First time homebuyer?

Question

I am a first time homebuyer who is having a house built. My contractor originally gave me a completion date of December 2006 but now has given me a revised date of March 23rd 2007. The exterior of the house seems to be completed and it looks like all that needs to be done is the interior. I have not locked in an interest rate as yet; my question is should I do so. I spoke to my broker yesterday and he said that my inerest rate if I lock it in know would be 6 ½ on a FHA loan, but if the house is not completed by March 23rd I would have to pay fees such as a quarter of a percentage point until the house is completed. Any advice would be greatly appreciated

Answer 1

I do not think it is absolutely necessary to lock your mortgage rate that far in advance. See the way it works is the further in advance you lock the rate, the less attractive rate you get. Since it does not look that the economy is going anywhere any time soon, why lock 3 months in advance to make sure that you get a bad deal in today’s terms. Even if the rates inch up a bit, you may get a better deal locking for just 30 days, rather than locking now for 60-90 days.
I'll suggest another thing to you, and this is very counterintuitive, but you may thank me later. Talk to your broker and ask him if he would agree to give you a slightly higher rate, but cover your closing costs. Now, I am sure that this is going against all the conventional wisdom, but:
1. Closing costs are not tax deductible, but interest is.
Say your loan is 300,000, if your broker gives you a rate that is .25% higher and cover you closing costs say $2000-3000.
This will cost you extra about $750 of interest per year, this 750 is tax deductible, so in fact it will be about $600 per year out of your pocket. Basically you get 3-4 years to spread your closing costs out. Now, you may ask what about over 30 years... The answer is you will not hold this loan for 30 years. You are getting a FHA loan, which is generally more expensive than a conventional one. So that means that you will be refinancing it within a couple of years anyway. If your broker says he will not or can not or does not want to do it for you, talk to other brokers and see what they say. Shop around, you don't have to be loyal to your mortgage broker, find an honest guy who will keep your interest in mind. I am a mortgage broker in IL I know what I am talking about. In some states, the closing costs are much higher, so then perhaps the broker will agree to cover at least a chunk of them. What you want to make sure is that they don't just add those fees to your mortgage amount, but cover it out of their commissions. The commissions are higher if you accept a higher interest rate than going market rate.

Good luck.

Answer 2

a grimy floor should not be a topic, lacking flooring (holes interior the carpet), vast stains to the element the flooring is unusable, may be the subject with the flooring. the bathtub liner is an argument. A cracked bathtub liner will carry approximately water harm which will carry approximately mildew. i don't be attentive to the dimensions of the homestead, yet $15,000 seems intense for carpet and a bathtub liner. reckoning on the financial employer, the two they are going to hold the money in escrow and have you ever fix it after it is closed, or it is going to must be executed previous to remaining. Your lender has not something to do with HUD. HUD desires to sell the valuables. Your lender would not % to handle property that has harm that could exchange right into a structural (ie: water) subject. The appraiser ought to care much less what variety of subject concerns are with the homestead (foreclosure, divorce, and so on), an appraisers job is to appraise the homestead interior the present difficulty of the form, not what the situation is. Get 3 authorized contractors into the valuables and get 3 estimates. positioned up them to the financial employer and ask the appraiser to check and revise the appraisal.

Answer 3

Don't Lock!