Saturday, September 22, 2012
Home NVR Mortgage - Loan Approved
NVR Mortgage - Loan ApprovedHurray! 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.
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.
|Gross purchase price||$387,293.00|
|Net purchase price||$372,603.00|
|Down payment (20%)||$74,520.60|
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