First Time Buying A Home - Any Tips? (2 Viewers)

[pltrgyst]

Get it inspected, but keep in mind that septic systems are the
ultimate example of "if it ain't broke, don't fix it.".... Most septic systems function very, very well and tinkering with a properly-functioning septic tank can cause damage. Get it checked but unless the inspector identifies specific issues with it, don't make it a big issue.

I would recommend that the inspection include video 'scoping the septic lines. We have good friends in MD who are pouring cement over the new pipes in their basement as we speak, a month after closing and moving in... surprise!

We had similar problems with our townhouse in Alexandria, VA. Built over large slabs for each 6 to 8 townhouses, the space under the slabs wasn't filled in solidly, leaving the waste and water pipes suspended. After ten years with no support, guess what happened to the joints?

 

[Anthony Martino]

Anyone do the FHA 203K loan with additional money for home renovations?

 

[Anthony Martino]

We put in an offer on the 3 bed, 2 bath doublewide which I can walk to work from. We can't go USDA due to this, so we're going FHA with the 3.5% down. Received Closing Cost Details page from lender and curious about some of these charges (this is the first time we've received these charges, we still need to conduct the home inspection, septic inspection, well test, appraisal, etc so we were told these charges will adjust and change as the process continues, estimated closing date is 1/23/17)

The home is $79,900 and here are the various fees:


A. ORGINATION CHARGES - $1,740

Processing Fee - $695
Underwriting Fees - $1,045


**from what I've read online, usually these charges are 1-2% of the total loan amount, so this definitely seems like we're being overcharged. Any recommendations on how to address this with the lender?**

B. SERVICES YOU CANNOT SHOP FOR - $1,919

Appraisal Fee - $500
Credit Report - $70
Mortgage Insurance Premium - $1,349

**again seems padded with profit for the lender. Appraisal fee I thought should be $200-400? Credit Report $25-50? Negotiate these with lender?**

C. SERVICES YOU CAN SHOP FOR - $2,013

Engineering Certificate - $375
Pest Inspection - $100
Survey Fee - $350
Title Closing Fee - $740
Title Lenders Title Insurance - $275
Title Surcharge - $3
Water/Well Inspections - $170


**my realtor found us a company that will do the engineering cert for $299, and a well inspection for $145. So working through these**

H. OTHER

Title Owners Title Insurance (optional) - $475

**I have read varying opinions on this one, some for, some against. Anyone care to chime in?**

 

[Ben]

We put in an offer on the 3 bed, 2 bath doublewide which I can walk to work from. We can't go USDA due to this, so we're going FHA with the 3.5% down. Received Closing Cost Details page from lender and curious about some of these charges (this is the first time we've received these charges, we still need to conduct the home inspection, septic inspection, well test, appraisal, etc so we were told these charges will adjust and change as the process continues, estimated closing date is 1/23/17)

The home is $79,900 and here are the various fees:


A. ORGINATION CHARGES - $1,740

Processing Fee - $695
Underwriting Fees - $1,045


**from what I've read online, usually these charges are 1-2% of the total loan amount, so this definitely seems like we're being overcharged. Any recommendations on how to address this with the lender?**

B. SERVICES YOU CANNOT SHOP FOR - $1,919

Appraisal Fee - $500
Credit Report - $70
Mortgage Insurance Premium - $1,349

**again seems padded with profit for the lender. Appraisal fee I thought should be $200-400? Credit Report $25-50? Negotiate these with lender?**

C. SERVICES YOU CAN SHOP FOR - $2,013

Engineering Certificate - $375
Pest Inspection - $100
Survey Fee - $350
Title Closing Fee - $740
Title Lenders Title Insurance - $275
Title Surcharge - $3
Water/Well Inspections - $170


**my realtor found us a company that will do the engineering cert for $299, and a well inspection for $145. So working through these**

H. OTHER

Title Owners Title Insurance (optional) - $475

**I have read varying opinions on this one, some for, some against. Anyone care to chime in?**

First of all, I strongly, vehemently, vociferously urge you to come up with an extra 1.5% (in this case, $1200 cash) and get into a convention loan program with 5% down, without a federal subsidy. FHA is a complete joke any more. That $1200 will save you:

-The entire up-front MIP financed ($1,349)
-about $25-$30 per month over the life of the loan on FHA's annual MIP vs. standard MIP
-having to REFINANCE THE LOAN to get out of paying MIP at all once you have achieved 20% equity (FHA annual MIP is now not cancelable, EVER.) Refinancing costs money (as you see,) and there is a very good chance that in a few years when you get there, loan interest rates will be considerably higher than they are now.

The only reasons at this point that anyone would use FHA for a purchase are:

-they absolutely must buy NOW and absolutely cannot pay the difference between the 3.5% down payment and a conventional 5% down payment.
-they absolutely must buy NOW and happen to fall within the very narrow range of credit scores acceptable to FHA but not acceptable to conventional lenders (it's only like 10 points.)

Now that said, as to your list:

$1,740 origination - very high as a percentage of the loan, but you have to take the extremely low loan amount into consideration here. As an absolute number for an origination (especially involving FHA,) $1,740 is pretty reasonable. You can't really ask someone to originate an FHA loan for $800. You MIGHT be able to get them to shave off a couple hundo, if you want to be a pain in the ass.

Appraisal: $400-$500 is standard - especially for an outlying area. Yes, the lender is getting a little back out of that, but nothing you can really do about it (especially if they are fronting the appraisal fee until (if) the loan closes.)

Credit report: WTF??? The cost for a commercial lender to pull credit reports is like $11 - I've never seen anyone around here try to pad that. I'd say something about that...

Up-front MIP: set by FHA and not negotiable - see above

Engineering Certificate: I don't even know what this is. Must be an FL thing???

Pest Inspection: $100 seems fine.

Survey Fee: hopefully they have this here as a placeholder "just in case." Even on a rural property, 95% chance you will not need a survey performed - final call to be made by the title underwriter after they have seen all the documentation. If I saw a copy of the deed, I could tell you pretty much for sure. IF you do need a survey, $350 is totally fine.

Title closing fee: too high. Shop around and get it for $400.

Water/well inspection: don't know as this is a pretty rare situation that happens to apply to you. $170 (or $145) certainly doesn't seem unreasonable.

Owners/lenders title insurance: I don't know why lenders always list it this way on GFE's (they do,) as it's complete bullshit. What you'll see on your closing statement from your title company is a title insurance premium of $475 (non-negotiable,) with a nominal fee (usually $25) for simultaneous issue, which will cover both owner's and lender's policies issued at the same time. And yes, you need owner's title insurance (especially on a rural property) - you definitely don't want to opt out to save $25!

 

[Anthony Martino]

Thanks Ben!

I went into this whole process on a no-down payment USDA loan and now I'm considering the 5% conventional, lol. Ahhhhh, my head is spinning!

I'll check with my credit union tomorrow and have them provide me a lender estimate on their charges and requirements and see what can be done. I'm betting I'll get a substantially better deal than the current lender is offering.

I have an executed contract with a closing date of 1/23/17 so kinda in a time crunch and have home and septic inspections on Tues of next week plus well testing next week also.

 

[Anthony Martino]

Hmmm, it looks like there is also a conventional mortgage that allows 3% down payment. But it appears ANY conventional mortgage restricts seller assistance on closing costs to 3% of the purchase price, which is roughly $2,400 in my case. In my current arrangement the seller has agreed to provide $4,000 in closing cost assistance, because FHA permits up to 6% of the purchase price to be contributed.

So it seems it works against me a bit to switch to conventional because then I lose $1,600 in seller contributions towards closing and on top of that have to come up with another $1,200 in cash myself to close.

 

[Ben]

Hmmm, it looks like there is also a conventional mortgage that allows 3% down payment. But it appears ANY conventional mortgage restricts seller assistance on closing costs to 3% of the purchase price, which is roughly $2,400 in my case. In my current arrangement the seller has agreed to provide $4,000 in closing cost assistance, because FHA permits up to 6% of the purchase price to be contributed.

So it seems it works against me a bit to switch to conventional because then I lose $1,600 in seller contributions towards closing and on top of that have to come up with another $1,200 in cash myself to close.

Interesting - that's new; until sometime recently it was the other way around; FHA closing cost assistance was capped at 3% and conventional limits were higher. That definitely makes a big difference (I still wouldn't do it if you are getting a good interest rate and have any way to come up with the cash to close, but I get that it would be tight and that additional closing cost assistance would make up for the UPMIP which is huge.)

 

[Anthony Martino]

UPDATE

Septic Inspection - GOOD
Well Test - GOOD
Pest Inspection - GOOD
Home Inspection - Some items found


The seller has been presented with some items to fix. The lender is in the appraisal process on the home, still have to get a survey and title check, but the process is moving along. Hoping that we'll make our closing date of Jan 23rd, excited about this big change in our life. Will keep you all posted, Happy Holidays!

 

[Anthony Martino]

• Seller agreed to fix the items that were most important to us
• Appraisal came back good
• Lender approved the loan

Almost at the finish line!!!!!

 

[Anthony Martino]

and it can never be easy. Lender noticed the appraiser gave the home an economic life of 29 years, but the mortgage is for 30 years. Been pinging my lender for a frigging week with no response on whether the appraiser had made a mistake or if they could do a 25-year term.

Then yesterday I get some documents to E-sign including my lock-in rate on the loan. Well, the document they sent lists:

Term: 20 years
Interest Rate: 4.625%

So I inquire about this because when we started in November I was quoted 3.875% as my rate on a 30 year loan. Now, I get that rates have gone up since November, I believe about .25% But my term has decreased from 30 years to 20 years, so one would expect the interest rate would also lower somewhat. Plus my lender was supposed to provide a credit towards closing. Here is my lenders response to my inquiry:

There is no option for more than 20 years the appraiser went back out and said the max financing was for 20 years. Your rate is because it's for a manufactured home that can only be financed for 20 years.


As far as the lender credit I had to use it on your rate. The actual rate for this home was higher.

I pinged another lender who said this:

Rates since November have gone up about .25% so the jump seems way high. I agree it does seem suspect especially since you've now paid for the appraisal.

Lender credit is usually a credit towards closing costs for taking a high rate. They make more with interest over time and give the credit up front so what they're saying doesn't make sense.. the applying it to the rate part.

This other lender is saying they could do better

4.5% over 25 years with no underwriting fee and a slightly better processing fee. So I wind up saving roughly $1,000 in closing costs and $66/month on the mortgage rate. But switching lenders would add another 30 days onto my process (not a huge deal since our apartment lease expires end of January and then we're month-to-month).

Can I use this to negotiate with the existing lender or is it unlikely they will budge?

 

[pltrgyst]

Can I use this to negotiate with the existing lender or is it unlikely they will budge?

Yes, and yes. Why not? You have nothing to lose by trying.

Sorry to hear about the complications, though...

 

[Anthony Martino]

Yes, and yes. Why not? You have nothing to lose by trying.

Sorry to hear about the complications, though...

Thanks, my lender buddy seemed to think negotiating would be tough due to regulations or something. I'm planning on swinging by my credit union today (have a bank account, credit card and auto loan with them) to see what they can do.

I can afford the rates with the existing lender, but it's a principle of the matter thing, just feel like they're really shafting me right before close jacking up their profit.

 

[abby99]

A lot depends on whether this is a portfolio loan for your lender, or a conforming loan that will be sold. The lender has a little more leeway with portfolio loans.

Good luck!

 

[Ben]

and it can never be easy. Lender noticed the appraiser gave the home an economic life of 29 years, but the mortgage is for 30 years. Been pinging my lender for a frigging week with no response on whether the appraiser had made a mistake or if they could do a 25-year term.

Then yesterday I get some documents to E-sign including my lock-in rate on the loan. Well, the document they sent lists:

Term: 20 years
Interest Rate: 4.625%

So I inquire about this because when we started in November I was quoted 3.875% as my rate on a 30 year loan. Now, I get that rates have gone up since November, I believe about .25% But my term has decreased from 30 years to 20 years, so one would expect the interest rate would also lower somewhat. Plus my lender was supposed to provide a credit towards closing. Here is my lenders response to my inquiry:





I pinged another lender who said this:




This other lender is saying they could do better

4.5% over 25 years with no underwriting fee and a slightly better processing fee. So I wind up saving roughly $1,000 in closing costs and $66/month on the mortgage rate. But switching lenders would add another 30 days onto my process (not a huge deal since our apartment lease expires end of January and then we're month-to-month).

Can I use this to negotiate with the existing lender or is it unlikely they will budge?

It all depends on the home and how it is currently classified by the tax assessor.

If the home is not on a permanent foundation and/or is not currently affixed to the real estate as a permanent improvement according to the tax assessment, then the lender will treat it as a movable structure and yes, your maximum term will be 20 years and at a significantly higher interest rate. If there is really no permanent foundation, don't buy it. Seriously - a few years down the line, your "investment" will be worth nothing.

If it IS on a permanent foundation, then it should be treated as real estate. If it is not currently classified that way (or even if it is, to cover their ass) the lender can and should file an Affidavit of Affixation which is a document that gives notice to all, including the assessor, that the home is a permanent part of the real estate and cannot be moved. In that case, you should be able to get a standard 30-year mortgage at a standard interest rate (there are still special rules applying to loans where the collateral home is a manufactured home, much like when the collateral is a condominium - I don't know all of the specifics.)

 

[Ben]

I can afford the rates with the existing lender, but it's a principle of the matter thing, just feel like they're really shafting me right before close jacking up their profit.

I'm pretty sure that's not the case - sounds much more like a case of loan officer ignorance, either at the start of your process, or now (a very, very common occurrence...) If anything you may have been quoted at the outset based on the best-case scenario, which of course almost never actually happens, but is how they get people in the door. The same thing is more than likely happening with the other guy you are now talking to...

 

[Anthony Martino]

Wound up switching lenders, better rate and lower closing costs. New closing date of 2/17

Seller has agreed to repairs we wanted and some are completed, others in progress.

Title company found an easement issue. My property is on a long driveway that connects three homes from the main road, so there is sharing of some portions to allow access. My home is in the middle, and the easement issue exists with the home that abuts the main road. Fortunately both properties were owned by the same seller, and the title company handled the recent sale of the first property, so they expect to be able to bang this out without too much of an issue to our closing date.

My boss mentioned when he purchased a home in another county they had an easement issue that took 6 months to clear up, because they had to wait for the county to process things, etc.

Anyone with insight onto whether they can resolve this easement issue within 2-3 weeks or should I be expecting a significant delay?

 

[Anthony Martino]

Thanks to Ben for his offline assistance with understanding the easement issue. Got some good news from the title company

Awesome news!! Upon further review by our underwriters, they have determined that the property does in fact have legal access. Since the property was obtained via court sale by the pre-previous owners and the mortgage that had been foreclosed included the ingress and egress information, it created the accessibility in the public records that was needed.

I will be typing up the commitment and sending it both the lender and the buyer for review. Please note that the lender requires the mobile home title to be retired. Therefore, a mobile home title will not be transferred at closing

 

[Anthony Martino]

Foundation has been fixed, movers have been scheduled, internet installation set. It's coming pretty quick, closing on the 17th, really excited!