DW and I are FIRE’d and are relocating from Hawai’i to Central Texas’ Hill Country later this year. We own a house in HI that we are listing for sale this spring. We started the process of financing a lot purchase and for a new construction home. We thought about selling our house in HI first then just pay cash for the house and lot...the builder owns the development/land and will be the builder of the house. However, we wanted to take advantage of incentives the builder was offering (i.e. 35% off lot premiums and 20% off Design Options) and timelines will not line up if we wait to purchase the lot and begin construction until after we sold our house in HI.
Needless to say, we felt we had to secure a new construction loan for the property in TX, not only to take advantage of builder incentives but for some additional flexibility. We went with a well established and recommended credit union with competitive rates. We told the loan officer of our plan to list our house after we return from TX to close on the lot. All was going well until 3 business days before we closed on the lot...when we were told that since we haven’t sold our house in HI that they can’t do the loan, citing our debt to income ratio (we do not have W-2 income but have enough assets in stocks/mutual funds/CDs to cover the purchase) would be higher than what they can support. Are you kidding me?
In all our dealings with the bank, which began in November/December, we’ve always been up front about our plan to sell the HI house after we return from TX and after we closed on the lot. After I asked what our options were, they returned with new “workable” loan terms, namely a 30-yr fixed (up from a 15-yr), higher APR (from 3.5% to 4.625%) and lower loan amount (from $600k to $400k)...which meant our cash to close doubled (using round figures for illustrative purposes) from $100k to $200k. We were told late Wednesday night that someone would contact us the following morning to go over details of the loan. We cashed out some CDs to have enough cash, and some fluff, to meet the $200k cash to close.
The following morning, I had to call the bank since nobody contacted us. I left a message which was returned late afternoon. This new contact then proceeded to tell us that, after looking at the numbers, our cash to close would be close to $300k! At that point, I lost it and DW became sick to her stomach.
Cooler heads prevailed and after additional conversations with this loan officer (this time without DW), he was able to get his VP’s approval for a higher loan amount with the same rate and term, meaning our cash to close would remain at around $200k. I had to write an email stating when we would be listing our house in HI, how much we would net on the house, and our intent to pay the loan off in full once we receive the proceeds from the sale of the house.
At this point, I intend to write a letter to the CEO to express our disappointment and displeasure with how we were treated and request to be reimbursed the early withdrawal penalties (~$1,200) we incurred by breaking the CDs prior to maturation. I also plan on contacting the CFPB and the NCUA to file a complaint. Aside from the above, what other actions can anyone suggest we take for some measure of accountability for what the credit union put us through?
) . Not to mention the extra costs
