Buying New construction home

Sep 10, 2017 62 Comments

Hi Guys, I am trying to buy a new construction home in a community. I know there are many home owners here. Especially lots of msft people are homeowners. So asking here before I try reddit/quora and everywhere else.

This is going to be my first home so don't have much idea.

I have few newbie questions which I would be really happy if you can give unbiased responses from your own/friends experience.

1. For the new construction, should I go with the broker who sit in the construction area or with my own broker, assuming that the homes disappear within an hour of listing.
For eg, more than 25 homes are already sold but if I put the addresses on redfin, only 8 shows as pending. Others don't even show up in redfin. Does that mean that they are sold even before showing up in mls listing (broker was the one who was selling?)

2. There was a loan officer who was there at the property. Based on my file and my info, he told my interest rate will be at around 4% for 30 yrs fixed conventional loan. At max 4.1-4.2 but not more than that. I will be putting down 15-20% and home price would be around 850-900k.
Closing costs would be approx 10k extra (approx 6k would be payments towards first 6 months of taxes + home hazard insurance for first 15 months). So I will be paying around 4k for miscellaneous fees.

So my question is should I go with him or should I search for other lenders? Will I be at a loss and preferably lose the home if I try with another one because the market is hot and property disappears within one hour of listing(this is verified by me personally)
My profile - 15-20% down with around 650-670 credit score

3. Lets say I go with the preferred lender. Can I refinance right after I move in if I get a better interest rate? What would be pro and cons for this?

4. Do you guys have any recommendation for me? I am completely new to this so don't have much idea.

Few stuffs about me (incase you need these for any recommendations):
On h1b. Don't have i140. Green card process hasn't started. Indian.
Started working last year.
25 years old. Not married yet but will be marrying in the next 12 months. Spouse won't work for the initial 2 years at least but definitely not spendthrift so I am hoping mortgage payments won't make my life hell.
Schools rating for the home is 8,9 and 10

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TOP 62 Comments
  • Amazon
    c++e

    Go to company page Amazon

    c++e
    How much do you make and how many expenses/debt do you have now?
    Sep 10, 2017 23
    • OP, I make the same as you. But I echo kpqd's comment above. Though I had savings, I went with a modest 400k condo. It's a no rental cap property. So, I'll live here for now. Once I marry in a year or so, based on spouse's income, preferences, I'll turn this into a rental and plan for a SFH. If need be, I can sell this too if market goes crazy. God forbid the market crashes, I will have good savings and can go for a nice house.
      Sep 27, 2017
    • Op here.
      Instead of going after that house, I instead went for a new townhome near bothell for 600k. Have been preapproved, placed offer and accepted and right now going through the loan process. Thanks for all the suggestions everyone.
      Sep 27, 2017
  • So did you end up buying the new one ?
    Nov 1, 2017 1
  • Intel / Mktg
    nononsense

    Go to company page Intel Mktg

    nononsense
    Don't think a broker will help you, but you can always look for another loan. Get pre-approved (not just pre-qualified) before you shop. Your offer will look better if not using their lender.

    If you are getting ~4% on a jumbo loan with <20% down and 650-670 credit score, that isn't bad, however.
    Sep 10, 2017 3
    • Intel / Mktg
      nononsense

      Go to company page Intel Mktg

      nononsense
      I was saying that if you aren't using their lender, your offer will look better if you come in with a pre-approvall.

      You can get pre-approved with multiple lenders.

      Would need to see all the details to know if fees are reasonable, but there are lots of things that you will need to pay up front. Things that you need to watch out for are too many "fees" - application fee, origination fee, underwriting fee, processing fee - these are all the things the lender is profiting on, as well as any rebate they get from the lender. They deserve to make money, just not a crazy amount.
      Sep 10, 2017
    • OP
      I think the guy was mentioning all these various fees inclusive of appraisal. And told it should be at max 4k.

      Do you have any recommendations for lenders?
      Sep 10, 2017
  • Get a real estate agent of your own. The good ones have their own network and inside connections.
    Sep 10, 2017 2
    • OP
      Will this be beneficial in my case since this is new construction? Inside connection with the builders you mean?
      The real estate agent i was working with was quite good and they are partnered with msft i guess. We get 10% gift too on the commissions they get. But I am not sure whether to approach this with her or the one who is sitting at the property
      Sep 10, 2017
    • Yes, with the builder. Try to find one that's still under construction since you still have time and can get a better deal. Those same real estate agents could also give you .5% back from their commissions if you ask after you find the house. This is better than just competing in the open market.
      Sep 11, 2017
  • Salesforce
    Anonymyt

    Go to company page Salesforce

    PRE
    Amazon
    Anonymyt
    I recommend 7/1 ARM. Being first home you will not live in that for more than that many years. Why pay more in interest with 30 year fixed loan? Also with tech salaries, plan to payoff your loan in 7 years.
    Sep 10, 2017 13
    • Intel / Mktg
      nononsense

      Go to company page Intel Mktg

      nononsense
      You all are assuming that rate doesn't change. What is the A in ARM? Adjustable. I would bet that 3.6 is 4.1 in 12 months and then 5 in 24 months.

      What was one of the contributors to the last housing crash? People buying more house than they can afford, using ARMs to get initial payments down, then losing their homes when the payments adjusted up to something they can't afford.

      Just because rates haven't gone up recently doesn't mean they can't or won't. Current rates are crazy low - they have already gone up 0.5 in the last year. If you take and ARM today, you have to assume it will go up. How much and when are the only questions.
      Sep 11, 2017
    • Salesforce
      Anonymyt

      Go to company page Salesforce

      PRE
      Amazon
      Anonymyt
      7/1 ARM adjusts after 7 years. 5/1 ARM adjusts after 5 years. And NO, ARMs did not cause housing crash. Interest only loans, buying what you cannot afford and greed caused the housing crash.
      Sep 11, 2017