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Portrait of a Young Man as The Artist
abmann
abmann
Ghosting

Ghosting
Originally uploaded by ABMann
ABMann.net
Houses.

Fox and I spend the weekend thinking houses: location, build, costs, financing, etc. We never thought we'd really find one with the amenities that we'd want in a location we want. But we still wandered around looking at places nigh all of Saturday.

As is, Fox and I make pretty darn good money but I fail to understand how everything adds up. First, I refuse to do this "buy up" bull. I don't like the starter home concept where you build equity, sell and get a bigger house. I'd much prefer to go straight for the single-family house with like 2 or 3 bedroom right away. I don't want to deal with this stuff multiple times, let alone settle for something less than I"d prefer.

So, that personal complication aside, I quizzed bizarre on how the whole money stuff works as she and assfingers recently bought. Her deal seems reasonable and, without details, seems like entirely reasonable costs for the sort of house they bought (based on descriptions). And then she dropped the Veridian Homes bomb.

Are you people familiar with these people? They build houses with your requested options. You choose everything - siding, fixtures, deck, fireplace... inset granite counter tops with stained hickory cabinets, not to get specific or anything. And I'm confused. How exactly can this sort of customization be affordable?

Poking through their website, their places are nothing buy affordable. I looked at some pretty ridiculous 4 bedrooms with nifty features that I could theoretically buy. The hell? This cannot be.

So, I Google them. I get nothing but lists of awards, corporate philosophy goals and scruples, and any number of satisfied people. No bad news, no "OMG My house fell down!" anywhere. Everyone loves these people.

And how the hell can a house that sells for 275k have monthly payments of less than 1500 with only 5% down payment? This cannot be real. They're lying to me.

Can't be true. Nope. Not possible that I could get a fireplace and study with inset shelving painted in that burgundy I like. Or have a soaking tub and central air.

Unreal.

Anyone familiar? Is there something I'm missing like having to pay through the nose in closing costs or for the specific lot they build on?
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Comments
suburbaknght From: suburbaknght Date: April 7th, 2008 02:30 am (UTC) (Link)
They do it by saving money in real estate and building in undesirable locations, such as on top of an Indian grave yard If your property doesn't have an Indian grave yard, don't worry, they'll have one installed for you.
abmann From: abmann Date: April 7th, 2008 02:43 am (UTC) (Link)
AHA! I knew it.

Damn poltergeist.
bizarre From: bizarre Date: April 7th, 2008 02:54 am (UTC) (Link)
P.S. since we went with their sister company, Interlink, for their special financing Veridian paid the closing costs.

and they are reasonable priced because they are buying land in large chunks, building nice neighborhoods, and they manufacture the majority of the house in their warehouses, drive it out to the site and assemble it. There are a limited number of plans and many of the 'parts' can be used on multiple homes.

The pricing is for staying within the basic levels that they have set aside. There are upgrades available at a higher cost (such as granite counter tops and the like).

But even the 'basics' have tons of stuff to choose from.

All Ian and I needed to do was choose carpeting and window treatments and we were overwhelmed with all of the choices available to us. I dread to think what it would have been like if we built from the ground up instead of getting one of the model homes :D
abmann From: abmann Date: April 7th, 2008 02:57 am (UTC) (Link)
I think my tastes currently out-price my ability to pay. I would love to get granite counters and cherry wood in the kitchen and bamboo flooring in the study. I don't suspect I can afford those sort of upgrades.

It seems like using Interlink is the way to go.
suibhne_geilt From: suibhne_geilt Date: April 7th, 2008 03:01 am (UTC) (Link)
Does that $1,500/mo also include the escrow for property taxes & hazard insurance? For my mortgage, I'm paying $930/mo, but the escrow payment is an additional $450/mo on top of that. Assuming that the property taxes and insurance are proportionally similar to mine, you're potentially looking at a monthly payment of closer to $2,100/mo.
abmann From: abmann Date: April 7th, 2008 03:04 am (UTC) (Link)
Using Interlink eschews a number of those extra costs because Interklink is owned by Veridian. I don't know exactly about escrow but I do know they pick up the closing costs.
(Deleted comment)
abmann From: abmann Date: April 7th, 2008 03:17 am (UTC) (Link)
Uh. No duh?
tandu From: tandu Date: April 7th, 2008 03:36 am (UTC) (Link)
My best friend from college bought a Veridian home in Sun Prairie. From what I've heard, he likes the house so much, his inlaws bought one less than a block away. It's a nice place, good floorplan, fireplace, etc. He has one income, and 3 kids, and they seem to be doing fine with it.
rianwyn From: rianwyn Date: April 7th, 2008 11:32 am (UTC) (Link)
Damn. If a close relative of mine were going to like the place I lived in soooo much that they moved in less than a block away... that would be really good incentive for me to not buy that house in the first place.
medeine From: medeine Date: April 7th, 2008 04:11 am (UTC) (Link)
Ummm.....from what I understand, the mortgage is actually an interest-only mortgage, so until you hit year 10 (or whatever it is), you're not actually paying anything on the principal balance of the house. Read here - no equity.

Unless Veridian has changed their mortgages in the few years since we looked for our house.

I did speak to a couple of people in the construction industry that said Veridian cuts corners on installation - details I can't quite remember right now, but things like how they install baseboard, the thick(thin)ness of their carpet padding, etc. so the house 'wears' more quickly.

And the escrow folks are talking about aren't one-time costs like closing and filing papers and stuff - it's the yearly amount you need to have set aside to pay your property taxes and hazard insurance - ours is approximately $365 a month, so our approx $1300 payment would actually sound like a REALLY cheap $935 without that.

Please keep in mind that my info on Veridian is not only second-hand, but a few years old, but it bears looking into more closely, especially the way the mortgage is structured.

But house-shopping!!!! It's so much fun! :D
Good luck in your search.....
abmann From: abmann Date: April 7th, 2008 12:44 pm (UTC) (Link)
Given the calculators I've been playing with, they include taxes and PMI (as applicable). So I think the prices they quote include all recurring mortgage costs. I think Fox and I will have to visit their design studio this week and ask them, "What's the catch."

Also, I wouldn't be surprised about the easier wear on certain aspects of a home. I don't think that worries me as it's just me, lady_fox and the cats. I don't expect we're especially hard on a place - though Poe very well could mangle stair carpet if we're not paying attention.

I guess it's all hard wood floors for us. Darn. :)

Yay property tax... The calculator at the site includes estimated property tax and rolls that into the mortgage estimation so I think 1400 as stated above is fully recurring fees. Crazy.

Edited at 2008-04-07 12:50 pm (UTC)
antarcticlust From: antarcticlust Date: April 7th, 2008 01:55 pm (UTC) (Link)
Like you, I felt that this was too good to be true. There was a similar company in Vermont that built what are basically shabby homes - beautiful on the outside, but with lots of cut corners and exploitative financing options.

Here's what I was able to come up with:

Check out this blog post, which has some intelligent-sounding commentary about the company and their financing.

This blog post details how Veridian, along with other companies, abuses the inclusionary zoning ordinance by listing "affordable, low-income homes" that aren't actually built.

There's this, which I was surprised to see (not the energy bit but the green building bit - seems hard to do at those prices, though I don't know what Wisconsin considers "green built") :

The EPA has named Veridian Homes, Wisconsin's largest home builder, as an Energy Star Partner of the Year for its contribution to reducing greenhouse gas emissions by building energy-efficient homes. All Veridian homes meet U.S. Energy Star and Wisconsin Energy Star standards and are Green Built Home certified.

I found a couple of references to higher "amenity costs," but don't know enough about this sort of thing to know what that means.

I dunno, ABM. They've only been around for five years, and it feels too good to be true. I'd love to hear what you come up with. If it's just a matter of having to live in a cookie-cutter subdivision, that might explain it, but I expect that there might be some kind of quality issue, or some method of financing that exploits the current downturn (especially if they do their OWN financing). I mean, if people are defaulting on their mortgages, they can sell and resell a "quality" house for a low price a few times to a lot of people who shouldn't be buying houses (because of their income). That wouldn't be the case with you, of course, but that may be part of their MO.
abmann From: abmann Date: April 7th, 2008 02:05 pm (UTC) (Link)
The first blogspoty posts is about veterans. Did you link it correctly?

I don't know enough about IZ houses to really understand that other one. But it seems like they're saing veridian can;t be making much money on the houses so something must be fishy?. I dunno.

I know two couples that recently bought veridian and they're thrilled with the houses and location. The locations are Ok, a little further out than i would like in some cases but close to work, or close enough that i can get to a bus line. So it's a minor issue.

Yeah, I failed to find anything terrible about them. All I found were piles of awards and articles lauding their cost-cutting methods and efficiencies that make these houses so cheap. it seems fake that I can't find even one bad thing about them.

Yeah, only 5 years old and already account for 30% of Wisconsin's homes built. Insane.

I agree that I'm not thrilled with the neighborhoods they build, they tend to look similar and haven't enough trees for my liking. However, trees come with time and landscaping. Not much to do about the look of the houses but I can eventually get over that. The allure of having all the amenities that I want in a house out of the gate overwhelms my desire to live in an established, interesting neighborhood currently.

I mean.. granite couter tops, bamboo flooring, built-in shelving, fireplace, loft... I can potentially have all these in my first home for a price I can afford! INSANITY!

alyska From: alyska Date: April 7th, 2008 02:04 pm (UTC) (Link)
east side versus west side will determine a lot of the cost.

when we bought our house, we had a household income of a bit shy of $60K, and got a WHEDA loan (first time home buyer.) you should look into that, though i'm not sure if your combined income would be over their cap (or the cost of the house you're looking for.)

generally, people do starter homes/condos because they're more affordable. the sooner you start building equity, the better. also, if you're all nuclear and stuff, you buy the smaller house, and then trade up when your family grows.

we're hoping to keep this house for a good long while. the extra bedrooms give us studio/office space, and we don't plan on having kids, so we realy don't see the need to upgrade anytime soon.

when we bought our house, it was $175K (i think it's at $185K now) and our monthly mortgage payments INCLUDING escrow and homeowner's insurance are about $1100/month (i think without, they'd be something like $800. and we've got a 4BR, 1/.5/.25 bath house with a 2+ car garage. granted, we bought it with the kitchen in a shambles, but i think our total for that renovation project was only about $6K (and probably added $20K to the value of our house. the city just doesn't know about it yet.)

now, we had a 20% down payment, so not having to pay PMI has certainly helped, but there are definitely ways out there to get more house for your money, if you can. look into WHEDA and see if you qualify. our mortgage is at like 5.25% or something, and NOT and ARM (eew, ARMs...)
abmann From: abmann Date: April 7th, 2008 02:11 pm (UTC) (Link)
Yeah, we looked at east side homes and we could get more bang for the buck but we'd be commuting like crazy. It makes more sense for us to focus on Fitchburg or the newer areas on the south west side to keep travel cost reasonable for us both.

I don't think we quality for a WHEDA unless we use only my income, which is a possibility. I'll look into that certainly. The way the world bends backwards for home buyers is pretty crazy. I love that, given some of the calculations, i could claim the 12k interest I pay on the home for the first three years as entirely tax deductible. I'd suddenly be seeing huge tax returns for the first few years of home ownership using the Interlink mortgage plan - mostly paying interest in the first five years.

I think my credit is good enough to get less than 6% interest. And PMI seems dumb if I can scrape together 20% down. I think Interlink is biased towards people who can't though. Using their calculator, I could shave about 150 off the total monthly payment while only paying 5% down and having PMI. granted, that rate is on a smaller loan and, therefore, less house.

I think I could do pretty well with 20% down on a 200 to 250k house.

I think I'm more in awe that I could get to that easily and quickly.
nathan_lounge From: nathan_lounge Date: April 7th, 2008 04:05 pm (UTC) (Link)

Have you considered...

abmann From: abmann Date: April 7th, 2008 04:12 pm (UTC) (Link)

Re: Have you considered...

I'm at work. no watchy for me.
From: (Anonymous) Date: April 8th, 2008 12:02 am (UTC) (Link)

Did you say 20% down?

If you did, and I read that correctly, that gives you a TON of wiggle room. I'd go to your bank first, tell them what you want to do, and see if they will waive most of the closing costs on a loan to you. With 20% down, you won't be paying PMI. And if they ask you to? Go Elsewhere.

You make decent money, I'm assuming you have a credit score of at least 650, right? You may also qualify for an FHA loan, which can offer lower interest.

Figuring 6% interest, when you say that you are looking for a total payment of $1500, you are looking at a 30 year loan of roughly $180K. This will include escrow (The loan is $1080/month).

The rule of thumb used to be that you could afford a house worth three times your total income for the year. If you make 50K a year, you can afford a loan of $150K etc.

It is great that you are looking so early in the process! I'd advise one more thing: Work on getting the financing at least 3 months before you are ready to drop the cash and pay for the house. The paperwork for a home loan right now is insane and they will try to break your soul before they let you sign a loan.
jackshoegazer From: jackshoegazer Date: April 8th, 2008 05:07 pm (UTC) (Link)

I found one of my ghosts.

abmann From: abmann Date: April 8th, 2008 05:17 pm (UTC) (Link)

Re: I found one of my ghosts.

Nifty. You should apply your normal Photoshop edits to it!
shortcakeness From: shortcakeness Date: April 10th, 2008 01:31 am (UTC) (Link)
um... you had very very many posts by the time i got to this one (we just moved and thus no internets for a while) however, we just moved, into our new Veridian home. They are amazing and I'd be happy to answer any questions you might have...or if you want to come see the place, etc. let me know. It's a lovely three bedroom here in Verona.
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