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1430 hours: Herb from Wells Fargo calls me. He takes my information (salary, savings, expected price cap on the house, etc) and promises to fax me a form he needs me to sign so he can run my credit report. This call lasts 15 minutes and 51 seconds.
1458 hours: Herb calls me back and asks me to check my fax machine. On the fax are 7 pages. The first two are the credit report authorization. As I pick up the form and start to sign it Herb tells me I have a superb score and that despite my misgivings the Experian credit bureau is actually scoring me the highest of the big three. He had already run my score and had a full picture of my credit status! As I set the fax machine to send back the signed authorization form Herb drops another bombshell on me when tells me to pick up the other set of pages and flip to the back. I am shocked and delighted to find a letter of pre-approval for an FHA fixed-rate loan for 30 years, to the tune of $180,000 at six percent interest. With predicted taxes, various forms of insurance and closing costs my monthly payment will be $1,425. I'm absolutely flabbergasted -- in 28 minutes (of which I only spent 15 minutes on the phone actually communicating!!) I have been approved for enough cash to buy pretty much any house I ever thought of owning. This call lasts 14 minutes and 34 seconds
1523 hours: I call Herb back to discuss some other choices that might be available to me. Among the various options I explore are FHA ARM loans, conventional loans and 80/15/5 loans. By the time I hang up 15 minutes later my head is swimming -- there's so much information to absorb I feel in danger of drowning amidst it. I've got more than a few options available to me at this point, each one having benefits and drawbacks that are entirely unique. I promise myself I'm going to drink copiously during the weekend and try to understand what I'm looking at so I can make an appropriate choice when the time comes to put my name on the dotted line.
1545 hours: I call my realtor and give appropriate contact information to get the ball rolling now that I have the paper in hand that says I'm good for obscene amounts of money.
I decide to explore my options and seek a "second opinion," and so take a detour on my way home. At 1651 hours I am sitting down with a second mortgage lender at my credit union in Rolling Meadows. Once again I clear the preapproval process in the span of fifteen minutes, and by 1720 I'm walking out the door with a second preapproval letter and two good-faith estimates (one for a 30 year fixed conventional, $180,000 at 6% and a second for $180,000 on a 5/1 ARM at 5%). Needless to say when I walk in the apartment door at 1735 I'm in a state of euphoria. roho and enveri are there on the couch and absolutely amazed at my news. Hell, I am absolutely amazed.
1738 hours: My realtor calls me back and we start talking. I give him the MLS ID of a house that I was particularly interested in along with a series of requirements (three bedrooms, two baths, two car garage, minimum lot size of 60x123 or comparable, etc etc) and send him on his way to start digging through the database. The call only lasts 7 minutes because he has a property to show, but he promises to call me back.
1918 hours: To my surprise he does indeed call me back, and we talk for ten minutes. The house I'm interested in does indeed have a catch to it (I suspected as much for the price): it resides in a flood zone, and I would have to get flood insurance. Flood insurance is costly. I mull this for a bit and decide that I'll request a showing anyway. The realtor lists a number of other properties in the area, evaluating my reaction for each one. Once we've worked out my availability we decide that "Sooner is better." I agree to meet the agent at his office tomorrow around 1PM, and he will take me for a viewing of two to three properties that match my requirements.
I had absolutely no idea that once I lit the fuse things would be going this damn fast -- I believe I know now what it feels like to be a human canon ball. What really spooks me is that, in theory, if all were to go well it is entirely possible that I will be a homeowner by this time next month. To say that such a thing is terrifying and exciting doesn't do it justice.
So tomorrow afternoon I will go to look at houses. I hope I can convince Roho to tag along (if only to lend an objective eye when touring the properties) because it's a bit of a drive to the area and I'd enjoy his company while I'm going through this.
On an unrelated note I purchased some more music from the iTunes music store. On my plate tonight was a combination of Shania Twain, Moby and INXS. This was far too easy, and could readily lead to an addiction. I'm downloading the new 4.1.1 version right now and am rather curious to see what enhancements (less resource-hogginess, I hope!) it will bring. Regardless of the benefits I would say without a doubt that Apple has really hit on something here, and I hope it continues to prosper as I'm enjoying every minute of it.
take a break driver 8, driver 8 take a breakCurrent Mood:  excited
Current Music: Jerry Garcia Band -- Down Home
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| From: tetragon |
Date:
October 24th, 2003 10:16 pm (UTC)
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Thirty years is a log time. I doubt it, but do you have any option for paying it off earlier and saving interest? (As opposed to the usual scheme where you pay the interest off first in a decaying curve, and if you knock the last 5 years off early you save almost nothing.)
Also, $180k seems cheap to me, but then that is US currency and you're buying in the MidWest, yes? A smart thing to do sometimes is to link a credit-card facility to the loan and have all your paycheck depositied into the loan account. Then live off the creditcard. This means that the monthly cost of living, even though it is spent by the end of the month, helps knock off a little interest a month at a time, and any spare cash automatically helps the loan. If times get lean, the credit you are using is actually out of the house loan anyway, not a seperate (and expensive) credit account.
Down here, I cant consider buying property. Decent places start at Au$200k in shitty areas and go way up from there. The banks here are gouging bastards, who expect (and get) customers to pay 125% just in interest, for a 30-year Au$160k loan. ($160k is uttrly useless here, btw.)
Yep, you read right, for the privelige of being handed $160k for 30 years here, you pay around 360k over the 30 years. This obscene figure improves dramatically the quicker you pay it off, but is meaning that the average working person (or single-income couple) in Australia simply cannot afford to buy property, because the monthly payments are crippling.
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Congratulations and welcome to the debt-go-round!
A couple of observations: a $1,500 monthly payment seems really high to me, but if it fits your budget it's cool. To get the best value you can on a house, I would urge you to put as much into a down payment as you can afford. It's an investment, and with real estate the way it is it's a fair bet that you'll get a good return on it.
You're looking at a huge, multi-year investment. Whatever you do, DO NOT buy on impulse. Two, three, or even four showings for a house is not unusual. Taking Roho along as an impartial viewer is an excellent idea, but even after you've settled on a house, bring along someone else to look at it with a critical eye (come to think of it, Candis would be a great person for that!). At all costs, never "fall in love" with a house - this leads you to do stupid things like ignoring obvious flaws and paying too much (yes, I speak from experience).
Finally, just because you can spend $180,000 doesn't mean you must. There's a lot to be said for staying well within your budget (and having a little something left over each month after all the bills are paid!).
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