"Your New House" Mail Bag!

February through April 2000

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Updated E-mail address

Ran across this website and thought you might find it interesting. If you are familiar with it and find that it has a slant to it that I am not aware of please advise. I have your book (all of them in fact) and I am just searching for some feedback on a particular production builder(Continental Homes)and thought this looked interesting.

Homeowners for better building is the name of this site.!

http://www.hobb.org/news.shtml#other

Sharon Perez

Bi weekly mortgage payments

Dear Denise and Alan Fields,

I'd like to begin by thanking you for writing "Your New House...". This

book has been an essential tool for my wife and I in the planning and

development of the new house we are building. We are first-time home buyers

and your book taught us a great deal about the process and the pitfalls to

be aware of. Overall our home-building experience has been very smooth and

enjoyable with minimal stress and we believe that much of this is due to the

knowledge you provided us in your book. Thank you!!!!

Because we value the information you provided in your book and the knowledge

you possess, we were hoping that you might be able/willing to provide a

little information to us regarding bi-weekly mortgage payments. Until

recently, we knew very little about this, and our knowledge is still quite

limited. We first became aware of this when a group called the AAA

Financial Corporation sent us a letter informing us that we are eligible for

a bi-weekly mortgage payment program that is organized by AAA. Apparently,

AAA automatically withdraws from your checking or savings account half of

the amount of your monthly payment every other week and pays your lender.

So if your monthly payment is $1,000, they deduct $500 (plus a $2.95

transfer fee) every other week. They claim that paying bi-weekly instead of

monthly enables you to (1) Eliminate an average of 7-8 years off your 30

year loan, (2) Eliminates PMI premiums in the half the time, and (3) Allows

you to build equity twice as fast. They make it sound as though the only

charges (aside from the bi-weekly $2.95 tranfer fee) are a one-time

non-refundable paperwork fee of $195 and a $200 enrollment fee.

After reading this, my wife had a number of questions. First and foremost -

is this too good to be true? How is it possible that by simply making?

payment twice a month instead of only once a month that you can end up

making fewer total payments, eliminate PMI sooner, and build equity faster?

You're still paying the exact same amount each month!!! Have you heard of

AAA Financial Corporation? If so, are they and is this program legit? They

claim that their Bi-weekly Program has been the focus of articles in the New

York Times, The Wall Street Journal, and Consumer Reports. They also claim

that they have been selected to Inc. Magazine's prestigious Inc. 500 as the

177th fastest growing company in America. Additionally, they claim to be

the ONLY Bi-weekly administrator that is an Approved Mortgage Servicer by

the U.S. Department of Housing and Urban Development.

Just as we've done throughout our building process (largely because of your

book) we are approaching this offer cautiously and skeptically. However, if

the program is legit and can offer the "advertised" benefits then we would

definitely be interested in enrolling. If there is any information that you

could possibly provide about AAA Financial Corporation or this program, we

would greatly appreciate it. Thank you for your attention to our questions.

Sincerely,

Todd and Christy Casbon

p.s. - They provided a toll-free phone number (1-800-941-2613 or

1-800-868-6571) which you can call to find out more. We have not yet called

it because we wanted to speak to an impartial, non-biased source before

directly contacting AAA.

Our reply

Todd & Christy:

Thanks for reading our book, YOUR NEW HOUSE. Glad you found it helpful. And happy to hear things are going smoothly.

Yes, we've heard of these programs. A bi-weekly mortgage saves you because there are 52 weeks in the year. If you pay every two weeks, that's 26 payments---or the equivalent to 13 months in one year. But a year only has 12 months, right? That's where you save---by making that extra payment each year.

Our advice: DON'T DO IT. You don't need to pay this company a $400 fee and $3 per payment. ANY mortgage lets you add a extra principal payments with each payment at no extra charge. Just ask your mortgage company to provide you with an "amortization" table for your mortgage---this lists the principal and interest amounts for EACH payment for 30 years. Then you pay your regular payment PLUS next month's principal (keep track yourself). You will pay off your mortgage in 15 years, instead of 30. Scary, eh?

Does that make sense?

--

Alan & Denise Fields, authors

"Production Homes…"

Hi Denise and Alan,

I am currently buying a new townhouse and bought your book

about a week after the foundation was poured (great book by

the way!). I read your book religiously marking up the

areas that are applicable to me since I am buying a

production home. I was ripped off with the purchase of my

first townhouse which I bought new some 12 years ago (fresh

out of college and naive). To give you a hint as to what I

went through with that house, the builder 5 years after that

townhouse was constructed gave up building residential homes

because they were tired of dealing with all the complaints

and litigation they had to deal with the home consumer. They

are now strictly a commercial builder. Needless to say, my

old townhouse had "issues" and I was happy to get rid of it.

Now I thought I was doing the right thing by getting your

book and getting the right things done. I found myself a

building architect to inspect the house even though the

foundation was already poured and the first level was up. He

pointed out some very promising aspects of the house (i.e.,

my hopes were up) and also pointed out where things would be

better stabilized. I submitted his report to the builder who

assured me that they do all that the architect suggested

(admittedly, this meeting I had with the architect should

have been the pre-foundation meeting. I was late with

getting him on board, so he was really in too early for this

time in the construction phase). The builder went on to say

that when the architect comes in before they drywall, he

will see for himself that the list will be done to his

satisfaction and that he will be impressed with the overall

details they pay attention to in the building of the house.

He mentioned quite a list of things that the architect will

like, but I will spare you that list since this is the

builder and not the architect himself.

Anyway, so I had some hopes that the builder wasn't as bad

as the last. As far as quality is concerned, I think this

statement might still be accurate. But... my life lives by

Murphy's Law (which I have learned to laugh at and not get

upset about,....er, uh, most of the time). I took pain

staking efforts, including switching townhouse lots at the

time of contract, to make sure that the townhouse and the

"bumpout" had angles that were perfect with how the sun hits

the townhouse. I love open floor plans, large kitchens, and

sun just beaming through the house. Luckily, my fiancé does

too and we were quite excited about this particular home

(after seeing about 30 prospects). I found out today that

the house is the reverse (i.e., left to right is now right

to left.. it is the mirror image of itself) of what I choose

at the time of signing contract. The orientation of the

house that I was expecting is according to the subdivision

plans on the wall at the office and on all their brochures.

(No, I did not see the specific blue prints of the

subdivision. ) I am devastated because the bumpout wall

will now block the sunlight in the latter part of the

afternoon rather than allow the sunlight to flow through the

house throughout the day. Worse, I am now enclosed by my

neighbors bumpout which is claustrophobic to say the least

(before I was open to my neighbors deck which opened up my

whole deck area ).

Now the obvious thing would be to get another townhouse in

the subdivision with a similar orientation, but there is

none. The one I choose was the last in the development that

had this "perfect" orientation.

Keeping in mind I also signed this contract prior to getting

your book and realizing I never did have that real estate

lawyer for the contract signing, I ran home to see what my

contract had in store for me. Here's the only relevant

wording:

"Improvements. Seller agrees to construct and complete the

house and other improvements substantially in accordance

with the plans and specifications for the model type

specified above. Purchaser acknowledges that it has reviewed

and approved the plans and specifications prior to signing

this Contract. Seller reserves the right to make slight

deviations from the plans and specifications (Including

without limitation, any proffers, grading and/or subdivision

plans) to determine the grading of the lot and location and

ground elevation of the improvements and any driveways or

walkways, to modify the position of the improvements on the

lot, to change the location of boundary lines as necessary

to construct your house or an adjacent improvements to

locate or accommodate utility easements or to otherwise

develop the subdivision, and to make substitutions of

material or equipment without notice to Purchaser, provided

that the Seller shall utilize materials or equipment of

comparable quality to that specified in the plans and

specifications (although the brand name and/or manufacturer

may not be the same). Seller makes no representation as to

the final location of facilities to be installed by utility

companies, including telephone, cable television, lighting,

electrical, and similar facilities. If specific information

is needed you should consult the appropriate utility

company."

The wording mentions "slight" modifications to subdivision

plans "to determine the grading of the lot and

location...." Since these townhouse rows have townhouses

oriented with mirror images of themselves on any given row,

I hardly see how the sudden reversal of my townhouse to its

mirror image would fall under that particular disclaimer

statement. And I personally would call the reversal of the

orientation of the townhouse a major modification and not a

"slight" modification.

So, aside from the obvious, which is get a lawyer as soon as

possible, do you have any other advise for me? The thing is,

getting a competent lawyer that I can trust by tomorrow is

probably not going to happen (although I will try) due to

the fact that the builder wants to talk tomorrow. I

mentioned it to my Realtor (buyer agent who doesn't list

houses), but he seemed like he didn't know what to do with

the news. I was able to figure out for myself that he may

have gone into some agreement with this builder as he is now

bringing his other customers who are interested in custom

homes to this builder and had already had meetings with that

builder in a one on one fashion (as in, perhaps he is

striking other deals for future customers of his?). Both my

fiance and I believe a conflict of interest may have arisen

and we are going to treat the realtor like the builder and

assume he isn't on our side (thanks to your book we see this

now).

My fiance and I have discussed "concessions" that we would

be willing to take for this mistake; otherwise I fear we

will try to get out of the contract (as long as the above

words in the contract allow us to break the contract).

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