What a shitty stressful past six months this has been.
My wife and I signed a purchase agreement of $562k pre-approved at 4.25 in December 2021. The house broke ground in January 2022. The timeline communicated to us was a 10-12 month build time. Our financing is being done through the builder lender. We received closing incentives we are hoping to take advantage of. We were told that we could lock our rate at 60 days out.
Back then, we felt that we could always handle raised interest rates to a certain point before the home became unaffordable for our budget. Not a problem for us. I definitely didn’t expect the Fed to spike rates in chunks. In March is when I began voicing my concerns with our builder rep and our mortgage rep. Researching others and asking about alternative solutions to curb the pain of the rate hikes, but still not at a point of needing to back out.
I read an article quoting one of the c-suite members of our builder saying they’re doing long-term rate locks for their customers. I forwarded the article and asked about it to our lender rep, he told us it was not in our best interest to do that. Due to the fees, blah blah blah.
Mid-summer we began asking about ARMs, we also started shopping around for other options. They told us their ARM rates were higher than other lenders. Still expressing that this is getting awfully close to no longer being affordable for us.
July comes around, hooray we got the email saying we can schedule our Pre-drywall meeting!! Obviously, we immediately felt a bit relieved because that meant we’d get our closing date, and then we can lock our rate.
We literally showed up to our pre-drywall meeting and were told that the builder is not giving closing dates until the cabinets are in. This changed out of nowhere, it was the first time we ever heard of it. WTF?! We eventually received an email statement from the company going out to everyone stating the change.
Well, we now have an unaffordability issue. It’s now nearly October, and we’ve been told no firm closing date. Our lender rep is telling us he can’t lock us because he doesn’t have a closing date. Our selling rep is telling us that we are definitely at 60 days out with an estimated completed late November.
I am pretty pissed off at this point. We’ve been very flexible with the climate and the process. We have no rate lock and no official closing date. We sold our old home months ago and have been living in an apartment since. My wife and I had a very tough conversation the other day and really have no recourse but to walk away unless the builder is willing to 1. Re-negotiate the purchase price and/or buy back points on our rate.
Is it possible to ask them to re-negotiate the purchase price? I’d like to ask them for a 10% price reduction. Is that even fair? There is a home on the same street that I assume was a spec home, listed at 577k in May and eventually sold in mid-September for 523k.
If we walk, we do lose about 28k already invested. I’d love to get any insights, thoughts, or feedback on what, if any, leverage we have to re-negotiate anything. We don’t want to walk but damn we gotta be practical about our long-term financial health.