So, exactly what have I been up to since my last post back in December? That is, almost six months ago?
Waiting and seeing, mostly. I'd become increasingly interested in Millbrae as my target area, but had also come to realize that there just weren't a lot of options out there in my price range. There are very few older condos in Millbrae, and the newer ones are darn expensive. Since I wasn't in a big rush to move, I decided to wait until the Millbrae Paradise units came on to the market; if they were reasonably priced, as seemed likely, then I would proceed. I was worried that, if I picked something else in the meantime, I'd feel like a dud when Millbrae Paradise came online if it turned out to be a better deal.
So, for the most part, I've been monitoring Redfin and Craigslist - or, rather, reacting to the subscriptions that I have set up on those sites for notices of new listings - but hadn't been actively touring anything. Finally, Millbrae Paradise started touring, so I got back in touch with Redfin and set up a tour; along the way, I also decided to visit Park Broadway, which had always been a marginal choice for me but seemed like a good basis for comparison since it's the newest nearby construction.
I first discovered that, thanks to the vagaries of Redfin's territory division, the area I was interested in (southern Millbrae and northern Burlingame) was divided between two totally different offices. Burlingame is covered by the Peninsula team ("Redwood City to San Mateo", though they do handle points north and south as well), while Millbrae is covered by the San Francisco/Marin team. I didn't just have a new field agent, but a whole new office as well. I just sort of shrugged it off and went with it, though. I was happy to see that, even though it had been more than four months since my last Redfin tour, they still had all my approval stuff on file and I didn't need to give them anything more to keep going.
Millbrae Paradise isn't listed on the MLS, so I submitted a tour request for a Park Broadway loft that was listed, and in the tour notes also requested a tour of Millbrae Paradise. I indicated my flexibility for tour times. This was towards the end of April, so I was kind of pushing to do it soon; in the best case, I figured, I'd check out Millbrae Paradise, it would be totally awesome and affordable, and I could quickly get in an offer and do a double-dip on the federal and state tax credits as a first-time homebuyer of a new construction condo.
First up was Park Broadway. It ended up being much nicer than I had thought. They've dropped the prices of these 1-bedroom loft units substantially, most recently another $50k. I had never bothered to visit because I was weirded out by the fact that they directly face onto El Camino Real at street level. I was pleasantly surprised to note that, at least in the model unit, the noise was practically unnoticeable, and with the demo window treatments, you got a lot of light without feeling like you were sitting next to a highway. It helps that these units are set a bit below street level, behind a railing that separates them from the street and public sidewalk. Plus, they're just huge; even though they are only one bedroom, they are extremely spacious. Despite my reservations, I found myself actually considering grabbing one; it fit within my price range, looked great, and was freaking huge. Ultimately, though, I decided that the siting was just a non-starter for me. If I'm going to pay Bay Area prices for real estate, I want to be able to enjoy Bay Area weather, and it was depressing to think that I'd need to always keep the windows shut and stay indoors when I was home.
Next up came Millbrae Paradise. I'd patiently been waiting a long time for them to finish, and was glad to finally get inside, but they clearly have a lot more left to go; even though the model units are ready, there's a lot of construction happening throughout. After a little initial confusion over exactly where the sales center is (a sign points into an adjacent parking lot, while the actual trailer is farther up the street), I met the very pleasant sales associates. I was turned off by how unforthcoming they were about the prices on the units; apparently this is fairly typical for new construction, but still, I would have really appreciated a straight answer regarding how much something costs. I eventually figured out that even their cheapest 1-bedroom unit (a smallish condo on the second floor) would be going for a cool $100k more than my maximum budget. Yikes! I felt glum - I'd staked too much on a couple of words on their website, which boasted about "Affordable Elegance"; I guess we have different definitions of "affordable." As long as I was finally there, though, I went ahead and did the tour.
The models do look really nice. They are just a little slap-dash - I thought that their cabinets were extremely modern, but it turns out that the contractors just had forgotten to attach the knobs. On the whole, I could really see myself living there, which just made me more bummed that they were outside my range. Even though the rational part of my mind realizes that the quality of finishes and appliances are the least important aspects of a home, far behind the importance of location and solid construction, there's still an undeniable visceral reaction that I experience when I walk into a place that just feels really nice and high-quality.
We finished the tour, went back to the sales trailer, I sat down, we chatted just a little longer, I asked about a particular unit, they again wouldn't tell me the price, but said that they could speak with the manager. I said "No, thanks," and left.
All in all, a bit of a bummer. I spent the next day moping around; I hadn't realized until then just how thoroughly I had convinced myself that I would end up living there.. Still, what was done was done. I decided to make a clean break, put Millbrae Paradise (which, inexplicably, has now changed its name back to Belamor again) out of my mind, and decided where to go from there.
Friday, May 14, 2010
Tuesday, May 11, 2010
The Pre-Approval Aeneid
Well!
It's been a while, hasn't it? I apologize. For a long time, nothing much was happening on the condo front. Then, too much was happening. I'll try and work through the backlog here, in roughly chronological order, to the best of my recollection.
First topic: financing!
I previously described getting pre-approved for a mortgage. You can get pre-approved from any lender at all; you aren't obligated to get a loan from them, and in fact, many people will get pre-approved from a traditional bank or broker that gives them great service, and then get their final loan from a cheaper source. However, I wanted to go ahead and get pre-approved from the lender I was most likely to close with, so I shopped rates for two weeks, and ended up with San Mateo Credit Union.
Because this is the first time I had gotten pre-approved, I assumed that my experiences were typical. In particular, I was surprised that, contrary to my expectations, they asked for a deposit and would only pre-approve me for a specific amount, one I had to guess myself. Well, it turns out that that isn't the way everyone operates!
A pre-approval is only good for a certain time, in my case 2-3 months. After that, you should renew it. In my case, though, I really didn't want to. Every time you renew a pre-approval, the lender pulls your credit again, which causes your credit score to drop a little more, which makes it harder for you to get a loan. Yeah, I know, crazy, right? As a result, I let my pre-approval lapse a few times, only renewing it when I thought there was a good chance that I would be making an offer soon.
Most recently, that was in early May. I had decided to slightly change the range of properties I was looking at, which required a bump up in my pre-approval limit. I felt comfortable going above it; I had chosen the original amount more or less at random, based on my comfort level at the time and expecting that my lender would automatically adjust it up or down to the "real" limit. Since then, I had just been refreshing the same amount, but now I wanted to hit a specific target; my finances have improved since my first round, and I felt comfortable with a bigger figure.
Since it had been so long since my original submission, the folks at the credit union asked me to start my application over again. Which was fine; because I was asking for more, I wanted to be sure that they saw my most recent paycheck, bank statements, etc. I got to the end of the application, and came to an ugly realization - they were asking me for a $250 deposit, but unlike the last time, this was non-refundable. If I went ahead with a loan, they would apply it to my closing costs, but otherwise, they would just keep it.
Needless to say, I was peeved. This was a pre-approval! I understand that they incur a cost to pull my credit, but even so, if they're going to charge me for it they should just charge for the pull. And really, this should just be part of the cost of them doing business. "Is this customary?" I wondered, and I dusted off my old list of links from summer 2009 when I first went shopping rates.
Well, well, well... turns out that things can change in a year! In 2009, San Mateo Credit Union was hands-down the best lender for my type of loan (conforming mortgage on a condo, 20% down). Both their fees and their rate were lower than anyone else, across the multiple weeks that I monitored things. Now, though, Provident Credit Union had come roaring back. Provident is another regional credit union, although they cover the entire Bay Area and not just the Peninsula. Their fees were now just a little larger than SMCU's, where before they were about $5000 more expensive. And, their rates were .15% less... not huge, but enough to make a difference. I did some quick calculations, and realized that Provident's rates would more than make up for their higher fees in the first year.
I dug a little more. Both Provident and SMCU use the same back-end service for loan application/pre-approval, but Provident doesn't charge a bogus $250 deposit. Score! I happily took my business elsewhere. The process was a breeze, and unlike my initial SMCU experience, they completed the whole thing online and furnished me with an initial pre-approval letter in my browser. Success!
The good times didn't end there, though. I was soon contacted by a loan officer from Provident who asked me to send him my proof of income and assets. I complied - I already had my letter, but would need to do all that stuff if I went ahead with the loan anyways, so why not get it over with? He was great, keeping in touch via email, and went ahead and told me the maximum I qualified for, without me even asking. He even sent me an Excel spreadsheet, personalized for my type of loan, where I could play with different figures to see what my monthly payments would be. That's the sort of thing you can find online, but still, it was a great convenience, a nifty use of technology combined with a personal touch. He also went out of his way to tell me that he could re-generate a loan approval letter for me when I'm ready to make an offer (to avoid tipping my hand in negotiations).
As you can probably tell, I'm now a fan of Provident. I went ahead and became a member, and, assuming that their rates stay at about the same spot relative to their competitors, will most likely take my final mortgage from them. The whole thing is kind of funny - because San Mateo Credit Union tried to get $250 out of me, they'll end up missing out on hundreds of thousands of dollars in interest that they could have collected out of the life of my loan. I suppose a business person could draw some sort of conclusion from that.
It's been a while, hasn't it? I apologize. For a long time, nothing much was happening on the condo front. Then, too much was happening. I'll try and work through the backlog here, in roughly chronological order, to the best of my recollection.
First topic: financing!
I previously described getting pre-approved for a mortgage. You can get pre-approved from any lender at all; you aren't obligated to get a loan from them, and in fact, many people will get pre-approved from a traditional bank or broker that gives them great service, and then get their final loan from a cheaper source. However, I wanted to go ahead and get pre-approved from the lender I was most likely to close with, so I shopped rates for two weeks, and ended up with San Mateo Credit Union.
Because this is the first time I had gotten pre-approved, I assumed that my experiences were typical. In particular, I was surprised that, contrary to my expectations, they asked for a deposit and would only pre-approve me for a specific amount, one I had to guess myself. Well, it turns out that that isn't the way everyone operates!
A pre-approval is only good for a certain time, in my case 2-3 months. After that, you should renew it. In my case, though, I really didn't want to. Every time you renew a pre-approval, the lender pulls your credit again, which causes your credit score to drop a little more, which makes it harder for you to get a loan. Yeah, I know, crazy, right? As a result, I let my pre-approval lapse a few times, only renewing it when I thought there was a good chance that I would be making an offer soon.
Most recently, that was in early May. I had decided to slightly change the range of properties I was looking at, which required a bump up in my pre-approval limit. I felt comfortable going above it; I had chosen the original amount more or less at random, based on my comfort level at the time and expecting that my lender would automatically adjust it up or down to the "real" limit. Since then, I had just been refreshing the same amount, but now I wanted to hit a specific target; my finances have improved since my first round, and I felt comfortable with a bigger figure.
Since it had been so long since my original submission, the folks at the credit union asked me to start my application over again. Which was fine; because I was asking for more, I wanted to be sure that they saw my most recent paycheck, bank statements, etc. I got to the end of the application, and came to an ugly realization - they were asking me for a $250 deposit, but unlike the last time, this was non-refundable. If I went ahead with a loan, they would apply it to my closing costs, but otherwise, they would just keep it.
Needless to say, I was peeved. This was a pre-approval! I understand that they incur a cost to pull my credit, but even so, if they're going to charge me for it they should just charge for the pull. And really, this should just be part of the cost of them doing business. "Is this customary?" I wondered, and I dusted off my old list of links from summer 2009 when I first went shopping rates.
Well, well, well... turns out that things can change in a year! In 2009, San Mateo Credit Union was hands-down the best lender for my type of loan (conforming mortgage on a condo, 20% down). Both their fees and their rate were lower than anyone else, across the multiple weeks that I monitored things. Now, though, Provident Credit Union had come roaring back. Provident is another regional credit union, although they cover the entire Bay Area and not just the Peninsula. Their fees were now just a little larger than SMCU's, where before they were about $5000 more expensive. And, their rates were .15% less... not huge, but enough to make a difference. I did some quick calculations, and realized that Provident's rates would more than make up for their higher fees in the first year.
I dug a little more. Both Provident and SMCU use the same back-end service for loan application/pre-approval, but Provident doesn't charge a bogus $250 deposit. Score! I happily took my business elsewhere. The process was a breeze, and unlike my initial SMCU experience, they completed the whole thing online and furnished me with an initial pre-approval letter in my browser. Success!
The good times didn't end there, though. I was soon contacted by a loan officer from Provident who asked me to send him my proof of income and assets. I complied - I already had my letter, but would need to do all that stuff if I went ahead with the loan anyways, so why not get it over with? He was great, keeping in touch via email, and went ahead and told me the maximum I qualified for, without me even asking. He even sent me an Excel spreadsheet, personalized for my type of loan, where I could play with different figures to see what my monthly payments would be. That's the sort of thing you can find online, but still, it was a great convenience, a nifty use of technology combined with a personal touch. He also went out of his way to tell me that he could re-generate a loan approval letter for me when I'm ready to make an offer (to avoid tipping my hand in negotiations).
As you can probably tell, I'm now a fan of Provident. I went ahead and became a member, and, assuming that their rates stay at about the same spot relative to their competitors, will most likely take my final mortgage from them. The whole thing is kind of funny - because San Mateo Credit Union tried to get $250 out of me, they'll end up missing out on hundreds of thousands of dollars in interest that they could have collected out of the life of my loan. I suppose a business person could draw some sort of conclusion from that.
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