Closing - Red flag?

[Kevin C]

I went to a dealer in nothern Jefferson county, Alabama. When discussing a home only loan he said the closing takes place at the dealership BEFORE set-up. He said for home only, they don't do a turnkey deal. When I asked about any problems that might be found after the setup, he assured me they would be taken care of under the warantee. Somehow, this doesn't sound quite right to me. However, if I do a land home package, the closing takes place in the lawyers office after setup and final inspection. Should I be looking for another dealer.

He also said a septic system there would cost about $19,000.00. Does this sound a little high?

Thanks in advance for your help.

[Mark]

Actually, that sounds right, as until you sign the paperwork, the dealer has nothing to ensure you will follow through. He could set the home up and then you not show up for closing. On a land home deal, you have to get a construction loan (or sign the land over to the dealer).

19k is way high for a septic system, even if you have to go special.

A basic system is about $1500 (including the tank), a more complex one may run double that, and an above ground system may run near 10k.

[Karen P]

I am in Louisiana, but that shouldn't make such a huge difference in price for the septic. We paid $3,000 for ours. It was a simple inground type.

[bryan]

Are you sure its not 19000 for well,septic, foundation,driveway,colvart,grading out the yard and planting grass.If you had to hook to city water and sewer maybe 19000 but just for the septic, get a owl house!

[rmurray]

I doubt a septic takes $19,000....Maybe $1,900...Could it be you mistyped?

Home only finance is quicker..cleaner..but substantially higher priced in most cases......Some home only lenders will finance a septic and well if you own the property...some will not..

When home only is done...the lender will hold the money until you have done a telephone interview....if you close home only...do not do the interview until you feel you have gotten all you paid for...Understand there is a warranty..and until you do the interview the dealer owns the home and his insurance will not allow you to live in it..

What ever you do...be careful and read all of your papers...even if an attorney is involved...If you finance home only and do not understand every page..spend the money and have an attorney review and explain them..It will cost a few dollars...but you are better to understand all when you sign..

[Kevin C]

Murray,
As far as the septic goes, I must have misunderstood so I'll give him a call and check it out.
As far as the closing goes, is it normal to have it at the dealership BEFORE set up? Also, what does the "telephone interview" consist of?
I definately plan on hiring a lawyer as there will be to many $$ to risk if I don't. Having a lawyer is a little like insurance.
The reasons why we are considering a home only are: 1. The property is family owned and I'm not sure we realy need or want to get a section deeded over to us. 2 We plan to buy and set up the home before we sell out current home so I guess it will be considered a "vacation home." 3 As soon as we sell out present home we plan to pay off the MH so a year or so of higher interest won't make that much difference, will it?

[Kevin C]

Seems the cost of the septic is about $1,900.00 not $19,000.00. So from your resposes it looks like that is in the ballpark. Sorry about that and thanks for the responses on that.
Kevin C

[rmurray]

A few observations...

1)...putting a home on family property is a risky financial desision...If the time comes you no longer like the home..or your family...or the location because of life changes such as a job...selling this home will cost you a bundle......Candidly you can buy new property...wells..septics...and the like..finance with a lower cost mortgage and the payments and down payment will be the same OR LOWER than home only payments (because of the lower interest rate)..then when it comes time to sell..you sell the whole thing and do very well...That said...

The interview varies with the lender...most often they will ask if you have gotten the home you bought...they will ask the amount of down payment you made..(always answer truthfully...do not lie to a lender..some dealers will ask you to..this is fraud)...they will ask where you work...They will ask if you intend to live in the home...basically it is a final audit before they release the check to the dealer...The dealer will be anxious for you to do this interview early in the process...My suggestion would be to only do it when you feel you have gotten all you have contracted for..

Home only finance is just like auto finance..the paperwork does not involve real estate..therefore there is no attorney necessary...It is common to close in the sellers office...just like auto finance is down...There will be nearly 40 documents to sign...if you do not understand them..ask for the complete package in advance to review..with an attorney if you need the advice...Unfortunately it is common for SOME dealers to expect you to close on a higher payment than you were quoted..many sales person know that in the closing folks will "bump" from $50 to $80/ month easily..remember for 300 months this is a substantial amount of money...If this were to happen..only you can decide if the deal is still ok...if you get the whole package in advance to review..you will not feel the pressure to sign that some do...

As far as your other questions are concerned...you are right..if you are going to pay off in 12 months the rate means little (do not even do a buy down of the home only)...if your credit is strong enough to buy home only..mortgage lenders would allow you a vacation home as well...It is true that if you buy home only..you do not need to transfer the property...but this leaves a lots of power with the land owner...unfortunately family disputes can be far more vicious than normal business disputes...you will be at the mercy of the family forever...This may not mean much for your family....but I say it just to be sure you have thought this through..

GOOD LUCK....

[Kevin C]

Murray,
Thank you very much for the advise.
Kevin C

[david]

when i bought my home we closed after the house arrivee on site and had a c of o...