Mortgage Questions

[Mackman]

Well I'm 25 years old and still live at home with moms and pops. I think it is time i need to move the hell out. Plus my GF is almost done college. Anyway has anyone or can you get a mortgage with no money down. I'm looking at a house that is 119,000 (what the are asking) With no money down and roughly 5% interest rate my payment would be around 650 a month for 30 years. I can make that with no problem. I make around 40,000 a year now.


The problem is i have nothing saved up to put down. What i do have saved up i will need to furnish the place. I am seeing alot of this 20% down stuff. Do i need 20% down???


The only other payment i got is the Harley and that is 250 a month. My truck and car are paid off. I just paid the truck off last month. Also the Harley is for sale right now. So I'm hoping to get rid of that payment.


Any advice or info would be great.

[Mackman]

Also my credit is spotless. Was never late in the 5years on my truck loan and never late on the harley at all. All my CCs i was never late on. So i know my credit wont be a problem it is the down payment stuff that scares me.

[mike3fan]

I wouldn't expect to get a mortgage of that size with anything less than 10% down, also you can pretty much plan on that payment being about $900 a month or more when you add in escrow for taxes and insurance.

Also if you do come up with the down payment amount be prepared to show where the money came from, it can't be a gift from someone like your parents or a loan from some other source. They like you to prove that you had that money sitting in the bank for a year or more.

[golfhobo]

Have you kept your balance on your credit cards to ONLY 25% of the available credit? If not... your credit score could be lower than you think.

Have you checked your credit score? You can't GET the "no downpayment" option without a really high score.

I KNOW you don't want to hear it, but..... at ONLY 25 years old, you haven't got the LENGTH of "credit history" that many lenders would want to see.

There are options, though. Do you KNOW anyone who is a friend of the family or who knows you that would sell their house with Owner financing?

Your GF is still in college and has no "earning history." I suggest you rent until she has been working for one year, put dang near EVERYTHING she can make in savings FOR a downpayment, and go from there NEXT year. Mortgage rates SHOULD still be very low.

[Snowman7]

He he You are in luck son. Before driving truck I was a mortgage broker for a year. Actually a broke mortgage broker, which is why I now drive truck.

Anyway, you need to talk to your local bank or a broker to get current information as alot has changed in the last year. But before that, yes you could get a zero down loan. There were several programs all with pros and cons. To get a conventional loan with the best rate you need 20% down. If you do not have 20% the lender requires you to purchase Private Mortgage Insurance. Basically it protects the bank in the event you default before you built up any equity. As a guideline figure about $100 a month for your 119,000 loan. Once you have 20% equity in your house you can get the PMI removed. Another way is whats called an 80/20. This is two loans, one a fixed rate for 80% usually slightly higher rate than conventional and a second equity loan for 20% at a variable rate. I would think a zero down loan is very difficult to get right now because that was part of what led us to this current mess. But start by calling a reputable bank in your area. Go ahead and talk to brokers too as they might be your only option but be careful as they are slick like a car salesman. The real estate office listing the home probably has an in house broker and that might be a good option. Keep in mind that closing costs can be $5000. Some zero down programs used to let you add this to the loan as long as the house appraised for enough money. In other words you would offer the seller 119000 and they pay 5000 of your costs then the house would have to appraise for the 119000. After you talk to a pro who is up to date check back with me and I help you thru it!

[Snowman7]

FWIW, Last year in Feb my 22 yo daughter and her then fiance (now married) bought a starter home with nothing but 3 grand for closing costs. This was thru a local bank with excellent rates but they did add PMI. Not sure if this still being done with the financial meltdown. Bottom line is check with a pro and not us message board heros!

[dobry4u]

He he You are in luck son. Before driving truck I was a mortgage broker for a year. Actually a broke mortgage broker, which is why I now drive truck.

Anyway, you need to talk to your local bank or a broker to get current information as alot has changed in the last year. But before that, yes you could get a zero down loan. There were several programs all with pros and cons. To get a conventional loan with the best rate you need 20% down. If you do not have 20% the lender requires you to purchase Private Mortgage Insurance. Basically it protects the bank in the event you default before you built up any equity. As a guideline figure about $100 a month for your 119,000 loan. Once you have 20% equity in your house you can get the PMI removed. Another way is whats called an 80/20. This is two loans, one a fixed rate for 80% usually slightly higher rate than conventional and a second equity loan for 20% at a variable rate. I would think a zero down loan is very difficult to get right now because that was part of what led us to this current mess. But start by calling a reputable bank in your area. Go ahead and talk to brokers too as they might be your only option but be careful as they are slick like a car salesman. The real estate office listing the home probably has an in house broker and that might be a good option. Keep in mind that closing costs can be $5000. Some zero down programs used to let you add this to the loan as long as the house appraised for enough money. In other words you would offer the seller 119000 and they pay 5000 of your costs then the house would have to appraise for the 119000. After you talk to a pro who is up to date check back with me and I help you thru it!

+1 Pretty good for a Buckeye

[Mackman]

Thanks for all the great info everyone. I'm just talking right now. Just seeing what my options are. Maybe i should just wait another year. Just save my butt of in the mean time.

Hey snowman. I will call the BANK just for the hell of it see what they have to say. First i want to talk to my oldman see what he has to say.


If i had to i can sell my truck and get 15,000 from that. But why does the bank care were the down payment came from??

[Snowman7]

If i had to i can sell my truck and get 15,000 from that. But why does the bank care were the down payment came from??

They do and they dont. Mike is right, sometimes they wont allow gifts but I have seen it allowed. Each scenario is different. They want you to be commited to the home so there is a better likelihood you will pay for it as opposed to when things are just given to you. My daughter's 3000 was a gift. Start talking to lenders and get educated. When you have good credit you have a lot of clout. Where there is a will there is a way. I also spent many years in auto financing. I have a pretty good general knowledge of financing so let me know if you need any help. I suspect our resident accountant would also be a good source.

[Snowman7]

+1 Pretty good for a Buckeye

Thanks Dobry! I might be having a change of heart. If I wasnt happily married I might have to see what these Wolverine girls were all about! But then I'd have to fight Belpre first and who wants all that mess?

[Jumbo]

Our local credit union puts on home ownership clinics every so often. See if any banks in your area offer this. You can get an idea of what is required, what amount you may be prequalified for and the meanings of the terms used. I am also looking for a house within the next year.

[Mackman]

Our local credit union puts on home ownership clinics every so often. See if any banks in your area offer this. You can get an idea of what is required, what amount you may be prequalified for and the meanings of the terms used. I am also looking for a house within the next year.

I will have to look into this. Thanks Jumbo.

[Jumbo]

Also, some of the banks around us have listings of properties they have for sale. I also think maybe look for a fixer upper. And if you need furniture PM me. I have some cable spools and milk crates I will let go cheap. I have been finding furniture on Craigs list resonably priced.

[LightsChromeHorsepower]

I am a licensed Ca real estate agent with a good knowledge of loans and credit.

In CA there are lots of first time buyer programs that will get you in a home for 3% down. You should be able to get an FHA loan with3 1/2% down anywhere in the country. Google FHA home loans or something like that to get more info.

You sound like an excellent candidate, from a credit standpoint, to buy a home. Your first action should be to contact a local loan agent (preferably check with more than one) to determine the amount of loan you will qualify for.

When comparing loan programs make sure you compare all costs. Somebody might offer you a better interest rate, but load the loan up with so many fees & points that it ends up costing you more.

Interview multiple loan agents & Realtors to find one that you can communicate well with, one that can explain EVERYTHING to your satisfaction, one that is wiling too invest as much time as it takes and show you as many homes as it takes to get you in a good home and a good loan at a fair price.

Make sure you figure out the total monthly cost of the home you are purchasing- PITI- prnciple, interest, taxes & insurance- and be certain that you are comfortable with that number. Don't get the most expensive house & biggest loan you qualify for unless you are really comfy with the numbers.

IT HAS TO BE A FIXED RATE LOAN!

Also, all real estate is local. I am still telling people not to buy around here because I don't think the market is near a bottom yet. I am telling people that I would rather drive a truck for a living than lie and say now is a good time to buy. I have no knowledge of your market.

I could offer a bunch more advice, but I've got freight to haul. If you have any questions, feel free to ask.

[Mr. Ford95]

Whatever you do Mack, do not go with anything other than a Fixed Rate like the above post just stated. They will throw out a bunch of fancy numbers to try and wrangle you into an ARM or anything other than a Fixed Rate. Think along the lines of what CR England does and says for that BS, don't listen to it becuase it will come back to bite you down the road.

I didn't have to put any money down on my place nearly 2 years ago when we signed the papers but that was because I was gifted the land from my parents. Because of the value of the land, that sufficed in place of money down.

[vavega]

as golfhobo says, don't be so quick to assume your credit is spotless, get a free report NOW to see what's there.

free credit report it will give you time to clean anything up.

also, as much as it might seem like a good idea to wait until next year, factor in an up to $8,000.00 tax credit if you buy this year. i believe the purchase has to be completed by dec. 1st.

irs details

[69XKE]

IMO, ignore the $8K tax credit...my understanding is that it's a loan and has to be repaid (I could be wrong, though...).

When figuring payments, don't forget the taxes and insurance...$650 sounds like principal and interest only.

Personal recommendation...try to save up at least 10% for a down payment. Then have some set aside for emergencies. Do not use all available savings for the DP, because there will be things you either have to change or just want to.

And by all means....FIXED RATE ONLY. (I know it's been stated...just wanted to chime in on that specifically as well.)

Lots of great advice here. Home buying is a very emotional issue, even for those of my age group (48). Wife and I bought a house a year ago when she landed a job close to her mom and her kids, who are college age. So you can bet it was emotional for her especially.

Good luck!!

[GMAN]

There are also other expenses associated with home ownership. You will need to either mow the lawn yourself or find someone who can do it for you while you are on the road. If you have a plumbing or electrical problem you will need to either do it yourself or hire a plumber or electrician rather than calling the landlord. There are also painting and other maintenance that must be done on most homes from time to time. I mention this because you don't want to over spend on a house. Others mentioned taxes and insurance costs which may not be included in the payment they quote you. I would also suggest paying your own insurance if possible rather than having the mortgage company pay it for you. It could save money for you to do it yourself. I think it is great that someone your age is seriously considering purchasing a home. It is a good way to build equity in something. You will either pay house payments or rent. At least when you are buying a house you are putting money into something that will give something of a return and you will also have a tax deduction on the interest and closing costs. When you rent you have nothing to show for the money you spend. I would suggest getting your own financing and take your time. You may find a repo or new home for a very good buy.

By the way, I saw something about financing a home the other day on Fox News. This individual suggested doing a home equity loan rather than conventional financing. You can pay your loan off early without penalities. With most conventional loans there are penalties for paying down your loan early. I don't think you will have closing costs with a home equity loan, either.

[Mackman]

as golfhobo says, don't be so quick to assume your credit is spotless, get a free report NOW to see what's there.

free credit report it will give you time to clean anything up.

Well it wasn't free to get my Score. You get a free credit report it doesn't tell you your score. It cost me 7.95 to get the score. I got my Score from Equifax Credit File. It says my Fico Score is 762 Excellent. I didn't bother paying to get it from other places.

[Mr. Ford95]

Dude, 760 is real good. I think I had a 780 and my wife had a 500 something when we signed for our house, my 780 carried us to a great rate at the time(they are much lower now but at the time our rate was real low) even though she had 2 CC's that she had defaulted on before we were married.