fees get tacked on to the closing costs: Loan origination fee, appraisal fee, tax related service fee, application fee, administrative fee, closing fee, attorney fee, fee fee, stamp-lickin' fee, etc.
If they raise a pen or flex a muscle, there is a fee for it.
So this is where it all stands right now. I should charge everyone a stress fee.
posted by Brian Pearson at 3:07 PM
1 Comments:
The insurance problem is really getting to me. The insurance companies are hesitant to write a policy for this area now.. And you end up having to go to a no name company that cost a fortune and doesnt have adequate coverage.. I hate to see what happens this year..
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