I'm taking the time to write about my experience as a first time home buyer, so that other Americans who are also FTHB can be informed about possible challenges and pitfalls. In fairness to Taylor Morrison, I believe that my experience is not isolated to just TM, but other builders (e.g. KB, Centex, etc.) as well.
Around June 2009, my wife and I found our dream home in a TM development in Southern California. We both viewed the model homes and just fell in-love with a particular floorplan/home. In short, we were able to successfully close on the home before the Dec. 1, 2009 deadline for the $8000 Federal Credit (although, this is no longer the case, since the deadline has been recently extended)
To make our suggestions easier to read, I will just enumerate the list of things to watch out for. I hope that this will help other Americans out there.
1) If you plan on purchasing a home at TM and wish to stay with your personal Real Estate Agent, make sure that you bring your agent the FIRST TIME that you visit the model homes. If you're not able to bring your agent, do not make any deals or try to negotiate anything with the TM sales person. Just say, "thank you" and then you're still shopping around. The reason why I say this, is because I made that mistake. The sales person gave me some incentives to buy the home (e.g. 10k closing costs, 7k+ on upgrades 10k off sales price, etc.) BUT, it can only be offered if I drop my agent. (The problem with that is, once you drop your agent, no one is looking out for your best interest)
2) Upon receiving your FIRST GFE "Good Faith Estimate" don not sign any documents that have YSP "Yield Spread Premiums" on it. The topic of YSP is another thread altogether, please feel free to google and further research what that means. The bottom line is, as a homebuyer, if you have a YSP tacked on to your loan, then that pretty much guarantees that you will not be getting the best rate possible. So if you're technically approved for a rate of 5% for example, the TM Home Fund will instead let you know you're approved for 5.5%. The additional .5% tacked on to your rate (that TMHF is telling is the BEST that they can find for you) is absolutely FALSE. Without the YSP, you would be getting 5% instead of 5.5%. But since you implicitly agreed to a YSP by signing the GFE, the final loan package will have a YSP tacked on.
For my wife and I, I knew about this, so we were able to dodge it. Please keep in mind that with YSP, that is the only way for the TMHF broker to get paid since they are most likely paying for your closing costs (e.g. through incentives). Hence, they will be pushing for the highest YSP possible if they realize that the buyer is unaware of their motives
3) When buying upgrades, look at the fine print. Basically, with us, they tacked on the price of the upgrade to the final purchase price and loan amount. So if you are not planning on financing 1-5k of upgrades for 30 years, make sure you tell them upfront. They were really sneaky with us. On the day that we were going to close, our purchase price and loan amount increased by the amount of upgrades that we purchased. Sure... we could have been backing out, but keep in mind that we already told our Apartment Manager that we were leaving that week, so we did not have the luxury to redraw the "closing" papers. Please be aware of this
4) The only way for you to get back your deposit is if your loan was completely denied by the banks that TMHF is in dialog with. If you get a loan that is approved based on "contingent upon" conditions (e.g. paying for a credit card, bigger down payment, paying for th reminder of your car lease or car loan) it is considered by TMHF that you were approved. Hence, your 1-10k deposit (whatever it maybe) will not be refunded. So two things:
- Make sure that when you correspond w/ your TMHF agent, that you are explicit about meeting certain conditions that the bank is looking for if you dont' feel comfortable with it or it's just not feasible.
- Don't forget to try to process your home loan with another broker in parallel. Remember you don't have to go through TMHF!
Thanks for your time. God Bless you on your first or next home.
p.s. TM is actually a very good company to deal with. But if you don't watch yourself and don't seem to be informed, you will more than likely get taken advantage of.
p.s.#2 Don't forget to document e.g. pictures of your new home (every step of the way, from the pouring of the foundation to the final walkthrough)
p.s. #3 Taking pictures of the "frame" walk-through is very important if you're plannign to wall mount your TV and put an elaborate Home Entertainment System. You get an idea of were the studs are prior to using stud finders. If you plan on putting some HDMI or speaker cables behind the wall, don't forget to bring the "inwall" certified cables with you. You can just install it yourself before the drywall is put on. It will save you a lot of head ache later.