THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: WEDNESDAY, June 8, 1994 TAG: 9406080459
SECTION: BUSINESS PAGE: I1 EDITION: FINAL
SOURCE: BY KERRY DOUGHERTY, STAFF WRITER
DATELINE: 940608 LENGTH: Long
They staggered.
{REST} Both seemed stunned by the number of documents they had signed - and the amount of money they had borrowed.
``I feel like we just signed our lives away,'' sighed Cindy, brushing her long strawberry blond hair out of her eyes.
Every year about 18,000 people buy homes in Hampton Roads. The Tidewater Association of Realtors estimates that between one-quarter and half of all home sales are to first-time buyers like the Ayerses.
But the thing that all homebuyers have in common is that before they can get the keys to the front door they have to go to closing. In the past couple of years, the pace of closings has been particularly intense because of historically low interest rates which have prompted many homeowners to refinance, move up to larger homes, or have brought first-time buyers into the market.
If finding the right home can be emotionally taxing, getting to closing can be a grueling ordeal.
For the Ayerses, this closing day should have been a time of elation. Months of dreaming about buying their first home were over. The time for living in a cramped, 700-square-foot apartment was behind them. They had just bought part of the American Dream: Cindy and Eddie Ayers, married just one year and three months, parents of a 6-month-old son, Corey, now owned their own home.
But months of uncertainty, of waiting for their loan approval, of questions, requests for documents, of being forced to consolidate debts and drop their home Amway business, of trying to document their child care expenses, of searching for old tax forms - all had taken their toll.
``In some ways it's almost humiliating,'' said Cindy Ayers. ``They want to know everything about you. It gets embarrassing.''
The Ayerses began looking for a home last summer. By autumn they had looked at dozens that fit their requirements: three bedrooms, two baths, near the Norfolk Naval Base and in the $80,000 range. They first toured the home they would eventually buy in September. Something about the little white bungalow with green shutters and the roomy master suite on the second floor drew them back again and again.
In early February they made an offer. After negotiations and counteroffers, they finally had a deal. They didn't know it would be three long months before they would move.
By the time they got to closing, Cindy and Eddie Ayers had become experts on purchasing a home. Even so, the couple collectively groaned when paralegal Bea O'Brien, who works with Ewing Title and Escrow Co. and conducted their closing, came to the ``truth in lending'' part of the settlement and told the couple that their final mortgage payment would be due on May 1, 2024.
Cindy Ayers looked stricken when O'Brien added that during the next 30 years the couple would pay $186,295.27 for the three-bedroom house that they were buying for $83,351.
Ayers' real estate agent attempted to reassure her.
``Typically, on an 8 percent loan you would expect to pay about $200,000,'' said Tina Minter of William E. Wood and Associates. ``You got a great interest rate.''
Cindy Ayers smiled weakly.
Indeed, the couple did get an extraordinary interest rate: 6.829 percent.
But it wasn't easy.
Cindy and Eddie Ayers were able to buy their first house, which cost $83,351 at an extraordinary interest rate with only $1,170 in cash because they used a VA-VHDA loan - a hybrid of Veteran's Administration and a Virginia Housing Development Authority Loan. It is aimed at military first-time home buyers who fit a low-income profile.
To qualify, a family of three must earn no more than $47,200. They can borrow a maximum of $110,000.
The major drawback to this type of financing is the added paperwork, time involved and the rigid application demands.
The Ayerses fit the VA-VHDA profile perfectly. Eddie Ayers, 22, is attached to the carrier Roosevelt and earns about $19,000 as an Navy E4. Cindy Ayers, 21, earns about $11,000 as a waitress at the Olive Garden.
``The VHDA is very, very strict about who can qualify for a loan,'' said Bea O'Brien. ``It's not like going to the bank. You do it their way, you give them what they want when they want it or you don't get the loan. Consequently, you have twice as much paperwork as with any other loan.''
One of the biggest hurdles that appeared before closing was a request from the VHDA for the Ayers' complete 1992 tax returns. Unfortunately both Ayers had filed electronically that year and did not have a copy of their forms, just statements.
``We worked it out,'' O'Brien said.
Real estate closings usually work out, despite the scores of problems that seem to arise at the last minute.
Virginia Beach lawyer John W. Richardson, who has handled real estate closings since the early 1980s, says he has had only a handful of closings fall apart - but many close calls.
``Closings occasionally blow up,'' says Richardson, lapsing into the parlance of the real estate world. ``But that's rare.
``The major things that interfere with closing are termite problems and dirt or something the buyer spotted during the walk-through, like a broken toilet or the back door with no screen.
``The standard MLS contract requires that all plumbing, heating, air conditioning and electrical be in working order at the time of closing,'' Richardson adds. ``Working order is not the same as good working order. People have to remember they are buying a house pretty much as is.''
Another closing attorney says very often his conference room becomes a battleground at closing.
``Closings bring out the worst in people.'' says lawyer Carl W. Isbrandtsen. ``It's kind of like a divorce. People seem to feel like they're leaving a part of themselves behind when they sell the house.
``The walk-throughs are a real pain . . . I try to tell the real estate agents to work everything out before closing because there's nothing lawyers can do about most contentious things at closing anyway,'' Isbrandtsen says.
``Sellers do odd things,'' he adds. ``They take all the lightbulbs, take the chandelier. . . . I know of one case where the seller dumped herbicide all over the back yard just before closing. A week later the buyers had no grass.
``I had one closing where the buyers insisted that when they first looked at the house there had been a fireplace screen and now, during the walk-through they found it was gone. The seller denied there had ever been one. But the buyers had videotaped the house the first time they saw it and we watched the video and sure enough, there was the screen. The sellers had to put it back.''
The Ayerses were lucky. They didn't have to deal with a cantankerous seller, although the real estate agents nervously reported that the owner was becoming impatient with all the delays. The closing took place more than a month later than anticipated.
The waiting was hard on the buyers, too.
``That last month was terrible,'' said Cindy Ayers. ``We didn't know day to day what we were doing. We just kept waiting for the phone call telling us we could close.''
During those final weeks the couple was living in limbo. They had notified their landlord that they would be leaving their apartment. Then they began to fret that the closing would be postponed so long they would find themselves without a place to live.
The call they were waiting for came at about noon on April 22. Five hours later the Ayers' were seated at a conference table, Bic pens in hand.
They signed mortgage loan commitments, compliance agreements, employment certifications, technical corrections agreements, termite and moisture reports, initial escrow account statements, some name affadavits, something called an 1820 (``always part of a VA loan''), government monitoring papers, deed of trust, addendums and assorted other documents.
As Bea O'Brien handed them document after document, the couple skillfully passed their baby back and forth, taking turns signing their names.
They walked out of the conference room with the keys to their new home, knowing it would be several weeks until they actually moved into the 2,000-square-foot bungalow in the Wards Corner area of Norfolk.
First there were floors to refinish and rooms to paint.
Three weeks after closing, the oak floors in the little white house were gleaming, a new king-size pencil post bed presided over the spacious master bedroom and curtains hung at nearly every window.
``It was worth it,'' said Cindy Ayers, smiling in her kitchen. ``It's all ours and we'll never pay rent again.'' by CNB