Perils of new home buying
 

We're down here now looking to purchase a discount new home in The Villages. We signed the agreement on Wed and closing is scheduled for Jan 7. We thought we'd like to interest rate shop and checked with a couple of banks and they were unable to close so quickly. It seems the closing window is so short deliberately to funnel activity to the Family bank, Citizens. That's disappointing, but more than that I'm concerned Citizens could fail to close on time (I recall reading a scare story right here before). The contract says if you fail to close on time you lose the discount (11K in this case) and pay Citizen prime rate +1 1/2% plus $250.00. That's bolded in the contract also. Just curious, has anyone had, or heard, of issues? Anyone actually run over? I understand the 30 days is standard, but it seems particularly tight with the holidays.

You are the buyer. You are the person to decide when you want to close on the house. You are the one giving a lot of money to the seller. That puts YOU in the driver's seat. You should have used some of that leverage before agreeing in writing to the terms of the seller.

Forget about what the Villages Realty said about a "discounted" new home will not last. They are not selling as fast a the Villages Realty makes you believe - buy you already signed a binding contract.

Citizens First is a top-notch bank. If your credit score is good, you will have no trouble in making that closing date.

After 1 month of paying a mortgage, you can then pay off your mortgage in full and own the home outright. It does take one mortgage payment before you can do that.

We received a contract on our home in N.Va. in August of this year. Agent said this is a good contract, but going VA for the buyer takes time, should be no problem and he had put down a sizable amount on our home.
We immediately took off for the Villages and were taken around by one of their agents looking at new homes.
We mentioned that we tried to move down 4 yrs ago but home wouldnt sell, and we put down a $1500 deposit, which we eventually lost after a good while.
We found our perfect new home, the agent said we would have to put $40,000 down on it and if not settled in 30 days with balance we would lose it.
We said whoaaa, no way I would take a chance like that, anything could kick out.
We started looking at re-sales and eventually bought one in September, paying cash for it which in which we were going to do with the new one.
$40,000 is one big risk.

:22yikes: Sounds like you made the right choice, especially given that your home in VA hadn't closed at that point. I never knew TV was putting terms like that on the new homes.

Bill

I've been to TV on four occasions, two just looking and the last two buying. What I was told was always consistant with the times before. We tried to purchase a resale in September. When buying a resale the terms of the deposit and the closing dates are agreed upon by the buyer and seller. We agreed on 10% down, 45 day close. Citizens managed to screw the closing up and even a week later could not give me a definitive closing date. So I backed out and got my deposit back. I returned two weeks ago and decided to buy new. In that case TV controls the deposit amount and closing date. 20% deposit was due within a week and it was a 30 day close. Take it or leave it. I wanted to use another lender but knew the 30 day close might be a problem and I could not take the risk. For some dealing with TV is a whole different ballgame than what they might be used too, one has to realize TV is in control.

I don't think I am getting this right......
 

Wait now. Am I understanding that you would lose your down payment on a new home of 40K if you didn't close in 30 days....................???????????????


We paid cash so financing wasn't part of the deal, but I have never heard you would lose your earnest money.....

I had heard that you can change your mind if your deposit is on ground and choose another location and even wait a year or two.

I seem to recall a few years ago it was $20K down at risk.



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Thanks for your thoughts everyone. We met with the Citizens rep this afternoon. It was like kicking the can down the road, they're trying to keep us moving forward. But it was, as expected, more "just trust us". We're from NY and, fortunately, we have a 7 day rescission window. So we have control for a couple more days. The Citizen's rep could do no more than anyone else - gave us "no problem" just trust us. It's so unreasonable, I feel it's simple enough just to add a one liner that we will not be penalized if closing is delayed through no fault of ours. If someone else fails in their job we get penalized. So unreasonable. When you said The Family has control you're so right. I'd add they're very greedy. They should be able to provide the best loan rates around, given they're profiting from the sale (probably the appraisal, inspection, and everything else). I can't be sure but it appears to me they maintain they're cost a cut above the others. We're not done yet, we really want to make it work but it's all one-sided. They don't need us and they don't really care. If it works it'll be because we caved.

That is...
 

That is... scary.
JJ

We bought a resale, so the terms they "demand" are new to me too. Did they at least tell you what the interest rate would be before you signed? If not, and you still have time to get out of the contract, frankly I think I would. Resales are sounding better all the time!

Personally, I think resales are a lot better deal than a new house. Negotiate on price with the seller, set your terms, no construction going on in the neighborhood, mature landscaping, you get to see actual fees and bills the owner has paid, bond will be a heck of a lot lower than in a new house.

The bond payment is attached to your property tax bill each year. Mine was substantially less than several friends who had bought new homes.

wishing u well finding the home u want, i suggest buying a used home at a great discounted price, then, see for your self how the homes are built and do as many walk threws as u can, decide to buld your home a year later and watch your home getting built, or just rent a home untill your home is compleat. keep the bulder on his toes, and inspect your home with a fine tooth comb. best wishes and Merry Christmas....

Hal

I know someone who actualy closed "early" on a Village New house ...early by 3 days and had to pay the additional $250. House was done and buyer wanted and needed to get in the house. The $250 charge was not necessarily a penalty but a charge for making scheduling changes not only with the bank (Citizens) but also with the builders rep for walk throughs etc.

Sparky-30

Im with Gracie on this one regarding the loss of a down payment on new construction. YES TV will default you if you change your mind for whatever reason and dont complete the purchase on a new home after you made an initial contract downpayment..........BUT in the past if you came back to TV and executed another contract for a new house, TV gave you credit for the Downpayment you defaulted on the earlier contract....if they were made are of it. Now things may have changed or TV may have imposed a time period where this offer is available.

It would be interesting to know if something like this regarding the downpayment being recredited after you cancel an inital contract still exists...and if so for how long is the offer valid?

Yes, they quoted the rate and we can lock-in today at 5%. Bank of America was 4.62% and that would be $50/mo savings. But BofA said there's no way they can meet the closing date, especially now (holidays). At this point, I'd be afraid to go with anyone but Citizens since the contract penalties. are so harsh. That's the way they want it. We can still get out of the contract. If we do, we'll be looking at pre-owned. We really want to be here. We like new build and we'll probably look for nearly new. We're going to try one more time to get some kind of exception from penalties in the event someone else fails in their responsibility, but I'm not hopeful.

It's almost comical. The contract says if missing the closing date is caused by the seller they're responsible for actual incurred cost for lodging, one meal a day, and furniture storage. On the other hand if closing is delayed and not caused by the seller, the buyer will pay the seller for water, sewer, electrical, lawn and landscape, monthly amenity fees, interest on remaining balance (prime +1 1/12%), $250, and any Discount will be added back into Purchase price. Note that buyer accepts responsibility for any and all delays not caused by seller, that means Bank failures, delays in inspections, the appraiser gets hit by a beer truck, sudden surprise hurricane, or a stray meteor hits the Sales Center. It's hard to believe they demand we accept responsibility for the promptness of all their organizations. But that's the way it is.

We were told that the initial $2500 could be re-applied if we backed out now (moot point because, as New Yorkers, we actually can rescind with prompt refund). I think re-applying amounts applies to the remainder of the 20%, due in 7 days, also but I'm not certain they actually said that. Interestingly, I don't believe there is any mention of it in the contract. It's another "trust us" provision.

Being from New York we got a spiral binder (probably a couple hundred pages) that spells out the requirements. Seven day rescission period, rather than 3 days. As I read it, all monies (deposit, down payment, etc) must be put in escrow at Bank of America branch, N 14th St, Leesburg. If we don't receive notification of that deposit within 15 days we can cancel the purchase agreement. In the event of any dispute the Attorney General of NY will determine distribution of the escrow funds. They laughed at the NY bureaucracy but I think I like it. I guess we do things differently in New York.