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Monday, September 24, 2012
NVR Mortgage - Bait & Switch
Is the NVR Utilization Incentive a rip-off?Anyone looking to purchase a new home through Ryan Homes is almost certain to be enticed by seemingly large discounts with the contingency you use their in-house mortgage service NVR-M. Your Sales Rep and Loan Officer will tell you not only are you getting a great deal, instant equity, yada yada, but you'll "enjoy the convenience of having a one-stop shop."
Let's review the Ryan Homes - Homeowner's Guide.
Chapter 3, Arranging Your Loan with NVRM, Page 18, the fine print, at the bottom:
Note: Using NVR Mortgage Finance, Inc. for the financing of your home is not a condition or requirement for purchasing a home from Ryan Homes, but as your Purchase Agreement makes clear there may be certain incentives tied to the use of NVR Mortgage Finance, Inc. Subject to the possible loss of those incentives, you are free to select a mortgage lender of your choice for the financing of your new home.
Nice to know I have a choice!
Let's review more Ryan Homes - Homeowner's Guide.
Chapter 1, Introduction, Page 4:
Customers who choose NVR Mortgage enjoy competitive rates and a financing process that's simplified, streamlined and customized to suit their specific needs.
Is this true? Is NVR Mortgage Finance, Inc. a truly competitive agency? Let's evaluate. First, I agree that buyers may run the gamut of finance scenarios, but to keep it simple, I'll use my scenario, which by my estimation is ordinary. Credit score: 740, 20% down, stable job, some installment debt.
The day I went into meet with Chris McDonald to discuss my application for a loan, the most important concern I had was what will be my rate, and what are they charging for closing costs? That day, checking the average rates in VA using Zillow.Com, I observed online quotes around 3.34% for a 30 year loan, and other conditions relevant to my needs.
Chris quoted me 3.625%.
Finally, just before leaving, Chris mentioned I would qualify for 3.5% if I brought my credit score up from 737, to 740. OK, great, 3 points to go! Before meeting with Chris, my SR estimated my closing costs in the realm of $10,000. When I left my initial loan application meeting, my closing costs were almost $13,000. Why does paper work cost $13,000?
Today, on Zillow, I observed rates as low as 3.14%. Here are the screenshots to prove it.
Wow! Those are some competitive rates!
So in discussion with NVR today over former concerns, I asked Shawn what their current rate was. Shawn, bless her heart, was quite responsible in letting me know she wasn't legally able to offer a quote, but she'd pass it along to Chris to get back with me. Here is Chris' response:
"Hey Todd. Our rate today is 3.5% with no points or origination fee. This is based on a credit score above 740. Let me know if you have any questions. Thank you very much."
So after a month+ of plunging rates, NVR hasn't budged, though I admit, no origination fee was special--at least for someone locking today.
More to the point, is NVR Utilization Incentive a rip-off?
Today, I put together something I should have done in the beginning. I created a spreadsheet comparing NVR against Other.
Here's how NVR really stacks up against the competition:
| NVR | Other | ||
| Purchase Price | $387,293.00 | $387,293.00 | |
| Utilization Discount | $14,690.00 | $0.00 | |
| Adj Pruchase Price | $372,603.00 | $387,293.00 | |
| Percent Down | 20.00% | $74,520.60 | $77,458.60 |
| Loan Amount | $298,082.40 | $309,834.40 | |
| Interest Rate | 3.50% | 3.20% | |
| Tax Rate | .95% | .95% | |
| Loan Duration (Years) | 30.00 | 30.00 | |
| Total Interest Paid | $183,785.95 | $172,540.58 | |
| Total Taxes Paid | 0.95% | $110,378.50 | $110,378.50 |
| Monthly Payment | $1,645.13 | $1,646.54 | |
| Total Cost of Ownership | $592,246.85 | $592,753.48 |
Wow!!! NVR really is competitive! When I turn 70 years old, I will have saved $506. That value today is about $220 of raw purchasing power.
The spreadsheet above shows that even with a $14,690 utilization incentive, with NVR's "competitive rates" the reality is...
THERE IS NO INCENTIVE!
As a result, what you are presumably saving at the onset of signing, you are actually losing in high rates and high closing costs. This practice, for lack of a better term is Bait & Switch.
Best of luck in your Ryan Homes / NVR Mortgage Finance, Inc. negotiations! And if you aren't getting at least $15,000 in incentives, then you better be shopping around.
Saturday, September 22, 2012
NVR Mortgage - Loan Approved
Hurray! I think?[Updated News: See comments below]
This Friday I received a loan approval from NVR. On one hand, it's comforting, but on another, it's just a step with emotion best left out. The more I think about it, the more it feels like getting a telemarketer call saying I've won a free subscription to a magazine, so long as I sign up for a 30 year membership.
My disposition:
I'm gainfully employed, 737 FICO (current as of Aug), some student loan debt, no revolving debt, and generally a good citizen. Each loan rep I've spoken to has, out of the gate, with no knowledge of my credit worthiness or financial picture, made the assumption I was interested in FHA, and wanted to know if I was interested in putting little to no money down. This was no different with my SR and meetings with NVR. I'm of the opinion, banks don't really want your money. The more cash you have to put down, the less they make. Because NVR sells your mortgage within 24 hours of closing, I am probably accurate in stating they make a killing off people who aren't able to make at least a 20% down payment.
From the beginning, I've made it clear I intend to offer 20% down, and that my ability to do this comfortably is based upon an estimated closing date around Feb/Mar. If I can't meet this objective, I see costs spiraling out of control, to include higher closing costs, higher monthly payments, and the evil, dreaded, mortgage insurance.
Now, Chris MacDonald, and Shawn Curran, my NVR loan reps, have so far come across as decent people. I've not met Shawn, but her phone skills are courteous. Chris, also has shown professionalism and thoughtfulness, so they aren't the bank sheister dinosaurs from the Lehman era I was expecting. This doesn't mean though that their boss isn't, or perhaps even their boss' boss. Like most of us, they're probably just doing as they are told, looking for kudos for a job well done.
So the Loan Approval?
Rather than the Feb/Mar estimated closing I started out with, the loan approval clearly states a closing date Dec 7th. Also, it specifies a loan amount of $327,087. I expected the loan amount to be a lot less: $298,082. How did that happen?
Perhaps NVR assumes their clients to be overjoyed to receive their approval letter, so much that we are willing to forget other subtleties, like closing date, or like down payment, or like monthly payment. I wonder if the exclusion of down payment on the loan approval document, and omission of other pertinent data related to the loan is intentional to keep figures out of sight, out of mind.
So elation aside, this "deal" is a mathematical one, not a magical one. Unless it proceeds according to my calculations...
IT'S NO DEAL.
My Calculations:
| Amount | |
| Gross purchase price | $387,293.00 |
| NVR incentive | $14,690.00 |
| Net purchase price | $372,603.00 |
| Down payment (20%) | $74,520.60 |
| Loan Amt. | $298,082.40 |
Their Calculations:
From assumptions being made in the loan approval, I make assumptions that NVR is leveraging a few tricks in order to maximize their profit at my expense. By unreasonably pushing up the closing date, I see this as an attempt to make me accountable for increased costs, and increased profits in NVR's coffers. It appears to me, the loan is predicated on a down payment of 10-12%. Given they now have full disclosure into my financial picture, and ability to furnish 20% as a dependence on time, I'm starting to feel less elated, and a bit more concerned NVR, and its representatives, is just another Lehman-inspired game-player, able to make up and change rules as this game is played.
Here is how our arrangement will be successful:
- NVR alters the closing date to occur at the end of February
- NVR provides a Loan Approval that is based upon a 20% down payment
- NVR removes the requirement for mortgage insurance
- NVR makes good on their promise to offer competitive rates and closing costs
Friday, September 21, 2012
Plot, Plat, Lot?
There are many important things to consider when building a house. No doubt how they are ranked vary between buyers. For me, location ranked near the top. I am not 100% satisfied with the subdivision I ended up in, but I am pretty close. When selecting a lot, it was very important to be on a cul-de-sac. For some psychological reason these lots appear desirable, but for me this is how I grew up. When given a demonstration of other lots, I observed grid boxes on some, gaping storm drains on others, and in some cases the threat of privacy due to the angle of the house against other lots. The process of selecting a lot seemed rushed. Being inexperienced I felt I had to wing it and muster as much intuition as I could. Now that the decision had been made, some time ago, today I am still very satisfied with what I am getting. In some ways, since I was the first Ryan Home buyer in the subdivision, I got to cherry pick. I am thankful for that, but I do get that coming into a well developed neighborhood can offer nice deals too, since builders are trying to unload their risk.Without further adieu, here is my lot, or is it plat, or plot???
I am desperately hoping I can sway my PM (when I meet him), to keep as many trees as humanly possible. Even still, I am loving that our house backs up to a conservation area, where no trees can be removed. Aft of this conservation area is another road, and houses don't occur until the other side of it. Rainy days are gorgeous to me, times to look forward too. With the little creek bed near the large black dashed line, I might hear faint sounds of trickling water, that is if I am not enjoying the sound of rain-drops on a tin roof instead.
Thursday, September 20, 2012
Chief Architect Renders
Upon request, I've created this blog to document my experience with Ryan Homes, and detail information about the elevation we selected. We chose Elevation N. Here are renders I created using Chief Architect X2. Understand, these renders are interpretations of an actual elevation, and features may be missing or inaccurate compared to what we actually get.
Hear is the original Elevation N Ryan Homes as provided...
Selections complete
Selections are complete! In our area, we worked with Structured Cable of Virginia and CTI. Both of these agencies were very accommodating, professional, informative, and a pleasure all around.Cabling
Because I work in IT, having another company provide cabling did not appeal to me. I require CAT6 to support the bandwidth in my internal network, and the cost was high $195/room. Instead, I opted to request two CAT6 lines run to the attic where I could drop my own lines into each room at a fraction of the cost. Phone lines are of little use to me, but we had one run to the kitchen and another to the master suite. We had a cable line run to the family room and to the master suite. The alarm system offered was probably a good deal, but again, I am certain it will be better installing this myself.
One detail that did slip past me was requesting a PVC tube run from the basement to the attic. SCVA was willing to provide this, which would have been a very well worth it option. Unfortunately, the idea came to me just after finalizing my selections. Those building, should consider it, even if your aren't cable-wiring savvy, since down the road when you decide you want to run wire to the second floor, can do so almost painlessly!
CTI
Working with CTI was akin to feeling like being in an episode of something on HGTV. We splurged a little and requested Natural Blonde Hickory 4" planks in the following rooms:
- Morning Room
- Kitchen
- Dining Room
- Foyer
We chose Timberlake Tahoe Cherry Bordeaux cabinets for the kitchen, Luna Pearl granite counter tops and stainless appliances. We felt the floors needed to be light to offset the darker color of the cabinets, but also felt the darker color streaks within the Hickory floor grain perfectly matched the Cherry Bordeaux cabinets. Pictures we took don't capture it, but we were captured!
Bathrooms
Double-bowl cultured-marble vanity in the master suite, with Timberlake Maple Spice cabinets. and tile/ceramic throughout. Fortunately, our subdivision gave us incentives to accommodate tile and ceramic surround by default, with mosaic tile trim decorating the upgraded alternate shower bath option we selected. All other bathrooms, utility room, powder room, and mud room are tile.
Basement
We upgraded the carpet in the partially finished basement one level. We did not upgrade carpet or padding anywhere else. This may have been a mistake, but I didn't have any real experience to allow me to know for certain if there would be a noticeable difference.
Deck
Composite, 12x16.
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