House Shopping Scorecard

I made a scorecard today. I know I'll get into a house and forget what important things to look for. Not the common things, mind you, the hidden stuff. The idea is to score based on 1-3 with 2 being neutral.

Here is the list I came up with. Keep in mind this is specific to our needs based on our current location and situation.

About the Price:

Asking price (Total)

Asking price (Square Foot)

How much did seller pay?

How much does seller owe?

Comparable sales value

How many offers received?

How many days on market?

Real estate taxes

Water bill average

Electric bill average

HOA dues and frequency

Extent of HOA

About the Condition:

Year built

Number of stories

Square Footage

Lot size

Number of bedrooms

Master bedroom size

Has one isolated room for music studio

Number of bathrooms

Front door faces South

Living room

Dining room

Kitchen

Cabinets

Countertops

Modern open design (Y/N)

Interior illumination/Natural lighting windows

Closets condition

Master bedroom closet size(s)

Laundry space

Storage space (will HOA allow a shed)

Attic storage

Covered patio

Pool (none, included, or community)

Fence overall condition

Landscape condition (lawn)

Landscape condition (flowerbeds)

Trees and shrubs condition

Wood frame, Brick & Wood frame

Roof age (good for 15-50 yrs)

Walls and attic insulation

Refrigerator replaced (Y/N-date)

Oven/Range replaced (Y/N-date)

Dishwasher replaced (Y/N-date)

Microwave replaced (Y/N-date)

Garbage Disposal replaced (Y/N-date)

Plumbing replaced (Y/N-date)

Sump pump/drainage replaced (Y/N-date)

Gas lines replaced (Y/N-date)

Water Heater replaced (Y/N-date)

Water heater adequacy

Electrical replaced (Y/N-date)

A/C replaced (Y/N-date)

Thermostat replaced (Y/N-date)

Security replaced (Y/N-date)

Fire alarms replaced (Y/N-date)

Chimney sweep cleaned (Y/N-date)

Rain gutters cleaned (Y/N-date)

Water sprinkler system

HVAC ducts cleaned (Y/N-date)

Pool pump replaced (Y/N-date) if any

Upgrade to Storm windows? (Y/N-date)

Garage door opener replaced (Y/N-date)

Exterior illumination

Ceiling fans updated (Y/N-date)

Window coverings

Hard flooring

Carpet and pad (If any)

Aluminum siding?

Exterior condition

Garage capacity

Heat is Gas or Electric?

About the Location:

Clean streets

Neighbors' property well maintained

Flooding

Loud noises (traffic, highway, animals, etc)

Bad odors

Train tracks

Open drainage ditch

All utilities installed out of sight

Area zoned residential

Nearby industry

Proposed special assessments

About the Location:

Garbage collection

Street lights

Streets and alleys well maintained

Heavy air traffic

Foot traffic from nearby schools/stores

Neighborhood traffic

Speed bumps/low speed zone

Community rating

School rating

Convenient shopping

Parks

Minutes from Dad's work

Minutes from Mom's work

Elementary School

Middle School

High School

Vicinity to Asian community for my wife

Neighborhood demographics

House Hunting Begins this Weekend

With the holidays finished we can finally get an idea on where our bottom line is financially.

In previous months it looked like we would be financially ready to start house hunting mid first quarter 2015. However, when considering the amount of time it takes to find the right house and close on it, now seems like a good time to get the wheels rolling on the house hunt.

Our pre-qualification letter expired a few days ago. I just got back from the lender. I had to give them our most recent bank statements and pay stubs. They will email a new pre-qualification letter to us and the realtor in the next day or so.

Since the realtor is next door to the lender, I stopped by to put our names back on their radar.

We can continue to save until we close. Meanwhile, let the house hunting begin.

Realtor Interview #2

It's been about a month since we first started our journey toward buying a house. I had met with the realtor initially on September 17. That was the seller half of the realtor.


My family met his wife, the buyer half, today. There was quite a bit covered in that meeting this afternoon. I will post my meeting notes in the next entry.


UPDATE
I had meant to add my notes from this interview previously. See below.


Lender will give itemization of fees in the closing costs.

Process:

1. Up front cost (earnest money $1000 up to 1% of house sale). Option fee $100 paid to the seller for unconditional right to cancel contract 7-14 days, pay for home inspection during the 7-14 days


2. Promptly after entering into a contract to buy a property and before any option period expires, contact your insurance agent to determine the availability and affordability of insurance for the property


3. Once you have a contract on the property, realtor takes contract to lender


4. Home needs to be inspected before appraisal - Home inspection #1 and termite report #2 $350-400 (this is not the home value appraisal)


5. Lender processes contract and orders appraisal which takes a few weeks - Appraisal runs about $450 usually paid to the lender up front after finding a house (but may only be due at closing)

Establishing Credit for My Wife Who Has None

I have added my wife as a cardholder to 2 of my credit cards. Some banks charge a fee for this, some don't and some simply don't allow it. My 2 cards allow it and charge no fee.

She will get the benefit of my history with these two cards that report every 30 days.

90 days later we will set up a card account with Macy's who also report every 30 days.

The key to all of these cards is to charge 10% of limit and pay off each month.

Finally, we will establish an additional type of credit by opening an account with a store like Conn's and follow the same concept. I was told with a place like Conn's to carry the debt for about 6 months, 10% of limit and there will be no fee within that time frame.

The chances are small that any of this will be considered in our house hunt. I'm documenting it in the event that we don't buy for 6 months or more.

Pre-Qualification Letter, Disputing Credit, Additional Documentation

I wrote a letter of explanation on why I was out of work for a few months in 2012 and submitted that along with copies of my wife's ID to the lender as requested.

The lender sent us a pre-qualification letter and introduced us by email to a realtor. The realtor happens to be the wife of the realtor I spoke to in the beginning of our journey.

Additionally, today I set up an account with TransUnion, but didn't see a place to set up an account with Equifax or Experian. I opened disputes for an account that shows a zero balance but is still negatively affecting my credit score. I'm not disputing that it's mine, I'm disputing the balance, the validity, the lack of supporting documentation. Since their is nothing to collect, no one will pay to send someone to hunt down documentation on the collector's behalf. After they have neglected to respond within 30 days, it will have to be deleted. We shall see.

First Proper Lender Meeting with the Family

Today, my family had a proper meeting with the Senior Loan Originator. A lot was covered. (See notes below)



In short, we have a bit of homework to do, some time needs to pass and we'll meet again perhaps in a few weeks. I have to write a 'Letter of Explanation' why I was out of work for a few months back in 2012, provide some of my wife's ID to move the paperwork along.



Additionally, I have to take additional steps to get something removed from my credit history. It's a paid off account that needs to be deleted. The original owner will not delete it. I will document that process as well.


NOTES

Let the realtor locate a house

The lender does a conventional loan with a minimum of 5% down.

The lender will ask seller to pay 3% toward closing costs and negotiate that into the lender's price (we would have to pick up the remaining balance)

Get into a house sooner than later because the after tax benefit of owning a home outweighs waiting and saving more money.

Any additional funds that you have after putting 5% down that you want to apply toward the mortgage, do that until you can get to 80% of the original sales price then the mortgage insurance piece will fall off and then your payment will even be lower. Then, take the portion that you were paying towards PMI and start paying down on the ‘principle’ (the snowball effect). The sooner you get to a balance of 80% of the original sales price, the sooner you can start applying the PMI fee toward the ‘principle’.

Establish accounts with Equifax, Experian, and TransUnion if anything needs to be disputed on all three bureaus.

Future Process:

1) Lender will get us a Pre-Approval Letter

2) We will locate a property

3) Negotiate contract/negotiate terms

            a) negotiate seller willing to pay closing cost

4) Give Lender a copy of negotiated contracts

5) Lender will work up the numbers and determine if they want to lock in an interest rate

6) Property Inspection, and condition of property is acceptable by your terms

7) Lender will order the appraisal

8) Once appraisal is completed, it will be sent to underwriting (72 hour process)

9) After underwriting approves, lender draws the closing documents and send them to the title company here in town

10) Title company will prepare the settlement statement and all of the numbers

11) Seller and buyer will sign papers

12) Lender will send a wire to fund the loan

13) Exchange of keys

**Lender guarantees a 25 day closing from the time you have your contract

 

Lender needs to have a credit card on file for appraisal $400 fee is charged at closing or upon cancelation

Winter months are historically better rates (research online if you want)

Rapid Re-Score Complete

The mortgage lender called me today and said they got the re-score completed. Some time has lapsed and they need updated bank statements and pay stubs again.

She told me what my new score is but I'm not happy about it. Not sad but nothing to get excited about either.

She told me carrying a zero balance on my credit card all these years doesn't hurt me but it doesn't help me either. No activity means no behavior to report.

She suggested that I used them for a few simple things each month and pay them off on time every time.

Ahhhh, this could take months. It's ok with me while we save money up. We are just tired of living where we live currently.

Can we tough it out for another 6-9 months? If we want a better rate, we may have to.

Right School Right Home Location

I spoke to my sister who is a teacher. She brought up a very important thing to consider when looking for a place to live.

We all want our children to get the best education that our tax dollars can buy. Narrowing it down to a school district is about as far as I had thought about that.

I've always known that Rockwall schools are very good. What I didn't consider is there are often more than one high school and some rank better than others.

It's important to choose the right location to live because it is indicative to what schools will feed into the high school of preference.

We will need to be sure to put that down as part of the criteria for the realtor.

Zillow has a pretty cool tool for accessing school ratings in a given area. Here is an example for Rockwall, Texas. http://www.zillow.com/rockwall-tx/schools/

Execute Rapid Rescore Process

I received a faxed confirmation of a zero balance from a creditor that was giving me problems.

The confirmation letter was sent to the mortgage lender.

She said, she can get the blemish removed from my history and do a rapid rescore. Rapid Rescore is not commonly available to all lenders.

In about 5 days, we should be able to see an increased score. I would be interested to know how this lender's rate compares to other lenders if they were to evaluate me?

Time will tell.

I'm thinking it would be better to wave for another 6-9 months. I think the time would go by fast.

Milestones:
Halloween
Thanksgiving
Wife's birthday
My birthday (3 months Major Milestone)

Christmas
New Years
4 year wedding anniversary
Tax Season
Lunar New Year
Valentine's Day
1 year anniversary at new job (6 months Major Milestone)

Vietnam trip
4 year anniversary at our current apartment
Easter
Our son's birthday (9 months Major Milestone)

An Old Score Settled

Today, I took on an old dragon that I thought would never wake. I didn't want to wait any longer to find out if he would.

I negotiated an old debt down to a 55% of the original. I got it and used a portion of my intended downpayment to pay it off in one lump sum. I was given the confirmation number. But the confirmation letter showing a full payoff with $0 balance will not come until the next business day.

I tried to get them down to 30% but they said they could only do %60. I was a little pushy and got the manager to lower it another %5. I'm happy.

I asked them if they do deletions but they do not. The mortgage lender volunteered to handle the details after I get the confirmation letter. They told me it should take about 2 weeks to clear everything up.

I guess the question on my mind is, shouldn't I wait for a while and let my credit score improve so that I can get a better interest rate?

My wife and I are prepared to continue to save, let our score improve and take our time with all of this. The management coming down and fixing the a/c today has helped our patience.

In the end, it is a nice feeling knowing the dragon has been slain if nothing else just for the peace of mind.

By the way, I found the missing W-2 form I was looking for during lunch yesterday.

Credit Check Speedbump

Well, we have hit a snag. Which is a big reason we are looking at financial backing first. ...to head off any troubles before getting excited about a house.

I have an old bruise on my credit that has never been resolved. It's a 5 year old bruise. The damage was done, I took the hit on my credit score. I've just been waiting for that old dragon to fall asleep for good.

Well, according to the lender, the particular debt buyer currently holding me hostage has a very tricky way of maneuvering around the law to keep the debt looking fresh. So it doesn't look like a 5 year old debt.

It has been suggested that the creditor and I come to an agreement and settle.

Additionally, the lender is talking about going after a no money down type load. That would be cool but its a USDA loan, which will really restrict us from the number of homes we can see.

I don't like not having options. I have suggested that we just continue to seek what we came here for. That is to find out what we can afford. Meaning a dollar amount, not an actual property.

I made this clear to the lender that if we need to prepare more, then that is what we will do. We are not going to settle for a narrow selection. We will wait it out if neccesary.

Request for Evidence of Income

The mortgage lender requested the following documents today:

• W-2 forms for the previous 2 years
• Federal Tax Returns and Business Tax Returns (all pages) for the previous 2 years
• Pay stubs for the passed 30 days
• Passed 2 months bank statements
• Driver's License
• Social Security Card

I had everything together except my most recent W-2. I contacted HR and they sent me a form which I filled out requesting a reissue of the most recent W-2. I'll forward that to the lender as soon as I get it.

Another thing they are doing is verification of employment and salary which is kind of mixed together with the documents requested above. Fortunate for me, my company already has a good reputation with this lender and have a portal set up solely for this purpose.

There were some other things they requested if applicable. Not applicable in my case. But those items are listed below.

• Current mortgage statement and insurance declaration page
• Retirement statements (most current)
• Award letters for social security/retirement income
• Bankruptcy schedules/Discharge docs
• Divorce decree (all pages)
• VA: DD214/Disability Awards Letter

Credit Check Cleared

Apparently the credit check was indicative of greatness. The lender requires some additional paperwork to complete the pre-approval process. I'm waiting to find out what paperwork they need.

Running my credit

So, I've chosen RE/MAX as my realtor. They called me and referred me to a lender. I was advised that it may be a good idea to avoid the huge banks (the untouchables). So, I have spoken with this smaller lender and they have enough of my information to find out how much house we can get.

Realtor Interview

Today I had a 20-30 minute interview with a Re/Max agent. He was very professional, experienced, warm, friendly and eager to share his knowledge freely.

He was quick to answer my questions and interpret what I was asking and even explain to me what I was asking and why it was or was not a factor to be considered. I felt a little guilty grilling him with so many questions but it was important that I asked the hard questions.

I can tell you that without a doubt, I've already found the right person. I may interview a few more, but this guy was really good.

This agency is run by a husband/wife. He helps sell, she helps buy. We are expecting a call for a follow up interview with her since she was not in the office when I stopped by.

Finding a Realtor

I only know one realtor and I don't really know her at all. I decided to look at familiar names like, Century 21, Ebby Halliday, Re/Max, etc...

I have many questions. In order to find someone I feel comfortable with, I came up with a page of questions to ask during the agent interviews.

I got the questions as suggestions from various online sources. To be quite honest, I don't even understand what I'm asking on a few of them.

Anyway, here are the questions I have for the realtor agents.

1) How many years experience do you have?

2) How many homes in the area have you sold in the passed 60 days?

3) Can you give references from recent buyers? get 3 (are they related to the agent) May I call them with additional questions?

4) How do you earn your commission, through the seller or from the buyer?

5) When should I call the and how often?

6) What is your best marketing plan or strategy for my needs?
A. How will you search for my new home?
B. How many homes will I likely see before I find a home I want to buy?
C. Will I be competing against other buyers? (Agent should solely represent you and not represent other buyers who are competing for the same inventory.)
D. How do you handle multiple offers?
E. Do you present offers yourself?

7) What are the top 3 things that separate you from the competition?

8) May I review documents beforehand that I will be asked to sign? Ask to see a sample purchase agreement and ask agent to point out your cancellation rights in the document (if they hesitate, find another agent)

9) How will you help me find other professionals (i.e. mortgage brokers, home inspectors, title companies)?
A. Are there affiliations with these related professionals?
B. Is the agent's company receiving compensation for referrals? This is against the law. If they receive kickbacks, find another agent.

10) What kind of guarantee do you offer?
A. Has anyone ever canceled and agreement with you before?
B. If we are unhappy, can we be released from the agreement before the expiration? If not find another agent.

12) What haven't I asked you that I need to know?

Finally, have the agent reiterate your goals and objectives to you to verify that they listen and have a clear understanding of your desires.

We are sick of renting.

After a few weeks of getting everyone healthy again, the a/c stopped cooling. Wife and child had both been to the doctor a few times with ear infection, fever, coughing, etc. The weather went from hot to a nice cool over the weekend. At least it wasn't triple digit heat with no a/c.

Then, Sunday night the bathtub clogged up. This was followed by no hot water this morning.

The apartments, oh sorry, "condos" we live in suck. The management/owners are non existent and never answer or return calls. If something breaks, it seldom gets repaired.

We are currently in a 700 square foot 1 bed/1 bath shoebox. It's no wonder everyone stays sick, what with the black mold and suit coming from the a/c vents.

We have been on the fence now for a long time about moving out. There have been too many things to hinder us until now. I was going to try to find a job in Florida closer to my retired parents but no jobs there for me in the area my folks live. My brother thinks I could get a job in Washington state but I haven't been motivated about doing that. We wanted to save 20% for a house first. We have to make a trip to Vietnam next year to visit wife's family.

Last week I looked at an apartment but they only have carpet and no washer and dryer connections. I won't live on carpet again. So, we have just continued to live with the headaches of this apartment and saved money.

After all of the problems, we have come to the decision that it is time to move.

I spent the better part of the morning looking at apartments online but still got the feeling that we are just throwing money away. The rent would be almost double what we pay now. For that kind of money, we are spending the 20% down on a house every month in rent.

I decided after lunch with Fiona that we need to consider buying.

So, I spent the remainder of the day making notes on the process involved in buying a house.

This blog will serve as a recording of our experience through the home buying process.