My lender pulled the funding an hour after closing on my rental!

[Chris Railey]

Hello All,

I was hoping my first ever post here on Bigger Pockets would be a more positive one, but I thought it would be helpful for everyone to hear about my first rental purchase this week.

Yesterday my closing went very well, everything went seamlessly. The seller was thankful and I made a great deal on an occupied rental property using the Rental Property Calculator.  After the closing, and after great conversation in the parking lot with the sellers, I checked my email to find a very unsetting message.  My lender emailed an hour after I had already signed the closing documents that "Unfortunately, due to the current market they were canceling all their 30 year rental loans in progress, so mine would not be funded.  I called right away and was told that since my rate would have to go from 5.25% to 7.5%, the numbers no longer worked for their Hedge Fund.  I walked back into the closing attorneys office to inform him. He stood there stunned saying in his 40 years he had never had that happen.  The Paralegal then said well that must be why the lender stopped communicating with me an hour ago. My next call was to the seller to break the news that he would not be getting a check on Monday.  He is a long time friend so he said no problem, we'll do whatever you need to do to make this deal work.

The lender called back after discussing the deal with his underwriters to offer a 1 year loan at 8% with a $2000 fee and no prepayment penalty.  So, I'm left with either taking their new offer, which is not a great one, or starting over with a local lender.  Fortunately, I have great local relationships with lenders so I will be on the phone first thing Monday, hoping the banks are open, to make the deal work.

I'm not new the real estate so I have seen deals fall apart.  However, I am positive the closing will happen and I'm still smiling.  This is just a learning experience and a great story to look back on down the road.  

I pray everyday for all the people faced with being infected by the virus, the ones out of work, and the leaders of this country. I pray that relief is coming soon and I know that a deal gone bad is nothing in comparison to what families around the world are dealing with today.  Whatever you are faced with each day, don't stop, keep moving forward and stay healthy.