Buying a condo in Chicago and the process has been absurdly quick and painless up to this point. I’m due to close on the 28th and agreed to a 5% down payment with the sellers for a conventional loan.
I paid that 5% as earnest money, and I have money in the bank for closing costs. My loan officer last week even was telling me I could potentially get the clear to close this week with how smoothly things were going.
Yesterday, though, he called me and said that there was a problem with the condo I was looking at.
There is this one type of insurance, Fidelity/crime insurance, that Fannie May loans require for condo purchases:
…for the dishonest or fraudulent acts of anyone who either handles or is responsible for funds held or administered for the HOA or co-op corporation
My association has this policy, but their coverage amount doesn’t meet the minimum required for a Fannie/Freddie loan. They are covered for $25k and should be covered for $100k.
My LO spoke to the management group and they would not change their coverage amount, so my only other options would be to either seek alternative financing, or to double my down payment to 10%, at which point the loan would qualify for a Limited Review, where this particular policy would not be under review.
5% for me was a stretch, so yesterday was a scramble to figure out where to come up with the extra money. Family not being an option, I decided to borrow from my 401k. It sucks to have to do that, but thank God I have the option.
This has essentially wiped out my entire cash on hand. Luckily I have a pretty good paying job and should be able to build it back up, but yikes, what an unexpected and kinda stressful position to find myself in so close to closing.