Thursday, May 26, 2005

Impeccable Timing

My husband and I have a horrible sense of timing.

In July of 1999, we bought a house two months before the furnace and water heater went out and the roof started leaking.

In March of 2000, we left for a two month pack across Europe. Many economist mark 03/00 as the start of the US recession.

In September of 2001, we left for a 10 day teaching stint in Minsk, Belarus. Our return flight was scheduled for September 11.

And now, in April of 2005, we are in the process of buying a second home. Our dream is to move to Edmonds (less of a commute and what a great town!) We also want to keep our starter home in Kirkland as a rental. We have heard so much about what a good investment this can be.

I must say, Verity has been great in this whole process. They ran so many different financial scenarios to see if we could swing two mortgages and they made it work! I swear I was going back to Shari Peterson every other day with questions like, ‘what if we put 10% down and increased our current HELOC?” “What if we put zero down and took out a second?” “what if we did a 40 year mortgage and rented our current place for less?”. Every time she would give me a new good faith estimate until we landed on what worked best for us. And she was so NICE about it (patient too). Then, when we finally closed and took possession, everyone in the department seemed so happy for us. I’m not just saying that because I work here. It is true. They were nice and helpful and happy for us. That felt good.

So now we are moving from one house to another and taking classes on being landlords and sprucing up our old place. Why do I think we have bad timing? Well, I’m 8 months pregnant. It’s hard to pack, move, spruce, rent, when you are as big as the new house you just purchased.


Wednesday, May 11, 2005

Buying a home – it’ll only cost you your pride?

I thought my experience was just an isolated event. But within these last few weeks, I am hearing more and more occurrences and it has me both worried and angered. I’m in the process of buying a new home. And just like many other homebuyers I am sure I share many of the same insecurities. Except with my lender. I work in the Mortgage Department and have for over five years. I am comfortable and confident that I am getting a competitive rate and a great deal with Verity as my lender. But most people may not have the same comfort level with their lender, after all, not everyone gets to work so closely with them day after day.

So I can only imagine how one of our members would have felt had they been in my shoes the day I went to meet with my builder. I went into the meeting confident and excited about the purchase of our new home. We had a pre-approval from Verity and I had extra room to do additional upgrades. But my confidence quickly changed to insecurity and fear when the builder began questioning my lender choice. I was told of numerous fees that I would incur if my lender were unable to meet all of the requirements of the purchase agreement. Of course, I knew this was a scare tactic to get me to use the builder’s preferred lender, but it had me rattled none-the-less.

The experience left me irritated at the builder’s boldness for first, requiring that I get pre-approved through their lender before I was able to even make an offer on the house, but then to continually question my choice throughout the process with scare tactics. I worry that homebuyers are experiencing this everyday and don’t know that the lender is their choice or they are afraid to find a different lender because it might cost them more in the end.

So I wrote an article for our newsletter with advice on how to make it through the pressure of a builder’s interrogation. Writing the article made me feel a bit better until a few days later I was told of another way this is happening, but this time through a real estate brokerage. Apparently a very large brokerage (to remain unnamed) is forcing their clients to be pre-approved through the broker’s lender. I haven’t experienced this first hand so I ‘m not sure exactly what they are doing, but it wouldn’t surprise me if they didn’t disclose to the client that they should also seek other lender quotes.

What I had thought was an isolated incident is becoming more of a regular occurrence. No one likes to be taken advantage of and that’s what’s happening here. Builders and real estate agencies are feeding off people’s fears and insecurities. My fear is not that we are losing potential loans. This of course is an end result. But my biggest fear is that homebuyers are being forced into a loan that isn’t right for them, they are paying more for it and it’s going to make the home buying process a bad experience rather than a good one. After all, it’s the American Dream to own a home. You shouldn’t have to pay with your pride.