Zero times Zero equals Zero. In this case, coming up short on time and money is quickly making this tiny house loan process fall apart.
I just received a call today from my potential lender inquiring if I had any money reserves in any other fund accounts. I told her everything I had given her was what I had. Barely scraping by with the closing/down payment costs there was a gaping issue of lack of reserve funds. I had never heard or knew before hand that I would be needing reserves – another painful addition to my growing list of ‘Things I Learned Today’. She suggested an ‘easy solution’ would be for a family member to ‘gift’ the closing costs so that I could brand my savings as the reserves I needed for the loan (and then under my own volition, turning right around to pay that family member back with those reserves after the closing). The underlying problem was that even with my savings, I still would be about $4000 short to pay that family member back. With the closing date right around the corner my options to save for it would be limited – it could be possible to take an advance at work, otherwise I could pay them back in about 4 months……..
I felt ready to puke.
This is very much a learning process as I experience all the ‘firsts’ of buying and building a house. I knew there would be road blocks to dodge and hurdles to jump, but this specific situation quickly became the most dreadful experience for me thus far. This was a project about self-sufficiency, sustainability, freedom from unnecessary debt. Not only was this entire tiny house loan inflated by the basis of the cost of the larger house plans, but I would need to acquire the loan by asking other people (FAMILY) for money.
Understand that I have been very financially self-sufficient since I started my first job at 16. The last sizable amount of money I received from my parents was the trade value of my father’s truck as a graduation gift to apply toward my car at 18. Otherwise the thought of asking for any financial aid would be completely absent of any equation. So when it came to the bank urging me to ask around my family, I felt nauseous and humiliated ringing up the only possible family member I could ask. I rushed through an explanation, asked that dreadful question, and they returned an answer as to why they wouldn’t be able to help for very specific reasons.
Ironically, I felt an immense rush of elation and relief.
It was dreadful having to ask in the first place, but knowing I wouldn’t be strapped to this family member’s debt, dripping with guilt and disdain, made me feel like I won the lottery anyway.
So (thankfully?) that means no extra money. I took a moment thereafter to reflect on the consequences of my lack of funds with a new perspective. These past few weeks of sprinting to the loan finish line at full force had made me feel nervous and hesitant. I had to step back and rethink about what my goals were here. While the prospect of building the smaller house was possible with the variance plan we had in place, I was having to put forth the inflated costs in order to make this deadline – all controlled by the lot’s closing.
I’m at a point where just closing on the lot to secure it, built equity on it, apply for the variance and all while saving up again for the reserves/closing for the original 700 SQ FT plans seems like a much more comfortable process for everyone involved.
The only question at this point is can we flip this around in time without losing the lot and my deposit? Stay tuned.