Thanks as always to L for forwarding me his great junk emails.
When I first saw this ad, my thought was, "I can’t believe these zero down, zero closing things are still around":
Like some of those cheap airline fares however, this program has just a few restrictions. O.K., maybe more than a few.
Note the itty-bitty asterisks that direct you down to the itty-bitty type at the bottom of the ad. I thought I’d save Doomers the eye-strain of reading the original though. Here’s what the fine print says:
$0 move-in requires up-front earnest money deposit when buyer signs purchase agreement, but deposit is refundable at closing, making it $0 to move in. However, if purchase does not close, deposit may be lost and its disposition will be subject to the terms of the purchase agreement. Many features/upgrades are preselected and included in cost of home. Buyer may be required to pay for any additional features/upgrades and is responsible for all taxes, insurance and other fees. Plans, inventory pricing financing, terms availability and specifications subject to change/prior sale without notice and may vary by neighborhood, lot location and home series. Restrictions and limitations may apply.
Not all buyers may qualify. Offer valid on FHA loan programs only. Restrictions apply. Scenario assumes borrower qualifies for and receives down payment assistance (DPA) from a qualified third party non-profit DPA program provider accepted by KB Home. See KB Home representative for eligible providers. Scenario assumes the buyer qualifies for an FHA fixed-rate mortgage loan where KB Home will contribute all of buyer’s closing costs. Scenario assumes the buyer has good credit, sets up a tax & insurance escrow account, and provides full documentation. This offer is subject to underwriting guidelines which limit 3rd party contributions, and is available only for owner-occupied homes. Loan amount limits and other conditions apply. Program guidelines effective 4/26/08 and subject to change witout notice. This offer is only available through Countrywide KB Home Loans, however financing may be obtained through any other lender. Buyer must sign sales contract between 5/8/08 and 6/30/08 and follow the terms of the agreement.
Sounds simple, doesn’t it?
Zero down, zero closing may still be around, but the programs aren’t the free and easy loans of a few years ago.
Of course like some of the cheap airlines, they may go belly up and leave you stranded. . . .buyer beware!!
Yes, another hidden cost is possibly living in an unfinished subdivision for many years. Piles of dirt, construction debris, views of some dumpsters for the foreseeable future. Maybe some squatters. Fun stuff.
Did you see this one? The Mayor of Surprise (a realtor, BTW) has organized this today:
“The City of Surprise is launching an effort to clean up around vacant homes that are in foreclosure.
Residents are being asked to get their hands dirty to beautify their neighborhoods.
‘Weeding, raking, trash pickup and such,’ said Mayor Lyn Truitt. “We’re expecting quite a few volunteers.’”
http://www.ktar.com/?nid=6&sid=873367
OT, but National Review Online just got an internal BofA memo that shows that BofA essentially wrote the Dodd-Shelby lender bailout bill.
linky
6%seller contributions is nothing new here folks. It has been around with FHA for sometime. Why does this come as a surprise to anyone? Fannie and Freddie are 97% with 3% seller contributions… No more soft market reductions either. FHA is changing the funding fees July 14th and Mr Bush took away the anti flipping rule last week. Let’s not forget about the rural housing loans (USDA) that offer 100% no MI AND your VA loans at 100% with no MI (Both have funding fees that do not require you come out of pocket for )So you see there are still plenty of 100% loans. I myself have purchased several homes with 3-5% down and never had a problem. (Knock on chicken wire)
Aaaaudio-
What I thought was interesting was the hoops that folks now have to jump through for these programs. I knew YOU wouldn’t be surprised, but a bunch of us didn’t know what all was required.
I was particularly surprised that the deposit could be forfeited on a quick move inventory home. It’s one thing to back out when you had a house built for you, but if a builder holds a home for you for a few weeks and it doesn’t close, it’s not like they don’t have others available for sale.
Hmmm….I wonder how much the “deposit” money is. When I bought my last home, I was able to reclaim my deposit amount 100% if I backed out.
uuuthe-
How long ago was that?
There’s always a certain amount of risk when buying into a new development. But these days, you’d have to be a die-hard gambler to buy into one.
And the cleanup in Surprise, AZ? What - there isn’t enough heatstroke going around this time of year?
I never understood why these towns do their annual cleanups when it’s 110 in the shade. I smell some lawsuits brewing.
Twist….that was over 15 years ago, but when I “sold” my home here in CA a couple of years ago, the buyers backed out and my real estate agent said that I had to give the money back. He said that I could try to fight it in court, but nobody does that because I wouldn’t likely win, and I couldn’t sell my home until I paid the buyers back because they had legal rights to purchase it if I kept their money. It was 4K or about 1%. Before I bought my last house, I went to buy a new home from a builder, but I later found a better deal, and bought elsewhere. I received all of my money back from the first home that I put a down payment on.
I know this blog is primarily referring the PHX area, so that may have something to do with it.
uuuthe-
Until the past couple of years, it was easy to get a deposit back in Phoenix. Recently though, you will often see signs in sales offices that say you WON’T get your money back, and I’ve heard from several folks that did in fact lose their deposit.
As much as that’s lousy for the buyer that needs to cancel, I can see that from the builder’s perspective- the security deposit is supposed to be their security that you will buy it. They’ve been stuck with a lot of cancellations. When the spec is just sitting there however, it doesn’t seem like the deposit should be forfeited.
Phoenix is not the only area that builders have been doing that, but the policy may differ market to market.
Twist-
I agree with the builders keeping at least $1000 of the deposit. I feel it’s unfair to tie up property, then back out. It happened to me, and I did it as well in CA, because there is usually no penalty.
I think it does vary market to market.