More NOOB Questions =)

[Susie]

Hey all! First I gotta say this site owns, especially Mr. Murray. =) I am looking into buying a champion home (new) and I think the guy is charging too much but not sure. The house he was trying to sell me is 1280 sq. ft. (doublewide) and he says the base price is $55K and change I think. Thats around $43 a square foot... Is that high? The homes do come with a 10 year warranty.. is that why its high maybe?

Also, how much does it usually cost to upgrade the land with all the utilities? I don't have exact figures but it seems like they charged close to 20k for that.

And one more thing that is confusing me. I recently got pre-approved for a mortgage loan (for a house) for $60K. The loan is at 7% interest (i dont have super good credit) and they estimated my monthly payment to be around $690 assuming $200 property taxes. The guy at the manufactured home place said he could get me a loan for 6.5% in that area with payments around $630 a month. So I'm calculating in my head this home with land and all is approx $75K and only $630 a month. But my mortgage loan was for only $60K and they estimated $690 a month. So did the guy just not do his math right or are there more expenses with owning a real home? Any info is appreciated. =)

Susie

[Susie]

Oh I forgot to add I'm looking in the Alvin, TX area (outside of Houston)

[Mark]

Let's see..
60k @ 7%, 200 for taxes, 200 for insurance, 30 years = $460 / month
On a 15 year term, $594 / month
75k @ 6.5%, 200 for taxes, 200 for insurance, 30 years = $542 / month
On a 15 year term, $713 / month

Your taxes and insurance WILL be significantly higher than $200 a year!
I'd estimate more like $800 for insurace and another $800 for taxes.

Keep in mind that in either case, you have to add any improvements, closing costs (unless you are paying those out of pocket or can get the dealer to pay them), etc.

[Andrew/RHLending]

Hey Susie,

A lot of dealers will pitch "unimproved" taxes when they guess a mortgage payment to get you into the door. If a lender goes along with that idea it can be a very bad thing for the borrower.

Most new land/home deals are on unimproved property, so many times the title company closes the loan with the low tax amount. A lot of times, just the land taxes, unimproved.

Now after you are in the home, and it becomes real estate, the local county tax office will apply normal tax rates to the home/land. This can make your escrow amounts for taxes WAY short and they will have to correct it in January after you've been in the home. So your low payment, with low escrows for taxes can go to $1200-3000/year. Many homebuyers are unaware of this fact. Most title companies should warn you about this.

When we qualify someone, we use closer to real taxes on our GFE. We underwrite it the same way. So, even if your home closes with lower, unimproved taxes, we make you aware of this fact from day one.

Hopefully your lender will too.

Best of luck,
Andrew

[rmurray]

Thank you for the kind compliment..

Champion like other large manufacturers build all sorts of different homes...Many homes in the smaller size will have slightly higher per square foot prices...You are lucky that you are in your area...there is much competition in all Texas markets..and you should be sure to shop this home with other Champion dealers..and against other brands...such as Palm Harbor..Fleetwood..Clayton..and others..

Shop quality of construction...warranty...dealer experience and reputation..size and finally features..

You mention a 10 year warranty...That is NOT a ten year warranty on the whole home...most likely this is a protection program offered by an insurance company that covers the basic structure of the home only...Claims for this are not made through the dealer or manufacturer...only the insurance company..there will be a deductible for coverage after the first year which can be as high as $500...These dealer paid for policies cost between $400 and $600...and are available for any home you have seen...Champion generally only has a 1 year warranty...There are a few Champion brands that might have a 5 year protection plan (always limited after the first year and with some deductable)..If this dealer actually told you that the home had a 10 year warranty with out a complete written explanation...I would be suspect of EVERYTHING ELSE THEY HAVE SAID..

The finance terms they have quoted are close...If you have credit issues..it is probably a good idea to let the dealer help you with finance...tell him who gave you a pre approval (pre approvals do not mean much..only that some guy/gal looked at your application, credit, income sources, down payment availabilities and obligations and decided that they thought they COULD get a real approval..A pre approval IS NOT a REAL approval..

[Susie]

Thanks for the responses. =) Actually I think I am going to go with purchasing a condo now. Those are a lot more affordable for my salary and I can live closer to the city. Hopefully they are less of a headache to purchase. =P

[rmurray]

I am sorry to hear that....just meet the neighbors before you buy..they will be 8 inches away..you will have to get along with them well..