I am going to tell you a story about a recent event that has transpired in hopes that it will help one of you to avoid the same mistake. I have lived in my current house for about 5 years. I bought it at the end of 2002 to the beginning of 2003. When I purchased it, I did what I thought was due diligence. I looked at the house and the detached structures to make sure they were in good shape. I had an inspection as well as an appraisal. I had the title search performed and ensured that the house was not in a flood plain. For those of you who have never purchased real estate (personal or investment), everyone of these steps should be taken.

I have lived, without much incident in my home for the past 5 years. We had a little damage during the major ice storm a few years ago. But insurance was in place and all was taken care of. However, I have recently begun a refinance process through my local bank that is running through FHA. I am acquiring an assumable loan with a good interest rate that is locked in for 30 years. I will be putting my house on the market soon (my family is outgrowing the home). With an assumable loan, the potential buyer can assume my loan rather than going through the trouble of acquiring their own. Closing will go quicker, lower fees, less hassle. All sounds great! Right? It would have been if I wasn’t hung up on a technicality.

I bought my home from individuals that lived here before there were any neighbors. My home is situated a few miles outside the city limits. It is a 2200 square foot home that sets on 3 acres with a 600 square foot steel shop building. The house has a private waste treatment system and private well. When the house was built, a private drive was constructed and turned 90 degrees onto my property. There was a 3 acres tract behind my house and a 13 acre tract next to my house. While the previous owners lived here, someone bought the land behind them and built a house. They extended the private drive past my land to the neighbors behind. Then a couple from another state bought the 13 acres adjacent and on the other side of the private drive. The private drive now looked like a T with a 90 degree curve half way up the straight away, on the left side. During the time the previous owners of my house lived here, the three couples paved the private drive and had a gentleman’s agreement on the maintenance.

Fast forward to today. So far, it sounds like everything is ok. Wrong. Nearing the end of my refinance process, the underwriter asked me for a maintenance road agreement. I explained it was verbal. The government, remember my mention of the FHA, will not take a verbal agreement as binding on the real estate transaction. So my quest began. First I had to learn the names of my our of state neighbors. Sounds strange right? They live in another state and frequent their apartment/garage retreat on occasion. I went to the county courthouse and looked through the public records. I found their names and contact information. Then I had to take their names along with my neighbors behind my house to my attorney so he could draw up a road maintenance agreement. It is good to have a support team in place and my attorney is one of my support team members. He drafted the paper that afternoon. I delivered the papers to my bank and my mortgage loan officer is taking care of having my neighbors sign.

The bank I am using is US Bank and if the bank manager of your local US Bank is half as competent, friendly, and helpful as mine consider yourself lucky. And my mortgage loan officer has gone above and beyond the call of duty during this process. He has carried on conversations about my refinance from his home, in the evening, way after bank hours. So all of you who have banks treat you like numbers, make an effort to get to know the bank manager or bank president. If you are into real estate, become acquainted with the loan officer(s). If they are unhelpful or unfriendly, find a new bank. Because there are banks that are truly helpful out there. For those of you interested, my bank manager is Kathy Reiss and my mortgage loan officer is Michael Hall. They are both worth their weight in gold and genuine assets to US Bank.

Back to my refinance situation. I am now awaiting signatures of my neighbors. The signatures have to be done in front of a notary. After that, my refinance package will be complete and I will be the proud owner of an assumable loan mortgage, locked in at a favorable interest rate, for 30 years. I would like to mention one other thing. While talking with my attorney, he told me a story about 4 neighbors that share a community well. For all of you who have never visited rural America, that is one water well drilled and 4 people share the well. Typically the electricity is billed to one of the neighbors. There was no well maintenance agreement. One neighbor has paid the electric bill for years now without one penny from the others. He has to pay the bill. Without the electricity the well pump won’t work and he will be without water. If the well breaks, there is no agreement on who pays for what and how much they pay.

Moral of the story, find a professional to ensure that all of your bases are covered. Although I have gained a wealth of knowledge through the years and during this process, I will hire a real estate professional to make sure that all the I’s are dotted and all of the T’s are crossed. I have realtors on my support team now. I sure wish I had one of them when I bought this house. Mistake made. Lesson learned. I’m a wiser man for it.