Do You Need an Inspection On a Newly Built Home?

One of the mistakes that many people make when buying a newly built home is to skip the home inspection. After all, they reason, it’s a brand new house – everything should be perfect. And the city or other local government will inspect it anyway in order to issue a certificate of occupancy.

Unfortunately, even a new home can have flaws, sometime major ones. And a local government inspection doesn’t guarantee the quality or the work or verify that everything has been built according to plan – it only verifies that certain minimum standards have been met. And when you’ve got several hundred thousand dollars tied up in a new home, “minimum” is not what you want.

 

New home problems differ from older ones

 

On a new home, you’re not likely to encounter the type of problems inspectors often flag on older structures – mold damage, a worn-out furnace, a roof that needs replacing. What you may find, however, is evidence of poor workmanship or failure to follow the plans – warped floors, joists weakened by improperly installed ductwork, leaky plumbing, bad wiring, drainage problems around the foundation, improperly installed appliances, poor seals around vents or other roof structures, or other things that just weren’t done properly.

 

Your sales or construction contract on a new home allows you the right to an inspection before taking possession. But surprisingly many people choose to pass up the inspection, figuring it’s not worth spending $500 to have someone check out a new home.

 

But it doesn’t make sense to scrimp on a $500 inspection when you’re talking about an investment the size of your home. Also, a new home inspection is likely to cost far less than $500 – many inspectors discount what they charge on a new vs. an old home, and you can often have it done for as little as $200-$250.

 

Two inspections if possible

 

The fact is, construction workers sometimes make mistakes. And sometimes, they just try to disguise the problem instead of fixing it properly. Or maybe they weren’t very skilled in the first place and didn’t realize the mistakes they were making. A private home inspection can detect their errors and get them corrected before you take ownership of the property.

 

Ideally, you want to have a newly built home inspected twice. First, while under construction, just before the drywall is hung. This allows the inspector to examine the framing and electrical wiring that might be covered up later on. It’s also a lot easier to correct many problems before the drywall is put up.

 

The second time, of course, is when the home is finished and right before you take occupancy. If you’re buying a prebuilt home or condominium, this may be your only chance to have an inspection done, since you weren’t involved in the construction process.

 

If you’re building a home or planning to buy a home under construction, be suspicious is the builder won’t allow an inspector to access the property during construction. They may explain it as a liability issue or simply company policy, but in reality, a builder who has nothing to hide should have no reason to deny an inspection. If they do, seriously consider whether you want to cancel the contract – you don’t know what you might find five years down the road.

 

Professional certification

 

To hire an inspector, it’s a good idea to get one that’s certified by either the American Society of Home Inspectors or the National Association of Home Inspectors. Both have standards for experience, skills, continuing education and ethics, and help ensure that you’re getting someone who knows what they’re doing.

 

Having a private inspection of a new home may seem like overkill and suggest that you don’t trust the builder. But it’s really just a matter of making sure you’re getting what you’re paying all that money for – your perfect new home.

By:

Kara Johnson - MortgageLoan.com

Higher FHA Pricing. More Savings on PMI

FHA's pricing increase on April 18, 2011^* means thousands more in savings for your borrowers when you choose PMI!  See the example below with pmiNU Monthly^SM and FHA.

For Immediate Release>>>>Fannie Mae Approval

A privately held St. Louis based mortgage banking firm has received approval as a Fannie Mae seller/ servicer.  The approval will allow Cornerstone Mortgage, Inc. to retain mortgage servicing rights, expand product offerings as well as sell and pool loans into mortgage backed securities.

Cornerstone Mortgage, Inc. founded in 1995 by Jim Dean, President/CEO and Angie Stevenson, Senior Vice President currently has 6 locations serving the St. Louis metropolitan area.  When asked how the approval will assist the company, Jim Dean responded “It will allow us to retain servicing when we choose to, realize pricing advantages over the competition, and become more independent from the larger lenders”.  He went on to comment, “This approval solidifies our position as an independent mortgage banker not reliant on any other company to originate, fund and service loans”.

With over 35 licensed Loan Officers serving the metro area Cornerstone Mortgage, Inc. originated in excess of $500 million in residential home loans during 2010.  The company was ranked the 5th fastest growing privately held firm by the St. Louis Business Journal and has been accredited by the Better Business Bureau since 1996 most recently achieving and A+ rating. 

Your Credit Score Can Make Or Break Your Mortgage

By JR Hevron, Published: February 16, 2011
Fix your credit report before you apply for a mortgage and you could literally save more than $100,000 over the course of your loan.

If you are applying for a mortgage, you probably know that you will have to submit your credit score as part of the process. While your credit score might seem like a mysterious number that you have little or no control over, you will be pleasantly surprised to find out that this is not the case.

 

First of all, what is a credit score? In a nutshell, it is a computer-generated number that ideally objectively evaluates all of the information in your credit report. The most used credit score in the US is the FICO score. It is a number between 300 and 850 determined with a formula developed by the Fair Isaac Corporation.

 

This number is often called a “snapshot” of the risk that represents your overall trustworthiness to lenders. Just as an SAT score isn’t the most accurate score of your intelligence or how you will do in college, a credit score isn’t necessarily the best indicator of how you will perform with a loan. Still, like the SAT, the scores are widely used because they are relatively inexpensive and somewhat reliable.

 

The whole idea behind credit scores is that people with higher credit scores are thought to be less likely to default on their loans and therefore are offered lower interest rates and a wider variety of loans from lenders.

 

Each person actually has three different FICO credit scores as the three national credit bureaus (Experian, Equifax, and TransUnion) all use their own databases to determine your score. 

 

The median score is 723, but in the eyes of lenders, there really isn’t much difference between a 720 score and an 850. So, as a borrower, as long as you cross that 720 threshold, you are in good territory.

 

The score is determined from your credit report. Some of the factors that go into that report are as follows:

• Your payment history: have you been paying your bills on time?
• The amount you owe: how much overall debt do you have?
• The length of your credit history: how long have you been borrowing money?
• New credit: Have you opened any new accounts lately?
• Types of credit used: are you using credit in different ways? Car loans, house loans, student loans, etc.?

A credit score isn’t everything. Other things considered on your loan application include your income, your employment history, the location of the property, and how much cash you are putting down. Still, lenders need some kind of standard, and the credit score is what they use—so it makes sense to get it in shape and play their game. While it might not be an accurate assessment of how you will do with your loan, it will affect how much you pay for your loan.

 

To get an idea of just how much of an effect your FICO score will have on your loan, check out the information here on their site. For example, on a 30-year loan for $300,000 dollars, someone with an upper level 760-850 FICO score will pay $1,556 per month on an APR of 4.698%. A borrower at the lower end with a 620-639 score will pay $1,854 on 6.287%. Add that up over the 30 year span of the loan, and you’ll get a difference of a whopping $107,208 dollars.

 

This is a huge difference! Luckily, if you have a low score, there are many things that you can do to change it.

First things first, though. If you are planning on looking for a home or getting a mortgage, you should check your credit at least 90 days before you apply. This will give you ample time to clear your record and hopefully improve your score. Even if you aren’t going to be looking anytime soon, it makes sense to get your credit score checked now.

 

As a result of the FACT Act (Fair and Accurate Credit Transactions Act), each US citizen is allowed one free credit check from the three main credit agencies per year. This site is the only one authorized under federal law to do this for you. The report will give you a chance to make sure that your information is correct and it will let you see any red flags on your accounts. If anything is incorrect, you can ask in writing that the information be corrected or removed from your report. The different bureaus are required by law to investigate your complaint within thirty days.

 

Remember, your credit report is not the same thing as your FICO score. To get this, head on over to the FICO site. The score costs a small fee, but is worth it in the long run.

 

Once you have looked at your credit score and fixed what you can, move forward by paying your bills on time, keeping account balances low, and only taking out new credit when you need it. Also, pay off your credit card balances, don’t close unused accounts, and don’t open new accounts.

 

For better or worse, your credit score plays a large part in how much you pay for your mortgage. The bottom line is that even though your credit score looks like a mysterious number that you have little or no control over, there’s actually a lot that you can do to improve it. And the time it takes to fix things is minimal compared to the potential savings over the span of your loan.

 

FHA To Increase Annual Mortgage Insurance Premium, Again!

Effective April 18, 2011,  FHA will increase the Annual Mortgage Insurance Premiums. There are no changes to the Upfront Morgage Insurance Premium (UFMIP). It is anticipated that this increase will have minimal impact on borrowers but will significantly strengthen the capital position of the MMIF.(FHA's Mutual Mortgage Insurance Fund). The increase will be 25 basis points(bps). This comes after the increase that took place last October, which increased Annual premiums from .50 percent to .90 percent based on LTV chart
below.  

It is imperative that the MMIF is further strenghened to ensure that FHA will continue its historic role of providing a home financing vehicle during periods of economic volatility and its mission of helping underserved borrowers.

 

Welcome to My Blog

Thank you for visiting my site.  I look forward to helping you along in the process of your home loan and answering any questions you may have. 

The home loan process has changed a lot over the years but the basic questions are the same. How much is this going to cost?  What will the payments be and how much do I qualify for?  We asnwer these questions with full explanations, just as I would expect, if I was buying or refinancing a home.  Everyone deserves to be treated like they are the only loan being processed.