First time home buyer/Austin - some questions on lenders etc (Cedar Park: sales, loan)

[general101]

We are looking to buy our first house in Austin. As first time buyers, I have a few questions for the experts out here. Any input appreciated.

>> Any recommendations on which/what kind of lenders to approach? An online search in Zillow yields 100s and 100s of lenders and is hard to shortlist . As a first time home buyer, apart from getting a good deal, I obviously would like to deal with a reliable institution.

I do plan to check with the major banks like Bank of America, Wells Fargo and JP Morgan Chase but any specific recommendations will also be helpful.

Is it true that it is better to go with smaller banks who may want your business more than banks like Bank of America which are much bigger?

>> We are being told by the builder that cost of new homes are going to up by $10K or more across "all builders" (for new homes in NW Austin) come this new year which is in a couple of days. This has been conveyed to 2 different parties in different places (and not just to us).

Just wondering if anyone who is actively looking to buy has similar experience or if others have input on this. It does seem to put us under lot of pressure to make a quick call on the purchase if this is really true.

Thanks!

[general101]

And adding one another question (in addition to what I have in the previous post):

If we have been able to decide on the home and builder ourselves (this would be a "newly constructed home"), is engaging a realtor necessary and is it helpful in anyway? It does look like as "buyers" we don't lose anything by engaging a realtor but for our scenario of "first time buyers + having decided the home we want" - are we gaining anything by engaging one or losing anything by not engaging one?

And if anyone has recommendations on good realtors in NW Austin (Cedar Park/Avery area), I would like to have that information too

Thanks!

[austin-steve]

Originally Posted by general101

We are looking to buy our first house in Austin. As first time buyers, I have a few questions for the experts out here. Any input appreciated.

>> Any recommendations on which/what kind of lenders to approach? An online search in Zillow yields 100s and 100s of lenders and is hard to shortlist . As a first time home buyer, apart from getting a good deal, I obviously would like to deal with a reliable institution.

I do plan to check with the major banks like Bank of America, Wells Fargo and JP Morgan Chase but any specific recommendations will also be helpful.

Is it true that it is better to go with smaller banks who may want your business more than banks like Bank of America which are much bigger?

>> We are being told by the builder that cost of new homes are going to up by $10K or more across "all builders" (for new homes in NW Austin) come this new year which is in a couple of days. This has been conveyed to 2 different parties in different places (and not just to us).

Just wondering if anyone who is actively looking to buy has similar experience or if others have input on this. It does seem to put us under lot of pressure to make a quick call on the purchase if this is really true.

Thanks!

If you plan to buy new, I'd hold off on the lender as you're probably going to use the builder's preferred lender in order to get the 1% to 2% bonus toward your closing costs by using their lender. In other words, if you use your own lender, you forego that amount, and there is no reason to do that.

It's a seller's market for builders right now, in the desirable areas. I was scouting/previewing some builders last week and they are all planning on price increases and are feeling very positive about demand.

My wife (also a Realtor) wrote a contract yesterday for a buyer for a new construction. She spent three hours there negotiating with the builder and was hardly able to get them to budge an inch, and she's a very good negotiator. She finally ended up getting 2% off the list price, plus a free washer/dryer/fridge. Builder was also giving 2% toward closing costs if buyer uses builder's lender.

Meanwhile foot traffic in and out of the office during that time frame yesterday was constant and non-stop. Builder rep says December was a record month, the best in 5 years, which is why they were not being flexible on price.

So that's what you have in store.

There are a lot of past threads discussing the pros and cons of using a Realtor when buying from a builder. I'm of course biased and think you, as a first time buyer, would be at a disadvantage on your own, simply because you don't know what you don't know. That said, it won't help to have a lousy Realtor either, and there are plenty of those in Austin. You should just do some more research and reading of the past threads on this topic. The best source for finding a good agent is to ask your family, friends and coworkers who they used and try to get a reference. Then make sure they know the new home market and how to navigate all that, including the inspections.

Good Luck,

Steve

[Komeht]

I would avoid the big banks like the plague. Go with a local organization like UFCU if you can. Don't get shoved into preferred lender route as they're a rip off too.

[austin-steve]

Originally Posted by Komeht

I would avoid the big banks like the plague. Go with a local organization like UFCU if you can. Don't get shoved into preferred lender route as they're a rip off too.

Please explain. If the interest rate, closing costs, and service are comparable to a non-preferred lender, and the buyer receives 1% to 2% toward closing costs for using the preferred/affiliated lender, how is that a "ripoff"?

Steve

[EzPeterson]

Get a realtor you trust and like. Interview a few of them to see which one is the best fit for you. My personal favorite way to do this is to go to open houses in the area and see which one pays you, the tire kicker, the most attention. If it's a listing agent working their own open house, that's a plus too.

Buying new, you're going to use the builder's lender. You're wasting money if you don't - hardly a "rip-off". That loan will get sold to some servicing bank anyway.

[Komeht]

Originally Posted by austin-steve

Please explain. If the interest rate, closing costs, and service are comparable to a non-preferred lender, and the buyer receives 1% to 2% toward closing costs for using the preferred/affiliated lender, how is that a "ripoff"?

Steve

I've never found the interest rates to be comprable to the best rates available generally.

[EzPeterson]

Originally Posted by Komeht

I've never found the interest rates to be comprable to the best rates available generally.

The last two new builds I've purchased, I used the in-house lender.

2009 DR Horton - 4.25%, they paid all closing costs. Everything. Nobody else could come close to matching that deal.

2012 David Weekley - 2.65% 30 YR Fixed. They paid loan origination fee and title policy. Nobody else could come close to that deal. Not by a mile.

So, my advice to the OP is to see what their deal is, shop that, and make your own decision using all the facts. This is where having an agent comes in handy for first-timers. But look at every option. Just writing something off because you heard it was "bad" doesn't do you any good.

[FalconheadWest]

Going to an open house to find an agent is not the best advice. The open house agents are usually the newer agents who are just looking for a way to grow their business and pick up clients because he have none. Most of the seasoned agents are not working open houses. I haven't done an open house in over 10 years. They're a waste of my time.

As for using an agent on new construction, and you're a first time home buyer, who is going to be there to help you represent your best interests? The sales rep works FOR the builder and the builder's best interests. There are reasons why some lots are left over as a builder builds out a community, resale value. A good agent on your side helps you from the very beginning on keeping your interests in mind with everything you decide on the house.

As for your concerns on lenders, I agree that you'll probably use the builder's lender. They're fairly competitive or they wouldn't be able to get the business for just 1-2%. The big banks are swamped and you'll be just a loan number to them. You should go through a broker if you're not going through the builder's lender, as the brokers get whole sale rates whereas you'll get a retail rate going directly through the bank.

[EzPeterson]

Originally Posted by FalconheadWest

Going to an open house to find an agent is not the best advice. The open house agents are usually the newer agents who are just looking for a way to grow their business and pick up clients because he have none. Most of the seasoned agents are not working open houses. I haven't done an open house in over 10 years. They're a waste of my time.

And I struggle mightily with this mentality, which is why I prefer my method. I want that realtor who is doing everything they can to build their client base. If any part of my transaction (buying or selling) is treated as a "waste of time" that's the last part of the transaction that is handled. Of the 9 homes I've bought/sold over the past couple decades, I've had far more problems with the "seasoned" agents, for this very reason.