One Woman's Quest for a Mortgage
MADELEINE BRAND, host:
One of Norman Calvo's clients joins us now. Claudia Hermann is trying to buy an apartment in Brooklyn. The interest rate on her loan just went up, and she's still not sure if she'll get her loan.
Ms. CLAUDIA HERMANN (Universal Mortgage Client): Hi.
BRAND: So tell us about the apartment you're trying to buy.
Ms. HERMANN: It's apparently an old brownstone that had been vacant for some time - five bedrooms, three and a half baths. And I can't say enough - light, light, light.
BRAND: And how much is it?
Ms. HERMANN: It's a bit over 1.6.
Ms. HERMANN: A little bit over 1.6.
BRAND: Wow. That's a lot of money.
Ms. HERMANN: That's a lot of money. Believe me, I'm freaked out about it.
(Soundbite of laughter)
BRAND: And so what happened? You had a loan with an interest rate and what happened?
Ms. HERMANN: I have a mortgage. I need part of my mortgage to be a HELOC loan, a home equity line of credit loan. Luckily it's not a huge portion of the mortgage, but it needs to happen. And that portion of the loan, I have a commitment on that as well. And then Norman called me last week to tell me that that lender has decided not to do home equity loans anymore. They will honor the commitments they've made for those people who could close before the end of September, but at an interest rate of 10 percent, which...
BRAND: Ten percent?
Ms. HERMANN: Of 10 percent. So it's gone up.
Ms. HERMANN: I believe it was around eight percent. It's gone up to 10 percent. In about two days, Norman told me, they just jacked it up. And I can't do that because then the monthly payment gets too high for the ratio that my primary bank wants, and then I will not get the primary loan, the mortgage itself. So Norman is trying very hard to find me another home equity loan.
BRAND: What if you don't get the home equity loan?
Ms. HERMANN: I really don't know what I'm going to do. If the primary bank pulls out, then I really don't know what's going to happen. Of course, I've signed the contract. They have my deposit. There's a financing contingency. And I don't know then what will happen with that deposit.
BRAND: How much is that deposit?
Ms. HERMANN: It's about $160,000.
Ms. HERMANN: Yes. All my cash.
BRAND: The owners could conceivably hold on to it if your financing falls through?
Ms. HERMANN: That's my biggest worry right now. I mean, I really, really would be devastated if I didn't get this apartment.
BRAND: You know, a lot of our listeners are thinking, wow, 1.6 million, that's a lot; why not go for a cheaper house?
Ms. HERMANN: That is a lot of money. It really is. You know, looking for a three-bedroom apartment - I have two teenage boys - it's a lot harder than it would seem. Basically you do all of your living in a smallish room, and when you have two boisterous teenagers that are bulking up, living in a small room to do all of your homework, your eating, your cooking, you know, it gets a little...
BRAND: It gets a little crowded.
Ms. HERMANN: A little crowded.
BRAND: And just to make the point that most people know by now, New York is a very expensive housing market. So 1.6 million in New York is not like 1.6 million in Peoria.
Ms. HERMANN: Yeah. That's a very good point. In comparison to everything I've seen, the price for this amount of space is pretty amazing.
BRAND: So you're just waiting. When will you hear about whether or not you get your mortgage?
Ms. HERMANN: Hopefully by the end of the week. I mean, it has to be by the end of the week.
BRAND: And then let's say you don't get it, what are you going to do?
Ms. HERMANN: Yikes. I have no idea. I think if I think that far, my brain will explode. It's too stressful. I've just got to take it one day at a time.
BRAND: All right. Claudia, I don't want your brain to explode, so...
(Soundbite of laughter)
BRAND: Thank you very much for sharing your story with us.
Ms. HERMANN: Thank you. Thanks a lot.
BRAND: That's Claudia Hermann. She's trying to buy an apartment in Brooklyn, New York.
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