Mortgage Process

Quote from nrdk00 : On a different note, any heads up to watch for in owning a newly built home or those mysterious additional costs to be aware of?

Absolutely positively get an inspection after you get the keys. Do not assume its all good just because it is brand new house. If you talk to other experienced home owner they will tell you the same. If you need one I would go to Redfin and find the inspectors for your area. I don't know where you are so I can say that if you are in Seattle in know a great inspector just PM me for it. I mention Redfin because they have a section where people rate and comment on their performance.

The inspector I used for my condo is feared by other sellers because he will find every little thing wrong with the home. He's loved by buyers though because he is so thorough. You will be very surprised at the things they find.

Some new homes have more problems than older homes because of shoddy workmanship. They reversed the hot and cold water in my bathroom upon construction and never fixed it. I finally had the seller fix it before I would finalize the contract (my condo was built in 1990). A good inspector around here will charge about $400 for a thorough top to bottom inspection. It's money well worth it.

Find out how to maintain your home. Does your home use a septic system or is the plumbing hooked up to the main line? If its septic it needs to be pumped ever year or two depending on your usage. If you have granite countertops make sure they get sealed before you start using it. Find out if you have electricity or gas and get the appropriate appliances. It would suck to get a gas range only to find out you only have an electric plug. One thing I wish I did was have a professional cleaning lady come in and wipe everything down before moving all my stuff in. I hate cleaning.

After you move in you should contact the utility companies to turn on everything and put it into your name. See what kind of high speed Internet is available. You'll get a packet of coupons in the mail after you move in. Look for it. There should be a 20% off coupon for Lowes, Bed Bath Beyond and others. These were real useful for me.

The naysayers here are wrong on so many levels, especially if you were renting previously. For one, ownership is a beautiful thing as you'll find out. You can do what you want and you are comfortable.

You might want to work out a plan in case of financial hardship. Find out how much you can rent out a room for in case you have to do that. A renter can really ease your burden. 50% equity after 5 yrs is insane. If you hunker down for 5 yrs you will be able to sell your home and will already have all that equity built up for possibly a nicer home down the line. It's also much harder to evict a homeowner as opposed to a renter so there's more security.

My personal rule of thumb for resale, make sure the kitchen and bathroom pop. The women love a great looking kitchen and bath and no girl will be able to resist a killer kitchen to use every day. A home with a great kitchen and bath will sell, this is something to keep in back of your mind.

The home buying experience is one you will learn a lot from. With the low interest rate you got its worth it to take the chance. Don't be afraid to take chances in life. If you mess up who cares? You learn from it and you move on. I took a chance on my condo and I'm loving it even though I can barely afford it.

My place is real nice. I'm putting in crown molding myself right now. There is a great deal on Nest thermostats now at Lowes for $200. That's the cheapest I've ever seen it but I have no money now. The Nest has a motion detector so it knows when you are home and when you are not. It automatically shuts off when you're not home.

I plan to make my condo state of the art. I already have a Schlage digital door lock which means I don't need a key to get in. I would like to get the Hue Phillips lights which allow you to not only control when the lights go on and off but you can dim them and make them all kinds of different colors. I also have a hi def projector with screen I will install into the ceiling.

Quote from Boomancini : Question, why not just go conventional and not worry about the upfront mortgage insurance?

Just noticed this portion of your earlier reply.

The reason I cannot go conventional would be because of the local incentive program offering 25% is being used as my down payment. Unfortunately, since it's not cash in hand and is instead a 5 year forgivable lein, the only way the bank will accept this would be through the FHA program. Although I do have to say I am confused and didn't get a clear answer on why I then don't have to pay the FHA insurance on the 15 year but I do on the 30 year, that one puzzles me a bit still.

Quote from stevenq : Absolutely positively get an inspection after you get the keys. Do not assume its all good just because it is brand new house. If you talk to other experienced home owner they will tell you the same. If you need one I would go to Redfin and find the inspectors for your area. I don't know where you are so I can say that if you are in Seattle in know a great inspector just PM me for it. I mention Redfin because they have a section where people rate and comment on their performance. The inspector I used for my condo is feared by other sellers because he will find every little thing wrong with the home. He's loved by buyers though because he is so thorough. You will be very surprised at the things they find. Some new homes have more problems than older homes because of shoddy workmanship. They reversed the hot and cold water in my bathroom upon construction and never fixed it. I finally had the seller fix it before I would finalize the contract (my condo was built in 1990). A good inspector around here will charge about $400 for a thorough top to bottom inspection. It's money well worth it. Find out how to maintain your home. Does your home use a septic system or is the plumbing hooked up to the main line? If its septic it needs to be pumped ever year or two depending on your usage. If you have granite countertops make sure they get sealed before you start using it. Find out if you have electricity or gas and get the appropriate appliances. It would suck to get a gas range only to find out you only have an electric plug. One thing I wish I did was have a professional cleaning lady come in and wipe everything down before moving all my stuff in. I hate cleaning. After you move in you should contact the utility companies to turn on everything and put it into your name. See what kind of high speed Internet is available. You'll get a packet of coupons in the mail after you move in. Look for it. There should be a 20% off coupon for Lowes, Bed Bath Beyond and others. These were real useful for me. The naysayers here are wrong on so many levels, especially if you were renting previously. For one, ownership is a beautiful thing as you'll find out. You can do what you want and you are comfortable. You might want to work out a plan in case of financial hardship. Find out how much you can rent out a room for in case you have to do that. A renter can really ease your burden. 50% equity after 5 yrs is insane. If you hunker down for 5 yrs you will be able to sell your home and will already have all that equity built up for possibly a nicer home down the line. It's also much harder to evict a homeowner as opposed to a renter so there's more security. My personal rule of thumb for resale, make sure the kitchen and bathroom pop. The women love a great looking kitchen and bath and no girl will be able to resist a killer kitchen to use every day. A home with a great kitchen and bath will sell, this is something to keep in back of your mind. The home buying experience is one you will learn a lot from. With the low interest rate you got its worth it to take the chance. Don't be afraid to take chances in life. If you mess up who cares? You learn from it and you move on. I took a chance on my condo and I'm loving it even though I can barely afford it. My place is real nice. I'm putting in crown molding myself right now. There is a great deal on Nest thermostats now at Lowes for $200. That's the cheapest I've ever seen it but I have no money now. The Nest has a motion detector so it knows when you are home and when you are not. It automatically shuts off when you're not home. I plan to make my condo state of the art. I already have a Schlage digital door lock which means I don't need a key to get in. I would like to get the Hue Phillips lights which allow you to not only control when the lights go on and off but you can dim them and make them all kinds of different colors. I also have a hi def projector with screen I will install into the ceiling.

Thanks for the positive and very helpful reply. I do plan on having an inspector come in prior to close, as it has always been one of those up front costs that seems well worth the time, money, and effort. Also, thanks for the heads up on Redfin, hadn't heard of that one before.

I've actually personally selected all the materials in the home, and spent time going through each individual building materials warranty and care instructions, so I'm not too worried about that. I'm having both gas and electric ran for the dryer and range, as I would always like having the option open and the gas is only another $225 to have ran. I am kinda curious as to why a cleaning lady was necessary for your move, typically any decent human being will clean thoroughly before turning a property over. I know the builder I'm using is very particular about having a stellar reputation and owns a cleaning service specifically for that reason.

I had no idea about the move in coupons, those sound like they'll be a great deal for me. Also, I'm only about a mile away from where I currently live, in my brother's house with him, so I'll be in no rush to move and take my time with things which is a great luxury.

Thanks again for the insight.

Quote from nrdk00 : Just noticed this portion of your earlier reply. The reason I cannot go conventional would be because of the local incentive program offering 25% is being used as my down payment. Unfortunately, since it's not cash in hand and is instead a 5 year forgivable lein, the only way the bank will accept this would be through the FHA program. Although I do have to say I am confused and didn't get a clear answer on why I then don't have to pay the FHA insurance on the 15 year but I do on the 30 year, that one puzzles me a bit still.

On a 15 year FHA, you pay an upfront MI of 1.75%, but for loans with a loan to value under 78% there is no monthly mortgage insurance. On a 30 year, you pay the 1.75% upfront AND you have the monthly MI on your loan for a minimum of 5 years.

How much of your money are you putting into the deal? That may depend on whether or not or have to go FHA.

Quote from nrdk00 : Thanks for the positive and very helpful reply. I do plan on having an inspector come in prior to close, as it has always been one of those up front costs that seems well worth the time, money, and effort. Also, thanks for the heads up on Redfin, hadn't heard of that one before. I've actually personally selected all the materials in the home, and spent time going through each individual building materials warranty and care instructions, so I'm not too worried about that. I'm having both gas and electric ran for the dryer and range, as I would always like having the option open and the gas is only another $225 to have ran. I am kinda curious as to why a cleaning lady was necessary for your move, typically any decent human being will clean thoroughly before turning a property over. I know the builder I'm using is very particular about having a stellar reputation and owns a cleaning service specifically for that reason. I had no idea about the move in coupons, those sound like they'll be a great deal for me. Also, I'm only about a mile away from where I currently live, in my brother's house with him, so I'll be in no rush to move and take my time with things which is a great luxury. Thanks again for the insight.

Redfin is one of the best online resources you can find. In my neck of the woods if you don't already have gas, all you have to do is contact the energy company and they will run the gas into your home. I don't know if they will do the piping all the way inside.

My condo had been sitting on the market for a while I think (at least several months before closing) and a ton of people had already come through. It didn't matter how well the original owner cleaned, she didn't have any control over the people visiting the property since she had already moved out. The toilets all had the ring around the bowl because they had not been used for many months.

Quote from Boomancini : On a 15 year FHA, you pay an upfront MI of 1.75%, but for loans with a loan to value under 78% there is no monthly mortgage insurance. On a 30 year, you pay the 1.75% upfront AND you have the monthly MI on your loan for a minimum of 5 years. How much of your money are you putting into the deal? That may depend on whether or not or have to go FHA.

I was instructed to have at least $3,500 verifiable in my bank account prior to filing the full application to cover closing costs, which at 1.75% I should only need just over $2,600 (final sale price of home cannot be over $150,000 due to program stipulations and I'm sitting at $149,750 )

Quote from nrdk00 : I was instructed to have at least $3,500 verifiable in my bank account prior to filing the full application to cover closing costs, which at 1.75% I should only need just over $2,600 (final sale price of home cannot be over $150,000 due to program stipulations and I'm sitting at $149,750 )

1.75% is not your percentage for closing costs. It's the funding fee that is rolled into your loan since you're doing a FHA loan. Definitely sounds like a state housing program. I know you mentioned a grant, but normally you have to come in with some of your own money.

Ah, understood. Well the program has been in place a few years now and all of the local banks have everything setup and in place to make the process easier. The mortgage consultant I'm working with actually did a home for a friend of a friend going through the exact same program. I did have to provide the builder with earnest money down at the initial purchase agreement, but other than that they just wanted to see some cash in hand to cover closing fees as the 25% comes into account to put the loan to value under 78%

Quote from nrdk00 : Ah, understood. Well the program has been in place a few years now and all of the local banks have everything setup and in place to make the process easier. The mortgage consultant I'm working with actually did a home for a friend of a friend going through the exact same program. I did have to provide the builder with earnest money down at the initial purchase agreement, but other than that they just wanted to see some cash in hand to cover closing fees as the 25% comes into account to put the loan to value under 78%

Do you mind disclosing what program this is? That is a killer deal and definitely one that I would not pass up, even if you have to stretch. You're young and can take the risk for the kind of return you're looking at.