Tales From the Trenches: Part II

My wife and I recently purchased a newly built home as first-time buyers. Of course, hindsight is always 20/20, so this goes out with the hopes that others can learn from our insights.

* When house hunting, know specifically what you like and don’t like. It’s easy to get swayed by the hype that each builder is making about why his or her home is just right for you. It’s easy to think this kitchen design is perfect--if it weren’t for the size of the sink. Keep looking.

* Check lot size. If the house is not yet built on the lot you like, ask the builder for the footprint size of the house. Then go to your lot and see how much room you’ll have in the front, side and back yards. You’ll be surprised at how small that “large” lot just got.

And don’t be persuaded by the fact that they’ve planted grass in the driveway of the model to give the impression of a much larger yard when, in fact, 75% of that grass will be torn up when they put the driveway in.

* Check the view. Most new homes have a large window in the living or dining area generally facing toward one neighbor’s home. Again, verify that your large window doesn’t look straight across the property line into your neighbor’s large window so that you end up watching each other eat dinner.

* Model homes always look nicer, brighter and bigger, and every piece of furniture fits perfectly. If you already own a lot of furniture, especially oddly shaped or larger-than-normal items, make sure the room you plan to place it in will not be too small or cramped.

* Ask what having a homeowner association in a development does for you. Beyond the normal requirements for landscaping, cleanliness, architectural control, etc., what are you getting for your money? Most associations maintain a pool and spa and possibly a club house for community use. But ask yourself if it’s worth the $75 to $150 a month you are going to spend for those services.

Also watch out for associations that are overly regulatory and others that

barely regulate anything. Make sure you’re comfortable with whatever you’re getting into.

* Check the garage. Some models don’t allow access to the garage. You’ll probably be surprised to learn that most newly constructed homes have unpainted garages. If it’s a two-car garage, and you plan to park two cars in it, check to see how much room is left for storage.

* Check up on the financial health of the builder. Obviously you want your house completed. But you also want the builder to make good on any warranty for the house. Best yet: Have the builder provide for an outside company to provide a warranty.

* Check the paint quality. You might find that the builder is cutting costs by applying a latex paint only in the kitchens and bathrooms and a flat paint elsewhere in the home. A flat paint basically means that any little mark on the wall or ceiling will not scrub clean; you must paint over it. Get the latex if you have a choice.

* Watch every step of construction on your house. Visiting each Saturday or Sunday during the construction period is probably good enough. If you asked for special construction changes from the normal, make sure they are doing them.

* If you have a video camera, record each trip to the house during construction. Not only does it make an interesting video to watch later when you are settled into your new home, but it helps tremendously when you are wondering where the wires, pipes or studs are buried in a wall. If you make alterations to your home, you’ll know exactly where to cut to avoid or find what’s buried in the wall. Take still pictures if you don’t have a video camera.

* Bargain with a builder. A lot of times, the home price is not negotiable. So negotiate on extras--backyard landscaping, plusher carpet, better quality paint, a painted garage, larger water heater, oven, etc. Get the customization list the builder offers and pick from there (extra ceiling fan outlets, extra phone jacks, etc.). There is a lot more latitude with these extras than with the price.

* The builder might also require that you use his lender to get the extras you are asking for. He may say his lender has hundreds of loan programs to choose from, but when push comes to shove (usually as your home nears completion), they’re going to give you only certain “available” programs.

Of course, you can use another lender, but the builder may not then include all the extras you were going to get.

* Check your costs. If you negotiate for the builder to pay a certain amount of your nonrecurring closing costs, say $4,500, make certain you’re going to have $4,500 in costs for the builder to pay.

* Details, details. On the walk-through inspection, spend the time going through each room looking at every little detail. Some of the things we missed and some of the things we caught:

-- Cracked baseboard under cabinets in kitchen.

-- Spilled paint of the same color as our carpet (just a drop, but you have to cut it out).

-- Cracks in dual-pane windows that can be seen only from a certain angle.

-- Spotty paint coverage.

-- Missing door stop on side door.

-- Paint over-spray on windows and woodwork.

Something that is considered damage (like the window or cracked baseboard) will not be covered by your warranty should you bring it to the builder’s attention after you close escrow and take possession of the home. You must find these things during the walk-through.

Also, make sure the builder writes down every little thing you find that needs attention. Don’t let them say, “I’ll get you one of those this afternoon.’ If it’s not on the list, it probably won’t get done.

Greg Ford

Chino Hills

Be Firm--and Firmer

A wonderful Realtor was recommended who drove us around looking at pre-selected homes in our price range.

The house we liked best was wonderful. New appliances had recently been installed, the floor plan worked and there was a large yard for our two dogs. Plus, the price was right! Before jumping in, I called the local police to check on the neighborhood and was told that there had recently been five drive-by shootings on that street, but mostly they were directed at another house. We kept looking.

If all I could afford in a single-family detached home was a blighted area, it was time to consider (shudder) condos.

The good news is that the same money that couldn’t buy a decent house will get you a really nice new condominium or townhouse.

Here are some things we learned in our house hunt:

* Keep a list. We developed a “cheat sheet” on which we had listed various features and noted our impressions of each unit. After the 10th property, it helps to see that this address had the balcony but that one had the patio.

After looking at several complexes, we finally found the perfect townhome--three bedrooms and three full baths, necessary for my extended family, and large backyard--in a project still under construction.

* Monitor construction. We visited the house several times a week, watching as the building progressed. When we saw a half wall was installed in what was supposed to be the downstairs bedroom, we brought the error to the attention of our salesman. He was very sorry and immediately called the builder. It could easily be changed; however, it would cost us extra.

* Be firm (and threaten to sue). I explained that we bought a three-bedroom home and that bedrooms usually had walls that reached the ceiling. Convincing the builder of this took about a week.

* Be firm II. Remember the backyard? There was no gate to access the yard. They could put one in, but it would cost us extra. After I pointed out that the model had a gate, which could be considered a warranty, and said I would personally organize all 24 new owners who had moved in in the last two weekends, without gates, to picket the sales office, the builder installed gates.

* The walk-through. Take a professional with you. This is your dream come true, and you’ll be walking on air. You probably will miss the fact that the floorboards and molding don’t quite meet. It took us about a week to notice the easy access the crickets had to every room in the house. Yecch!

Also, if the builder’s walk-through person tells you he set the clock on the stove for you but tells you not to try the timer, do it anyway.

Schedule the walk-through during daylight hours so there is sufficient light to discern problems, flaws, missing fixtures, etc.

Count shelves. I have three in my pantry; my neighbor has five. Two out of three shower rods were missing, borrowed for another walk-through.

Be sure every problem you discover is written down, because if it’s not on the form, it didn’t exist.

* The mortgage. All the experts agree: Pre-qualify. We were all set to apply at our credit union, but the builder was working with a mortgage company that was really convenient and helpful.

Rule 1. Read everything--twice.

Rule 2. Copy everything. Keep the folder with you because everything you give the escrow company will be misplaced or never received.

Rule 3. Compare everything. No two printouts will be identical.

Rule 4. Take your time on closing day. He who signs in haste pays at leisure, usually for 30 years.

Aside from all the garbage fees that appeared out of nowhere and were swatted away, it appears that mortgage insurance is required. But it was listed twice on the closing documents and in different amounts. Only some close questioning by two frantic buyers who were “that close” to walking away from the whole mess resulted in the lesser of the two charges being removed.

If stress and confrontations bother you, take your most assertive friend.

Michelle Bettis

Orange

Check Out the Market

* Get a mortgage lender you trust and are comfortable with. If you don’t like what they offer, try another. Don’t feel rushed or pressured into a loan; there is time to get the loan that works for you.

If you’re not sure of what the lender tells you, ask other people--or other lenders. Get opinions from more than one lender, so you know what is workable for you.

* Use a Realtor who is working for your interests and not for the seller. Realtors need to listen to your needs. If at any point you feel rushed or pressured, stop house-hunting until the pressure eases. If the pressure comes from the Realtor, you might consider using a different agent.

* To find the right neighborhood, go to a local market. That will tell you what kind of people live in that neighborhood. Visit the neighborhood at night.

Rhonda Dinsdale

Dana Point

Check Out the Roof

I am sure that a few of these tips would have made the home-buying process much less excruciating for me:

* Check the inspector’s credentials. Make sure he is licensed, insured and bonded.

* Be there when he does the inspection. Do not be afraid to ask questions.

* Check the plumbing and heating systems. Make sure they will meet your needs. For example, check to see if the water heater is on one side of the house and the bathroom is on the other.

* Watch out for trees near power lines. Once the house is yours, the trees are yours to trim.

* Do not depend on an exterminator’s termite report. Check for yourself to find out about other infestations (i.e., ants, spiders, etc.,) especially if the house is older. These insects can be as annoying as termites are destructive.

* If you buy in the summer, get proof that the roof is sound. Do not rely on an inspector’s report unless you see him go up to look.

* If at all possible, include first-year seller-paid roof repair in the escrow instructions. What looks great in August may be found wanting in February.

* Do not rely on escrow to arrange for hazard insurance. Review the terms yourself to be sure that everything is included. (For an extra $100, which I would gladly have paid had I known, my leaky roof would have been covered.)

* Do not trust verbal assurances. Read the million and one papers, making a list of questions and concerns, and get them all answered before signing.

Cherrie Presley

North Hollywood

Consult a Lawyer

My wife and I bought a home in December 1992. We worked through a local mortgage broker recommended by our real estate agent.

We had asked for, and thought that we would receive, an adjustable rate mortgage with the option to convert to a fixed rate after the 13th month of the loan. Imagine our surprise when we discovered after closing that we did not have the conversion option on our loan, that it was a “full-fledged” adjustable loan.

Since closing, our monthly payment has increased by 38% because of rising interest rates and our home has declined in value, so we have no chance to refinance. The lessons learned that we would like to pass on to your readers:

* Recap all meetings with your lending institution or mortgage broker in writing.

* Review all loan documents at least three business days before closing.

* Have a lawyer present at the loan review meeting (meet in private without the broker) and at closing.

* Don’t close on your loan if the lending institution or the mortgage broker fails to provide you with the loan package that you have directed that they provide.

* Remember that the lending institution or mortgage broker live on commissions that you pay them. They may be nice people (ours sure seemed to be), but the money is the bottom line.

I hope that these five simple lessons will save your readers some of the thousands of dollars in very unnecessary interest charges.

Kenneth W. Keller

Valencia

Stay Away From ‘Julie’

I bought my first home last summer. My Realtor introduced me to the mortgage broker who worked with her realty company. I’ll call her “Julie.”

When she promised to get me the best possible rate for the least number of points, I asked how she was making money on the deal. Julie told me not to worry, that she got paid out of the points and that I wouldn’t have to pay her anything.

Doubting my good fortune, I asked her the same question over and over during escrow, and she always gave the same answer. Imagine my surprise, on close of escrow, to see a $350 mortgage broker fee in addition to the points I’d been quoted.

When I confronted Julie, she denied ever having told me there was no fee. I kicked and screamed and got the $350 taken off, but it was an unpleasant experience.

The irony is that during escrow, I was calling The Times TimesLine service each day to hear the updated mortgage rates for dozens of area banks and lenders. I was, in effect, duplicating Julie’s work, only I was getting many more quotes and doing a far more thorough job than she did.

Mortgage brokers are OK for busy or unmotivated people, but they can be subtracted from the real estate equation quite easily.

Wendy Vega

Studio City

Leave Money Alone

As a loan officer for banks and mortgage companies for more than 20 years, I would like to pass on a few tips.

* Contact a loan officer three to six months before you want to buy. I don’t know how many times a borrower has come to me and said “Well, I just bought a home. Get me a loan.” Many borrowers have complicated situations; they are self-employed, say, or the down payment is a gift. These are all workable, but it can take time.

* Tell the loan officer your full financial picture. If you explain your financial circumstances, the loan officer can advise you on the best course of action.

Maybe you need to have your tax returns done early. I had a client who mailed out her tax returns on April 15, regular mail, and the private mortgage insurance company would not fund the loan until the returns were received by the IRS.

* Have your papers in order. I have had to search through shoe boxes carried in by the borrowers to find papers needed to process the loan. Bank statements, income tax returns and pay stubs are important.

* Leave your money alone. Don’t start switching money around in your bank accounts just before buying a home. Lenders require three months’ seasoning on money. If it has been in the bank only three weeks, there must be a trail showing where it was for the last three months. If you have been playing musical bank accounts, it makes it very difficult to track this money.

Most underwriters want to make loans, but the banks have guidelines. Just give them 80% of their guidelines and they are happy and usually will waive the rest of the conditions or work with you.

Lana Tolman