New Purchase Loan

Jon Shibley, President & CEO, Lenox Financial

There is not much to say about buying a new house. I want to throw out just a few little things and how they apply to no closing cost mortgages, give you a little strategy advice and also provide a couple of cautionary things.

Buying Your Property

The nice thing about buying a house is that you are excited. You put a contract on the house and you can get into your new house in 30 days, which is pretty standard. The problem is when you are investing thousands of dollars into your mortgage to buy a house, you are under the constraints of your purchase contract. What that means is that you have to take today’s interest rates at this particular time and secure whatever mortgages are available so you can close on this property within 30 days.

Benefits of No Closing Cost

My advice is if you are buying a house, let us do it with no closing cost whatsoever, and then sit back and watch the market. If rates get better down the road, refinance it, and we will do it again with no closing cost. If rates get better after that, we will do it again with no closing cost. This way, you have the ability to manipulate the market and catch it on a good day. You could invest thousands of dollars to try to buy the rate down, hoping that you got it on a good day. We do not recommend that at all because when someone comes to me and says that they want to invest $15,000 dollars to buy down a rate as low as possible, three months later, the rates are down to that point and this person just blew his cash because we would have put him there for free.

If you are buying a house, plan your mortgage with no closing cost and make sure that you have very low earnest money. They always try to make it seem as if you have to put down a large earnest money deposit, but if you are a stickler about it, you can get this done with very little earnest money. Make sure that the agreement is always subject to financing, so if you don’t qualify for a mortgage, they don’t end up keeping your earnest money, and most important of all, make sure the value of the property is real.

The Market Today

I know we are not helping the economy by saying this, but existing home sales are taking longer and longer to get off the market. The reason is people are trying to sell a house with inflated value because in many cases, they owe more than what the house is worth, so they are trying to get as much as they can. That is okay — more power to them — but as a consumer, make sure that you can’t go down the street and get the same house for less money, especially if it’s brand new.

Choose Your Mortgage Company!

And here is what we consider to be the most important thing: don’t give your mortgage to the first place your real estate agent suggests.

You wouldn’t secure your mortgage in the first place a taxi driver told you just because they drove you around for a week. Don’t go and blow $7,000 in closing cost because you can’t say ‘no’ to someone you have known for a week. They will try to shuffle you to whatever mortgage guy is going to protect their interest and who knows what is going on between them. Just stand on your own two feet and let them know: ‘If you want me to go and pay $7,000 in closing cost, then you go ahead and pay it; otherwise, I am going to Lenox Financial.’