First time buyer. New construction property. By myself..I know, right.

6 years ago

Hi Houzz community!

I wanted to start a dialogue with people who have or who are going through the process of buying a new construction property.

I am working with cal-Atlantic Homes in Maryland, and they are really reputable in the industry, as well as recently competed a merger with Lennar Homes (another very reputable builder). I am really excited about the process, but this is equally as terrifying. I have heard so many horror stories about things falling apart at the closing table, and after waiting for months (closing is looking like the end of August) I would hate for this to happen to me.

I am staying away from spending unnecessary money. I am putting money into my escrow account twice monthly. I am keeping my credit cards as close to a $0 balance as possible, and flat out not using others. I am also saving extra money on the side in my bank account just in case it is needed at closing.

Can anyone give feedback on the following:

1 - What can I expect at the table?

2 - I understand that credit scores fluctuate from month to month due to factors like credit age, and i have seen my own score do this by give or take 5-10 points as a time over the past coupe of years. Can a drop like this impact my ability to close?

3 - My builder is putting up $10k toward closing costs if I finance 70% and title with them. My credit union is offering me 100% financing, but if I go with them, the builder will only give $7K toward closing. Who would you finance your loan with? Why?

Am I just trippin here??? Help!!!

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Comments (3)

sheilajoyce_gw
6 years ago
One piece of advice I read a year or two ago is not to buy anything big for the house with credit until AFTER you close. Some folks were denied their mortgage at the last minute for charging the new refrigerator or washer and dryer for the new house. As to whose mortgage deal might be better, do the math when they give you the interest rate and monthly payment. Whichever costs you more may not be a good deal for you, even if up front they offer help with closing costs. If your loan is for 30 years or whatever, multiply the monthly mortgage payment by the number of monthly checks you will be writing. Then compare that total to other mortgage offers and the initial cost of the home. Many years ago, my eyes were opened to credit costs when I read that Sears made more money from the interest rates on their credit cards than from the profit made on the merchandise they sell.
User
6 years ago
I would have to look at much more than just who pays the closing costs. Can you lock in the current rate with either? But My main objection to the builder carrying the loan is that it is similar to the rent to own scams that have hurt so many people. Especially when you mention the changing of the ownership of the companies. If they fold, does happen, who then holds your mortgage? Do they sell their mortgages to a broker so you end up with a company you have never heard of or has a bad reputation? Can still happen with reputable lenders. If you do decide to do this have an attorney actually look at the documents for any prepayment penalties. If a disaster would happen to happen are there any clauses in the contract that mention how the proceeds are handled. You could ask both for a copy their standard mortgage contract being aware that wording could change between now and closing. If either is not willing to give you a copy back away.
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One Devoted Dame
6 years ago
In my experience (only done this twice, lol)....

1 - There should be no surprises at the table -- meaning all of the rates, final purchase price, etc. should already be discussed/approved -- provided that you don't go out and buy a new car/appliances/lose your job before closing.

2 - I doubt it. 5-10 points is nothing in the grand scheme of things.

3 - I'd finance with whomever I felt most comfortable, assuming you have the remaining 30% down payment to use the builder's financing.

My husband and I just closed in August 2017 on a new construction production/tract home (Gehan), and we were all set to *not* use the builder's mortgage company because when we asked about a specific loan type, we were told we didn't qualify. So we went shopping, and other mortgage lenders said we qualified *no problem*. We confronted the builder's lender, and they totally backpedaled, claiming that the associate who was "helping" us no longer worked for the company, etc., etc., etc. Moral of the story? Get competitive offers to keep the builder's lender honest.

4a - You didn't ask, lol, but I'd like to add the following. Use local comparable sales of existing homes as your "budget." This protects you from overbuilding in the neighborhood (and possibly not qualifying at closing). Visit the Design Center ahead of time, making your selections and pricing everything out while keeping your comps-based budget in mind, before your actual appointment.

4b - Speaking of the Design Center, try to upgrade as little as possible (or not at all) for interior design stuff like paint, light/plumbing fixtures, flooring, or even cabinetry/counter tops. Upgrade insulation, add windows (if you can), increase your electrical service, etc... You know, all of the structural things that are impossible/total pain to change later. :-D

First time buyer. New construction property. By myself..I know, right.

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sheilajoyce_gw

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