First home buyer help, please analyze.

[admin]

Originally Posted by Dasanii19

Can you go into more detail about these two statments above. Id really like to take your advice but would like to understand it a bit better.

Thanks for all the help!!

A loan officer gets paid in two ways.

1. They recieve a percentage of the orgination fee.
2. They make money by charging you a higher interest rate than par.

Par means that lenders will not purchase the loan for the standard fee and not give a larger amount based on an above market interest rate. Another way to explain this is that the par rate is the going interest rate at the time in the market place and pays no premiums and requires no buy down. The reason you can buy down your interest rate is because lenders sell loans in the secondary markets to investors. Investors are willing to give a premium for loans that are above a certain interest rate. The also require a premium if the loan has a below market interest rate. So, when you pay the bank the 1% to get a 0.25% lower interest rate you are paying the premium they must pay a investor to buy your mortgage note. When you buy down the interest rate it is called paying points.

Before I go on further please let me know if I have made this point clear as it is often very difficult for people to understand. And if you do not understand it the rest I have to say will not make any sense.

[Dasanii19]

Originally Posted by admin

Again I would float the rate until the 30 day free lock period unless the par rate gets down to 5.5% then lock. The amount the rates will likely decline below this will be negligible in your payment.

Can you tell me what you mean by "float the rate"? Are you suggesting that I should shop the rate the whole free 30 day period? How do I do that? Is it as simple as calling my lender every day to ask what the rate is? Should I trust my lenders suggestion as to when to lock?

[Dasanii19]

Originally Posted by admin

A loan officer gets paid in two ways.

1. They recieve a percentage of the orgination fee.
2. They make money by charging you a higher interest rate than par.

Par means that lenders will not purchase the loan for the standard fee and not give a larger amount based on an above market interest rate. Another way to explain this is that the par rate is the going interest rate at the time in the market place and pays no premiums and requires no buy down. The reason you can buy down your interest rate is because lenders sell loans in the secondary markets to investors. Investors are willing to give a premium for loans that are above a certain interest rate. The also require a premium if the loan has a below market interest rate. So, when you pay the bank the 1% to get a 0.25% lower interest rate you are paying the premium they must pay a investor to buy your mortgage note. When you buy down the interest rate it is called paying points.

Before I go on further please let me know if I have made this point clear as it is often very difficult for people to understand. And if you do not understand it the rest I have to say will not make any sense.

Please go ahead and proceed with this as well.

[admin]

Originally Posted by Dasanii19

Can you tell me what you mean by "float the rate"? Are you suggesting that I should shop the rate the whole free 30 day period? How do I do that? Is it as simple as calling my lender every day to ask what the rate is? Should I trust my lenders suggestion as to when to lock?

A lender needs about 45 days to close a loan once he has all the paper work. So, you can shop rates with lenders for the next few days then you need to make a decission on which lender you are going to use. What I mean by floating is waiting to lock the rate. I do not expect a rapid jump in interest rates any time soon but rates could come down. Floating the rate means not locking it. I say do not lock the rate unless it hits 5.5% until you get into the 30 day lock time line which should make the lock free. Again charges for locking rates depends on the lender. And as always markets do flucuate and so if you float the rate there does exist the chance that you could end up paying more. I expect that rates will not go up much unless the buy out bill fails. If it fails to pass rates will spike, however, I think congress will pass it. When the bill is passed if unemployment is up or stays flat and no spike in inflation is seen then interest rates will go down slightly. However, I do not expect that they will decrease below 5.5%.

I can not answer whether you should trust your lender or not to judge when you should lock as I do not know them or their level of expertise. If you think they have a strong knowledg of markets then their is no reason to distrust them as they would not benefit by having you lock at a higher rate since their pay is based on what ever the going interest rate is on that day at that specific minute.

[Dasanii19]

Hey James, well I just got a call back from the realtor and they said that the bank signed the papers, so that's one worry eliminated.......

Now I know that you highly recommend getting a home inspection done and I agree. But in the state of Nevada it is not mandatory to have a home inspection done. It is however mandatory to have a pest control done but I think you can waive that if you wanted.

Now, my father has been a plumber for 40+ years and has a lot of knowledge in the construction field. I also have a friend that is in the heating/AC trade. Structual, insulation, exterior/interior seems easy enough to just take a good look at. I have decided that we are going to the inspection ourselves and if anything pops up that were are no sure about that I would go ahead and pay a certified inspector to do the job.

Whats your opinions on this?

[TJS]

Hi,

I'm brand new to this forum and looking for advice. My husband and I are first time homebuyer and put down earnest money on a townhome in the east side of downtown (~ 7 blocks away from Minute Maid Park). We were supposed to close end of Sept, but because of the hurricane, our closing date had to be postphoned for couple weeks. It's an Intown home properties, and we recently encountered some negative feedbacks on the website in addition to the recent financial market turmoil that's going on.

My question is, is intown home a reputable builder? Second, is it even a good time to purchase a home?

Any feedbacks would help!

TJS

[Dasanii19]

You have come to the right place!

James is AMAZING! He is full of knowledge and guidance, and I truly feel my boyfriend and I couldnt have done this at ease without his help! I am going to blog my entire experience with James and HIGHLY recommend any advice he gives!!!

[admin]

Fist there are alot of builders that are going by the name of intown home properties of this or that so I need a little more information from you to answer your concerns about how reputable they are. What is the name of the project that you are purchasing in? In other words what is the name of the townhouse community? This will allow me to look up who the construction company working on the project is. Alot of times the outfit selling the units is not the same company that is doing the building. This is because one contractor can sub contract to another and then they can sub contract to yet another. I can look into who is handling the project if I know the name. If I can not answer it my broker surely can as he took part in almost all the redevelopment projects inside the loop.

As far as whether it is a good time to buy or not with things the way they are the answer is yes if you buy inside the loop. It is my prediction that some of the less popular suburb commmunities are going to take a small loss over the next year. But, I feel that inside the loop will hold strong as Houstonians are statistically becomming younger and interested in living an urban lifestyle. This fact added with Downtown becoming more and more residential living friendly we will continue to see an influx of people into the loop. So, you are wise to be making a purchase right now while others are afraid. I am going to leave you with a quote as I wait for your response.

"Be afraid when others are being greedy and be greedy when others are afraid." Warren Buffet

[TJS]

Dasanii19, thanks for your advice.
And James, thank you so much for taking the time to answer my questions! I really appreciate your help. I like your quote a lot - very true.

The builder's name is Intown Homes. Their website is http://intown-homes.com/ and the area of the construction is Capitol Oaks.
We also had an inspection done right the hurricane hit and one of the things that worry me a lot is roof. Our inspector pointed out that the roof rafter should be flush against the roof ridge and shouldn't have gaps. Since there are gaps, this states that the walls are moving apart and pulling the rafters away from the roof ridge or they were not properly installed. The builders later said that they will take care of the problem and put stints onto the rafters so that it can be flushed against the roof ridge.

TJS

[admin]

So the outfit that is putting up the townhomes is sub contracting the work I do not recognize the builder by name but will be meeting with my broker on monday to do rounds inside the loop I will talk to him and see what he says.

I personally have not seen the property or the inspectors report but going by your statements I feel that your concerns are well founded. Second not knowing the builder instantly by name leaves me skeptical myself. If you have pictures and a write up from the inspector you can send me I can take a look at it. After noting the inspectors report I would be better able to give you sound advice. Without knowing exactly what he said the condition is I would only be speculating.

Roofs on projects such as these can end up down the road costing you alot. Not to mention what becomes a small undetectable leak, later turns into rafter degeneration which is bad news. It may make sense to have an engineer give you an opinion on whether the builders proposed solution is adequate. If the inspector is right about the walls seperating that much run that is a clue to a larger problem.

Oh, along with the inspectors comments on the issue I would like to ask you how many days ago the inspection was completed and how much your earnest money deposit amounts to? With this set of information I can give you much higher quality advice. I look forward to hearing from you soon and do not feel funny about calling. You can find my direct line below in my signiture.

James