First Time home buyer

[robby_morini]

TK,
First of all, tell the loan officer that you are a first time home buyer. Every state has programs to incent home ownership. The loan officer can walk you through the process. The key is not to borrow more than 80-85% of the purchase price. If you do, the bank may require PMI, a type of insurance that protects the bank from you defaulting. It is expensive and depending on the loan amount can add a couple hundred dollars to your monthly payment. Ask the bank to make you a home Equityline (some banks will loan up to $100% of the property) draw on the line to avoid PMI. Paying interest on your Equtyline is better than throwing away money on PMI. The key is not to exceed 80-85% on your first mortgage.

Go to annualcreditreport dot you know what. You are allowed one free trip a year to see what info the credit bureaus have on you. Most banks work off of a Beacon or Fair Isaac (FICO) credit score. The higher the number, the lower a risk you are to the bank. Anything above 720 is considered low risk.

The bank will look at income to debt ratios. Typically your monthly debts (including mortgage) should not exceed 40-42% of your total monthly income. You can do some quick math to know what to tell the loan officer. There are always exceptions to the rule.

Don't get caught up in a fixed rate mortgage. Satistically speaking, you will not be in that home more than 5-7 years. You can get a 5 year fixed rate with a 30 year amortization for substantially less than a 30 year fixed. The last house you buy should be a 15 year fixed rate, not your first.

Lastly, find a lender that you are comfortable with. They should appreciate you, not treat you like you are a hassle. It is way too competitive out there.

I know enough about residential loans to get you to the next level. My focus is larger commercial business now, but I cut my teeth on mortgage loans. Anything else you want to know, let me know.

[CHICAGODOG]

Most people get a 30 year fixed mortgage I think i know i did!!!

[gbell]

Well one really has to give some thoughts as to what this house is to be. A starter home, a step-up or retirement home. When determining what it is, the next step would be to give some thought to how long you will be in the home. Are you married? Children? Plans of children? Etc. Not every person is suited for a 30 year fixed. Most people do, on average, either move or refinance within seven years. Some people are risk takers and what an interest only adjustable. Some people want a hybrid (fixed for a set amount of time and then rolls to an adjustable). Common terms for those are 3/1, 5/1 and 7/1, meaning they are fixed for 3,5, or 7 years then adjust. If you are almost certain you will be upgrading to a larger home in that timeframe, they should be considered. Even on a 30 year fixed, the first 2-3 years are nearly interest only. So it's not like you are building equity through payments, but through property value appreciation.

[tkim11]

This is my situation. I got out of college two years now and been saving to buy a small home. Basically, to move out of my parents place at the same time have an asset under my belt. Everybody is telling me not to rent, so I'm looking to buy.

I'm not planning to live in this future home for more than 5 years. I'm single and have no kids. I make about 2400 a month after taxes and pay about 1000 for school loan, car loan, cell phone and cc.

thanks for your help again

[Meg30]

This is my situation. I got out of college two years now and been saving to buy a small home. Basically, to move out of my parents place at the same time have an asset under my belt. Everybody is telling me not to rent, so I'm looking to buy.

I'm not planning to live in this future home for more than 5 years. I'm single and have no kids. I make about 2400 a month after taxes and pay about 1000 for school loan, car loan, cell phone and cc.

thanks for your help again

i came to realize that one thing and one thing only matters...your credit score..i was in your exact same boat

[CHICAGODOG]

Some people are risk takers and what an interest only adjustable. Some people want a hybrid (fixed for a set amount of time and then rolls to an adjustable).


Alot of people have got in trouble with These!!!ARMS

If the rates do go down refinance!!!

[tkim11]

I used to work for MBNA and looked at my FICO and it was at 720 - that was last year before I bought a car. I dont know what it is now. I'm never late on pymts rather early - the minute I get the bill I send in pymt.

[robby_morini]

One thing I forgot to mention . If at all possible, deal with a local community bank. They have a tendency to be more flexible because decisions are made locally.

Ask the loan officer about a portfolio loan. These loans are not sold in the secondary market and aren't underwritten to Fannie Mae guidlines. These are usually the adjustable rate loans and the bank will keep these loans in their loan portfolio. 30 and 15 year fixed are typically underwritten to Fannie Mae guidleines and are sold as soon as they are booked. You may end up dealing with someone 3000 miles away if you have a question.

he rate differential between a 30 year fixed and a 30 year with a five year balloon isn't huge. The underwriting difference is pretty noticeable.

[DIRK]

nice credit rating mines so low its embarrassing.

[tkim11]

Now I'm getting really really fucken nervous. Feels like the first time I got laid...Ok, I made the first move by contacting a realtor. I placed an ad on craigs... to see if I can get a rommie. Within minutes, I get emails saying they are interested in renting out. Holy fuck shit.

[10DimeBry]

Now I'm getting really really fucken nervous. Feels like the first time I got laid...Ok, I made the first move by contacting a realtor. I placed an ad on craigs... to see if I can get a rommie. Within minutes, I get emails saying they are interested in renting out. Holy fuck shit.

tkim,

can you afford to live on your own? if so i suggest going that route for awhile. if not, make sure if you rent out part of your place to have everything in writing. get an attorney. rentors tend to screw you over. i dont mean on rent $$$ persay, i mean in how they keep up the place. they leave and then you notice holes in the walls, outlets F'd up, shit like that. take lots of pics on camera. have restrictions like no pets/smoking etc... just my opinion anyhow.

[CMER79]

Ask your banker what first time home buyer programs are available in your state. There are programs that will help towards down payment, and even lower interest rates Based off of medium income. In Nebraska a super targeted NAIFA is offered which last time I saw was about a 3% rate. Makes a BIG difference. Pay close attention to your lenders rate and FEES. Don't be afraid of PMI if you don't have 20% to put down, although it sucks it can be taken off at any time once you can prove you hit 80%. I wasn't at 80% when I bought but it only cost $35/mo and I built enough value and paid enough to get their in 6 months. However, the seperate equity line is a good idea if your bank will accomidate.
I just looked at some rates and it looks like 30yr are around 5.95%-6.3%. If you have good credit this is the highedt you should be willing to look at if there isn't special programs for you.

[tkim11]

tkim,

can you afford to live on your own? if so i suggest going that route for awhile. if not, make sure if you rent out part of your place to have everything in writing. get an attorney. rentors tend to screw you over. i dont mean on rent $$$ persay, i mean in how they keep up the place. they leave and then you notice holes in the walls, outlets F'd up, shit like that. take lots of pics on camera. have restrictions like no pets/smoking etc... just my opinion anyhow.

I can live on my own but I'll be living on bread and water. Thanks for the notice. I can live comfortablly if I have two roomies. I can live with just one, but the other is my bro jkim so I have no worries. I'll def. take pics of my house before and after the rentor leaves. Do I get the mortage lawyer to make this contract or are there some special lawyers who does this type of work?

CMER,

thanks for the heads up bro. Jeez 6%...thats more than my car's interest...