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AMS Helps Navy Vets Purchase Rent-to-Own Home


Kathy Johnson and her husband Daniel Johnson have been around the block when it comes to buying houses.

Both are former Navy. She retired as a Chief Petty Officer and served as flag writer including two deployments on carriers John C. Stennis and Theodore Roosevelt. They met while stationed at San Nicolas Island, a military facility off the California coast near Malibu. They married in 1998 and raised four children.

In 2017, they relocated from the DC area for civilian jobs but also wanted to be close to aging parents. Daniel’s mother lives in Orangeburg, South Carolina, while Kathy’s lives in Graham, North Carolina — about 150 miles apart on the I-85 corridor. “When we split the distance, Charlotte, North Carolina, was halfway,” says Kathy.

They decided to rent a 3,300-sq.-ft., 5-bedroom, 3-bath Craftsman-style home in a quiet suburb. “We weren’t sure if we were going to like living in Charlotte or not,” says Daniel. “So we found a rent-to-own option that would let us save money toward buying the home if we decided to stay.”

With a rent-to-own home (also called a lease-to-own) the buyer rents for a period of time, normally 1-5 years before buying. During that time, a portion of the rent paid goes toward the home’s purchase.

Related: It’s PCS Time. Should We Live on Base? Or Rent? Or Buy?

“Then Things Really Went Crazy”

The Charlotte-area housing market has been a hot one for years. Prices rose 18.5% from 2020 to 2021 — the seventh consecutive year of price increases.

After living in the rental for a year, the Johnsons wanted to buy. They contacted a large online lender and qualified for a VA Home Loan. Paperwork was drawn up, the home was appraised, and a closing date was set for November 2021.

“We thought the deal was done,” says Kathy. “But then we got a notice from the seller saying there was an error in the paperwork… then things really went crazy.”

The Johnsons had purchased homes before. In fact, this was their third time buying a house so they were familiar with how the process works. But in this case, the sale took a strange turn: “After the original closing had taken place for us and the deed recorded, the seller refused to sign the closing documents and asked us to do a quitclaim deed to resolve the paperwork issue,” Kathy says. A quickclaim transfers ownership without other buyer protections.

The Johnsons completed the quitclaim, and another closing date was set and another VA appraisal was done. All the while they continued to pay rent on the home.

The delays in closing on the loan were costing them in other ways, too. The online lender initially locked their loan at 2.75% but the same lender was not able to close at 6% months later after the initial rate lock had expired. At the time, rates were rising rapidly due to inflation, reaching a 40-year high. All the while, home prices in the neighborhood were going up, and the house once priced in the high $300,000s had basically doubled in value and the seller wanted to increase the sales price.

The lender was still not able to close on the deal and the Johnsons were told their loan had “dropped out of the system.” They would have to start over. “We could not get the same interest rate and essentially that cost us thousands and thousands of dollars,” says Kathy.

Related: Tips for Buying a Home Sight Unseen

Finding a New Lender

Kathy describes the situation at that point as “horrible” and “very serious.” “We were at the point where we were wondering if we could even buy this home and, if we couldn’t, where we would live,” she says.

Luckily she ran into a friend retiring from federal service who was buying a home with a loan from AMS. He put her in touch with Samuel Getachew, an AMS Military Mortgage Advisor in Chantilly, VA. The Johnsons reached out to Getachew in July 2022.

Getachew did a deep dive on their finances and went through all of the title documents. “This was a very complex situation where the seller made it very difficult and dragged the transaction over several months which almost killed the deal,” says Getachew.

Getachew worked with the sellers and the closing rep to get the sale back on track. Even though rates were trending higher, Getachew continued to monitor the market for an opportunity with daily fluctuations. In the end, the Johnsons were able to get the home for the price agreed to a year earlier. AMS qualified them for a VA Home Loan at 5.25% using Kathy’s entitlement. They closed on the home in October 2022.

“Absolutely Wonderful”

The Johnsons were very appreciative of the work Getachew put into the deal, including working during many nights and over weekends, to secure a reasonable price on the home, get a competitive interest rate, and finally get to the closing table. “We were amazed when Sam said he thought he could help us, and he’s been absolutely wonderful,” says Kathy.

“Sam was very astute and aware of our local housing market conditions,” adds Daniel. “For the first time, it felt like we had an actual partner helping us on our side. He stepped in and just took care of all the paperwork coming to us and kept everyone in the communication loop.”

“With our previous lender there were all kinds of changes in who we worked with and what we were told,” Kathy says “But with AMS, there was no middle man. Sam was our point of contact from start to finish,” she adds.

“It’s the same determination we lived in the Navy — we never gave up,” says Daniel.

We’re Here to Help

Whether you’re just thinking about buying, ready to start home-shopping in earnest, or considering a refinance, an AMS Military Mortgage Advisor will be happy to provide you with an honest and fair comparison of your mortgage options, including a wide range of affordable mortgages designed to meet your needs.

Ensuring AAFMAA Members obtain the best mortgage possible is our mission. Get your free mortgage assessment today or give us a call at 844-422-3622!