Travis and I wanted to be sure that before we began building a house with David Weekley that we were pre-approved. We began doing a lot of research and asking questions to current homeowners about what kind of loan to get and what to expect. We never really understood fully what we were getting into and what we should be looking at until we talked to our sales consultant (which I will now refer to as our SC) at David Weekley. We meet with her in early November to talk to her about our options and to let her know that we were serious about building a home with them in Castle Hills. She was extremely informative about everything we could expect, while still letting us know that her facts might be off when it came to pre-approval and urged us to meet with someone. We began to ask her what our options were and she let us know that we could go to our banks or go with the mortgage company tied to David Weekley called Priority Home Mortgage.
We ended up making an appointment with David Weekley's mortgage company for November 30. I want you to know that our SC in no way forced us to choose this option, she only let us know it was available. Our SC also told us that we could always make an appointment and learn what we wanted to know and then decide not to use them either. We met with the Priority Home Mortgage consultant and learned so much about each and every different type of mortgage.
The FHA option, is the most popular option for first-time homebuyers. This gives you the option to only put 3% down on your mortgage, however something you may not realize is that you will be responsible for paying a PMI, known as Private Mortgage Investor. Basically PMI insures a percentage of your loan to reduce your lender's risk, in lamens terms you will be paying the PMI to a 3rd party until you have 20% equity into your house. What this means for you is that you will be paying your house payment and some other company and you will not build equity as quickly as you would with a conventional loan until that 20% is met. For more information I visited this site here.
The 80-15-5 option allows you to put only 5% down on your home and take out a 15% loan, which is technically a second mortgage, to cover your 20% equity right off the bat. Then you take an additional 80% loan to cover the remainder of the house, thus giving you a method of skirting PMI by paying strictly toward your equity instead of a 3rd party PMI. You will also see option like the 80-10-10 which is the same premise.
We decided on the 80-15-5 option because we would not have to worry about any PMI and build equity quicker in our home. We were also surprised to learn that we would be able to use this option as first-time home buyers because our credit was so good.
We were in great spirits after this appointment learning about all of our options and that we would be pre-approved for the basic cost of the house we wanted, but we still had to wait for our pre-approval letter that gave us the exact amount. We still decided that we would drive around our future neighborhood and choose our favorite lot, which I have pictured below.
Be sure to ask the professionals questions and do not be afraid to back out of a situation that you do not feel comfortable with.