My husband and I want to buy a house (basically tired of paying $1800 in rent in city), details:
credit scores: 574 (mine) and 629 (his)--old undergrad stuff
income: $30,000+ each (fixed for next 4-5 years, research fellows)
investments: both have IRAs, average each is $4000...mutual funds $5000
savings: combined $7000
debt: me (~$3500) him (~$19,000)
We will have cosigners (retired parents, with substantial income and great credit history)
Will we be able to get a mortgage, if so about what amount would it be, interest?? We kind of need specifics (as much as possible) so we know what we should be looking at. I know it maybe crazy to think about buying but if you were paying $1800/month in rent for the past two years you would do the same----thats less than our neighbors pay in mortgage (but moving out of the city is not an option due to our schedules and public transp. needs)
Should he apply by himself with our parents since his stuff is better? You could get a 100 percent loan at 6.50 30 yr fixed going FHA with the "My Community program" Rate is based on the lender and some are 6.25 percent. Have see higher rates for ppl that have lower credit and they have to go subprime, and their fixed rate is higher. FHA and Conforming is the best way to go right now. You can put down some of your own money, but have see where ppl want to buy new appliances, put down new carpet etc, to fix the home up with their own style. That choice is up to you (ok).
Your income and job time are good. You would not need a co-signer.
With a government loan - collections and judgements will have to be paid (most ppl do not know that) but for FHA it is true...Property Taxes and Home Owners insurance does have to be in the mortgage payment if you got FHA. Does hubby qualify for a VA loan? VA loans do not have MI insurance on the loan.
Type in mortgage calculator on the www and play around with rates and loan amounts. That will give you a idea.
It greatly depends if you need help with closing cost, (The seller could do Seller Help toward your closing cost). If that is the case, I normally tell my clients NOT to hackle over the price, since you are asking for closing cost help - especially if the home is thru a realtor, and the seller has to pay the realtor their fee which runs from 3-6 percent of the selling price, and you ask for 3- percent toward closing cost -assistance) Follow me so far?? You may find a For Sale By Owner, they are sometimes more willing to help you with closing cost(s) associated with your loan, since there is no realtor fees.
Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) FHA/VA approved too. If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score. When looking for a home &/or refinancing, please do not apply for a credit card, Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down.
By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with-in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). The GFE will tell you the up-front closing cost associated with your loan. The TIL will tell you the terms, rate associated with your loan. This is a estimate only - not the final - but it does help you figure things out
FIRST TIME HOME BUYER INFORMATION
Cost associated with your loan. You will need to pay for the appraisal up front (when it being done). You will need to pay for The Home Owners Insurance Coverage for 1 YEAR . The seller can help you with up to 6 percent of closing cost. So the title fee, lender fees, underwriting fees, broker fee, processing fee, flood cert, etc can be paid for by the seller.
YOU CAN ALSO DO A FOR SALE BY OWNER - YOUR MORTGAGE BROKER WILL HELP YOU & THE SELLER FROM START TO FINISH, TO CLOSE YOUR LOAN. THE PERSON YOU ARE WORKING WITH, WILL ORDER TITLE, ANY SURVEY鈥橲 NEEDED, INSPECTIONS IF NEEDED, ORDER PAYOFFS ON SUBJECT PROPERTY IF THERE IS A MORTGAGE ON THE PROPERTY.
Pin down the basics, specifically the neighborhoods you like that will accommodate your family's needs, including commute to work, schools, recreation, shopping, and, most importantly, are in a price range you can afford. Have an open mind. It's easy to start looking at houses and get discouraged because you don't see anything that matches your vision of the perfect house. But be open to a home's potential. Remember carpet and flooring can be replaced, walls can be painted, and a dreadful kitchen can be updated. Think about whether the floor plan will work for your family.
Find a qualified inspector. You'll want to find a qualified professional affiliated with the American Society of Home Inspectors or American Association of Home Inspectors to examine your Heating and central air conditioning systems, interior plumbing, electrical systems, the roof, attic, visible insulation, walls, ceilings, floors, windows, foundations, and basements are among the key inspection points. Inspections may also include appliances and outdoor plumbing. The inspector will provide a report and if there are any major problems, they can be negotiated with the seller. Or you can back out of the deal altogether.
Make a list of features that are important in your home
Write down desirable locations you would consider, an acceptable price range, number of bedrooms and bathrooms, and any other amenities. Be specific. It is unlikely that you will find a home that offers every feature you desire; however, without a wish list, it will be more difficult to recognize a home that meets your expectations. Provide the information to your Realtor if you are working with one.
Failing to obtain a home inspection from a qualified inspector The job of a professional home inspector is to look over every major part of a home and write a report that judges the home鈥檚 quality and condition. A home inspector reports on the structural and mechanical condition of the home. After the inspection, you will have the facts you need to make a decision about buying your home.
A well-qualified inspector who has adhered to federal licensing standards can spot problems that you might not be able to see. Expect problems to be clearly explained, repair expenses closely calculated, maintenance costs estimated, and a written report delivered within a day or two.
Most contracts are written conditional on the outcome of several inspections. These inspections may include several items including inspection for wood-boring insects, excessive amount of radon gas, structural soundness, and the condition of the heating, wiring, and plumbing. When the contract is written, it should specify who would be responsible if there is a problem with the results of any of these inspections. If well written, home inspections can create a safety valve for both the buyer and seller. If poorly written, the result can be heartbreak or law suits. Your Realtor should be very familiar with the laws regarding home inspections. Many people have lost the home of their choice because the agent failed to comprehend this crucial report.
Failing to make your own inspection
You probably would not want to rely on the seller to point out defects in a house he is attempting to sell. There may even be hidden problems of which he is unaware.
Be sure your sales contract is worded so that any 鈥渆arnest money deposit鈥?must be returned in the event the house fails inspection. If a major defect is found, you have the option to cancel the contract and have your deposit returned, bargain for a lower price to compensate for the cost of repairing the problem, or have the owner make needed repairs before the sale.
Even before you get to the point of a contract and having a professional inspector look at the house, there are many items you can check yourself as you are shopping for a home.
Structure 鈥?Basement, check the foundation for cracks or water marks. Floors, are they level? Does the roof sag?
Water damage 鈥?Look for unevenly painted ceiling or wall; mildew odor in basement; signs of re-plastering or re-tiling in just one area of the room.
Water pressure 鈥?Flush toilet and turn on both hot and cold water faucets at the same time to test.
Plumbing 鈥?Ask what type pipes are installed and their age. If applicable, ask when the septic system was last inspected and cleaned. Stand near the tank to detect odor or soggy ground.
Wiring 鈥?A 100-amp system is typical in modern construction and uses a one-inch main line; this can be seen leading to the fuse box. Appliances such as dryer or range require a 220-amp line. Notice if lights flicker or don鈥檛 work. Check for electrical outlets . . . usually at least 2 in each room.
Energy efficiency 鈥?Ask to check last year鈥檚 heating and cooling bills. Determine if proper insulation has been used.
Pests 鈥?Be alert for small accumulation of sawdust in the basement. This might indicate an insect problem. Obtain date and results of the last wood-destroying pest inspection. those credit scores are pretty good. take it to a loan officer at a local bank. The only way to know what you'll be approved for is to get pre-approved. Find a lender/broker (lendingtree.com or any bank) and see what they tell you. They will consult with you and give you quotes for free; you only pay if/when you close on a home. DO NOT GO TO A BANK! Go to a mortgage broker, let them shop around for you because it is a lot easier than to get denied at a bank. If you are in Georgia, e-mail me. With your given incomes, you will be fine. The standard is 20% down. Your combined $22,500 debt is more or less offest by your retirement funds and investment portfolios. However, all you really have right now, is $7,000 down. So, at 20%, that would get you a home loan of $140,000. If you are paying $1,800 in rent, I am guessing the homes in your area are in the $250,000 to $500,000 category. This does not mean you won't get the loan -- with your combined incomes you should be able to, but it will be at a higher rate. It makes no sense to me why people that can least afford it get charged more for things, be it credit cards or home loans, but from an insurance perspective, they base the cost on the amount of risk they are taking by lending to you in the first place.
Long story short, you should be able to buy a home with only $7,000 down, given your incomes and everything else. Interest is the thing. In the first 15 years, every month you will literally pay thousands in interest. This will get better over time, and snowball like crazy when you're down to your last few years, where almost all of your money goes toward the principal. Obviously you will want to pay off your credit card debt through the home loan. I don't know what price range of home you have in mind, but the loan would have to include the $22,500 in credit card debt. And don't use those bad boys again! There is also the matter of escrow (property taxes, city and county assessments, fire insurance, etc.). So part of your monthly payment will also include your monthly escrow payment. For us that's another $400++ every month so that there is money in our escrow account with the bank so that it can make payments on the property tax and insurance when they come due.
Here is the only thing that scares me: You said "fixed for next 4-5 years . . ." You want a 30 year FIXED loan (ours is 15-year, but only because we can afford it, for now). Do some research on how many people are now in foreclosure because they got a variable loan. Don't do it.
Edit: Regarding "garbage answers," be that as it may, a 6.5 percent rate of interest sucks. Shoot me an e-mail and I will see if I can help you. The company I work for is a Lender and a Broker. That means if you don't meet our lending guidlines that we will shop your loan for you and get you the best deal possible. E-mail me and let me know what state your in so I can make sure I'm licensed to do business in that state. In response to the broker who suggested you NOT GO TO A BANK. You should know that banks typically can get you the best rates and the best loan products. Mortgage brokers are able to offer a wide array of loan products to people with or without good credit. However, mortgage brokers also earn a commission on the loans they write and some body (you) has to pay those fees. Whether or not those fees are written into the loan. I would run not walk from anyone who tells you not to go to a bank. They're obviously desparate for commission fees. I don't know how much the homes you'd buy might cost, but if your loan amount is within FHA limits, that's your best bet by far. It's the easiest to use cosignors for, allows you to put only 3% into the transaction, and is pretty forgiving on credit, as long as the last 12-24 months things have been mostly clean. FHA loan limits are set by county. Click the link to look yours up. Hopefully it fits. https://entp.hud.gov/idapp/html/hicostlo...
If not, you'll have to get your parents to kick in at least 5% down payment (at least combined with yours). Then you need to find a skilled loan officer to help you go through Freddie Mac, and do your deal as an 80/15. Fannie Mae won't do this unless all 5% of the downpayment is yours, not your parents money. The hard part will be finding someone to approve the 2nd mortgage, but many local banks can use common sense to approve them.
FHA loan rates are very good, ranging from 6.00-6.50% right now for a 30 year fixed. 0.5% annual mortgage insurance, plus 1.5% of your loan amount financed upfront mortgage insurance. It's cheap in the long run. Freddie Mac are conventional rates, for a 30 year fixed 80/15, you'd find rates in the same range.
You got lots of garbage answers. I hope you follow mine. Your best bet is to comparison-shop online and see what they offer you. You can try the below website |
