Closing Day!

This is it. Countless hours of checking our budget, researching builders, stressing over color selections, driving back and forth to the construction site to check on progress, and the excitement of shopping for the house... all resumed into a seemingly never-ending pile of papers and 2 hours of signatures. We did it; we're homeowners.

We did encounter a couple of bumps on the road. Expecting otherwise would have been completely unrealistic. But we enjoyed the process and look forward to making wonderful memories in this home. Even though this may not be our forever home, it will definitely be a special place for us.

Now let the projects begin!

Rate Locked In

When we quoted the house, the interest rate used was 4.5%. All was fine and dandy with our estimated mortgage payment. We are not people who follow the market and as first time buyers, we weren't very educated on how much interest rates fluctuate and the several factors that can affect it. Fast forward 3 months and now we are here, dealing with a good economy and rising rates.

Our estimated date of completion at signing and pre-construction meeting was May 1. We were hoping to settle any time after June 1. Right before we knew that the new unemployment rate was going to be released, we tried locking. That was about a week ago. We contacted Patti (loan officer) and Frank (PM) to get their two cents. At that point, the rate of the day was 5% (ugh). Frank brought to our attention that some electric meter needed for the house to pass inspection could be delayed (two months!!), so he didn't feel comfortable telling us to lock in just yet. He would have more information at the end of this week.

We asked for today's rate and, sure enough, it increased to 5.125% due to unemployment numbers. Patti said the Feds were meeting again this Wednesday and most likely we will see another increase. We don't want to be stuck with a mortgage we can't afford comfortably! So I called my PM. He told me that even though he still doesn't know for sure if we will have the meter this week, he was being extremely cautious and that he is 90% confident that he can complete our home in 90 days. He wanted us to avoid paying for a rate extension. However, at this point, we decided we were going to pay for a 180 day lock anyway, the way rates are increasing, ev n if we couldn't lock for 90 days.

Long story short, WE LOCKED OUR RATES TODAY. We actually bought points to have the rate dropped to 5%, so that's what we will luckily have. Fingers crossed that we will have no major delays that will keep out home from being ready by June 13 :)

Loan Application

After meeting with Sam and signing the purchase agreement, she handed us a checklist of documents to bring to our Loan Application meeting with Patti. Patti is a young Colombian woman who in my mind could kick any man's ass with some sweet South American feistiness. She was also warm and patient, like only a South American mom could be (a shout out to my own Mama here :)).

The checklist consisted of:
- Pay stubs for the last two months
- W-2s for the last two years
- Bank and retirement account statements for the last two months
- Tax returns for the last two years
- Copies of Driver's License and Social Security cards
- Leasing contact for last two years
- Contact information for employment verification

There were more documents listed, but they didn't apply to us (e.g. if you own property, are retired or self-employed, etc.).

After Patti verified all the documents we brought in, it was her turn to go over everything she had to show us. She started with our credit score, which was great (phew!), disclosure documents, and then proceed to show us the loan application itself, with a very detailed loan structure (interest rate, taxes, escrow accounts, etc.). She went through it all a few times to make sure we understood all the numbers and the rest of the application process ahead of us.

Something Chad and I didn't understand well before this process was the rate lock-in. In our situation, NVR will only lock our interest free of charge for 90 days. So if 90 days before settlement the rate of the day is 4%, for example, we can lock that rate, regardless if at settlement the rate is higher or lower. If settlement is delayed, we will have two options: pay NVR to extend the rate (fee is pro-rated, so you'd pay different amounts if extending for one week versus one month, but it can be quite expensive from the scenarios Patti showed us) or lose the locked rate and get stuck with the worst rate at the time. It's pretty much a gamble since the rates could go either up or down. As of today, we're more than 90 days from settlement, so we will revisit those option a little later in the process. This website gives a better explanation on what rate lock-ins are all about.

Now we wait. We will hear from our loan processor soon about an approval and we should be good to go :)