First time homebuyer

[WildBill]

Just came across you on here and figured I could ask you a few questions. I'm looking to buy my first house and I'm not really sure where to start. I've been looking all over Zillow and redfin but haven't met with anyone yet as far as a lender or realtor go.

What's the advantage of going with an independent broker over my credit union or any of the big banks?
Should I get prequalified now, even if I might not buy for a few months? I'm sure a hard pull will hit my credit score a few points
Know of any first time buyer programs that are not income - based? I seem to make more than most allow.

Sorry if I'm just ambushing you with questions


Sent from my SM-G935V using Tapatalk

 

[Mightydog]

What type of loan? VA, FHA? Above all do not get a "negative amortization" loan. Lower payment but difference gets added to loan balance.

 

[MikeTF]

Remember that when you buy a home, you are responsible for the future value of the property, not the bank. There is a myth about real estate: it always appreciates. It doesn't. Be very certain that the area where you are buying the home will continue to be prosperous and that your home's value will increase. Sometimes it is better to rent.

 

[WildBill]

What type of loan? VA, FHA? Above all do not get a "negative amortization" loan. Lower payment but difference gets added to loan balance.

Great question! No clue. I have about 40k saved up for down payment and/or closing and credit karma says my score is 803.

Ive been sort of assuming I won't have any trouble getting approved in the 200-300k range, and I know I want a 30yr fixed, beyond that I've heard of FHA but don't know what makes that different than a conventional loan. I've never even heard of negative amortization.

Thanks for the reply!

Sent from my SM-G935V using Tapatalk

 

[Name Taken]

Great question! No clue. I have about 40k saved up for down payment and/or closing and credit karma says my score is 803.

Ive been sort of assuming I won't have any trouble getting approved in the 200-300k range, and I know I want a 30yr fixed, beyond that I've heard of FHA but don't know what makes that different than a conventional loan. I've never even heard of negative amortization.

Thanks for the reply!

Sent from my SM-G935V using Tapatalk

Please reconsider your 30yr fixed if you are in a position. A 15 year fixed would be my suggestion if it is do-able. You'll get many different thoughts on this though.

Get a house you'll grow into. Need two bedrooms now? Make it three. Make sure you get a flat driveway if you or someone has to work in bad weather. If you get snow days or work for home it doesn't matter. Getting home or having to leave and there being 8 inches of snow on a driveway that is a hill is no fun.

YARD YARD YARD. If you have or plan on having kids a flat back yard or a large community playground within a short distance is a great thing to have.

Beyond that make sure you budget 300-500 a month (on a 200-300k dollar home) for repairs and "things". Some months that 300 might go no where other months you'll spend 1200 on just upkeep. We've been able to cash flow all major appliances, roof replacement, HVAC replacement, finishing an unfinished area, and several other tools this way. It's important to realize your 1200-1800 dollar payment is a lot each money and to budget for repairs.

I can't help you with loan details other then from what I hear on the radio it's a sellers market with some sellers getting several offers quickly. It likely wouldn't be a bad idea to get pre approved. When we were buying (2010) folks wouldn't take the time to show us a house if we weren't pre qualified within our budget.

 

[XCheckR]

With that savings and credit you are off to a good start. Make sure you buy in you comfort zone as houses will cost to maintain and fix. Don't want to be house poor.

 

[Jim12]

1. Location, location, location.

2. Buy one of the smaller houses in the best neighborhood you can afford.

3. Fixed vs. ARM loan: Most people don't live in the same house for 30 years. I heard somewhere that it's more often something like 5 years. Jobs, family, other needs change, and some people just like to move up. If you think you're one of them, you can save a lot on your payments if you get an ARM loan, say 5/1 or 7/1: Five or seven years fixed, then adjustable annually. Just be sure the annual adjustments are capped at, say, 1/4 point to avoid big swings. Advantages: rates are quite a bit lower than fixed, and if you want to pay the 15- or 30-year amortized payment amount monthly, you're free to do so. You can also refi whenever rates are low, to get another 5- or 7- years at a lower fixed rate.

 

[Melnic]

Everyone has different situations. Do you have kids? Or will you? You also have to look at school ratings. School ratings can affect price of what you buy and also how quick you can sell later. If you buy cheap in a low rated school area now then sell later, it can work against you as you compete with homes in good school areas.

Don't wait much longer if you plan to buy this year. Available inventory of homes I think will dwindle as the next 2 months go by.

We were in first house for 6 years then just sold the house we were in for 20
I think we will be in new place for 10-15 years then downscale

Good luck


Sent from my iPhone using Tapatalk

 

[montoya32]

Just came across you on here and figured I could ask you a few questions. I'm looking to buy my first house and I'm not really sure where to start. I've been looking all over Zillow and redfin but haven't met with anyone yet as far as a lender or realtor go.

What's the advantage of going with an independent broker over my credit union or any of the big banks?
Should I get prequalified now, even if I might not buy for a few months? I'm sure a hard pull will hit my credit score a few points
Know of any first time buyer programs that are not income - based? I seem to make more than most allow.

Sorry if I'm just ambushing you with questions


Sent from my SM-G935V using Tapatalk

There are a few options as far as loan programs available. There are also programs available depending on where the home is located. As far as lenders, which I am not(I am a full time Realtor), your credit union may be able to do something like lower a few fees, but typically an FHA loan and VA loan are the same no matter which lender you use. Also, most credit unions don't "specialize" in mortgages. They offer them as a service, but do not efficiently provide them and quite honestly, they are a little more difficult to deal with during a transaction. A dedicated mortgage lender, IMO, is the way to do. They do mortgages all day, everyday and know the ins and outs to navigate your particular loan and your particular needs.

Ryan is a great lender. Very accurate with his estimates and information. Every one of my clients that I have recommended to Ryan have nothing but great things to say about him.

Lastly, speak to a lender now and get pre-qualified. It's always good to have that at the ready in case you find something you want to make an offer on.

 

[traveller]

As for your concern about getting pre-qualified. As I understand it, a 'hard inquiry' is only generated once new credit is established based on an inquiry.

Don't use what you get pre-qualified for as a guideline of what you can 'afford' to buy. Whatever formula the lenders use for those prequalifications does not take your life into account. Look at the housing cost in your current family budget an whatever other obligations you have to decide what you can afford, dont let some algorithm make the decision for you. And as recommended above, add a healthy reserve for 'shit that breaks' into the budget. You may not use it for 6 months, but then something IS going to happen. 15-20 year old houses are the worst in that regard. That's when all the original appliances, water heaters and HVAC croak. Also, once you hit 20, you often need a roof.

 

[good guy 176]

I sold residential RE for over 15 years, 1985 to 2000, and sold mainly in the three counties that surround Laurel, MD.

Location is very important. I'd avoid PG and most of Montgomery county and favor Howard county and the areas NW of Howard. If possible, you want to avoid the cancer that is spreading out of DC and Charm City. I'd consider buying in PA. VA, DE or WVA if the commute were tolerable.

Definitely get prequalified and get linked up with a fulltime Realtor who will work with you and give you their time and attention. You have an excellent credit score and have shown a propensity to save...would have loved to have had you as a buyer...you are gold plated!

We are preparing to leave Maryland and get back to our roots in western PA. Finding the market active in our West Laurel neighborhood and expect to sell in 30 days or less and at a decent number...been here since 1984 and have watched the hood and PG county sink to depths we did not think possible. With it came crime and a double homicide on Malcolm Drive on 13 May 2013, some 400 yards from our front door. A domestic situation that went very wrong the day after Mothers' Day 2013.

Have a wad of Guats next door and our court resembles UN Hq South. We used to look like middle class white collars. Haitian family of six soon selling here on he Court and heading to Howard county...why?...to get the kids into better schools...PG sucks hind tit real bad on all fronts.

Lew--Ranger63

 

[Minuteman]

Just came across you on here and figured I could ask you a few questions. I'm looking to buy my first house and I'm not really sure where to start. I've been looking all over Zillow and redfin but haven't met with anyone yet as far as a lender or realtor go.

What's the advantage of going with an independent broker over my credit union or any of the big banks?
Should I get prequalified now, even if I might not buy for a few months? I'm sure a hard pull will hit my credit score a few points
Know of any first time buyer programs that are not income - based? I seem to make more than most allow.

Sorry if I'm just ambushing you with questions

k

Congratulations! You are way ahead of most and clearly have a bright future.

Read these:
http://www.bankrate.com/finance/real-estate/first-time-homebuyer-mistakes-1.aspx#slide=1

https://www.nerdwallet.com/blog/mortgages/programs-help-first-time-homebuyers/

Also read a couple books on home buying.

 

[Minuteman]

More advice:

Unless you are buying in a market unknown to you, or you have some disability, you probably don't need a realtor. If you do go with a realtor make sure you understand how they work, what they will and will not do for you and ask if you have to pay them if you find your own home without them.

Look into FSBO.

I would get preapproved from a local bank that doesn't immediately resell your mortgage. I would not do business with WellsFargo.

Put down enough money to avoid PMI.

I use a firm that gives great rates, fantastic service and charges a simple flat fee, no hidden costs, or other mortgage tricks. They will resell your loan immediately, but are hard to beat if you want the best possible price/service.

I'm interested in possibly someday buying a home using block chain; I need to learn more about it.

My motivation for giving you this information is simply good will, and to help promote this web forum and the Second Amendment. Good luck, and enjoy this experience!

 

[traveller]

I would get preapproved from a local bank that doesn't immediately resell your mortgage.

I doubt that bank still exists. With the paperwork and compliance nightmare that residential mortgages have turned into, many community banks have gotten out of that business. They may still 'offer mortgages' but if you look closely, the entity you are talking to for the mortgage is a separate company that is part of a larger mortgage originator.

I would not do business with WellsFargo.

I have had two mortgages with WF and they were processed without any issues. WF has a habit of keeping the processing on most of their mortgages. If they sold the principal on my mortgages, they never informed me of it. I had mortgages through a local originator and in both it was a wild goosechase keeping up with all the sales of not only the principal but also the processing. Every couple of months I had the hassle of figuring out who got what check.

Put down enough money to avoid PMI.

Absolutely. Dont believe a mortgage seller who tells you that you can appraise out of it. If you don't have 20% down, look into doing a 80/10/10 instead. That's where you have a 80% conventional mortgage and a second mortgage or home equity line for the rest. As your overall loan ratio is calculated using both loans together, you are still being treated as if you are taking out a 90% mortgage so there can be a slight hit on your rate. It's worth it to avoid PMI.

 

[dontpanic]

I doubt that bank still exists. With the paperwork and compliance nightmare that residential mortgages have turned into, many community banks have gotten out of that business. They may still 'offer mortgages' but if you look closely, the entity you are talking to for the mortgage is a separate company that is part of a larger mortgage originator.

SECU does not sell thier mortgages. This was very important to me after being bounced around from company to company for years.

 

[WildBill]

I doubt that bank still exists. With the paperwork and compliance nightmare that residential mortgages have turned into, many community banks have gotten out of that business. They may still 'offer mortgages' but if you look closely, the entity you are talking to for the mortgage is a separate company that is part of a larger mortgage originator.



I have had two mortgages with WF and they were processed without any issues. WF has a habit of keeping the processing on most of their mortgages. If they sold the principal on my mortgages, they never informed me of it. I had mortgages through a local originator and in both it was a wild goosechase keeping up with all the sales of not only the principal but also the processing. Every couple of months I had the hassle of figuring out who got what check.



Absolutely. Dont believe a mortgage seller who tells you that you can appraise out of it. If you don't have 20% down, look into doing a 80/10/10 instead. That's where you have a 80% conventional mortgage and a second mortgage or home equity line for the rest. As your overall loan ratio is calculated using both loans together, you are still being treated as if you are taking out a 90% mortgage so there can be a slight hit on your rate. It's worth it to avoid PMI.

I've heard a lot of folks say PMI is trouble. I've also heard friends say they put 5-10% down with no PMI and no mention of a second mortgage, could that be accurate, or are there mistaken?

If I come up short of the 20%, my plan was to borrow from my 401k. I'm 27 so a long way till retirement. I know there are risks but I think it might be a better option than PMI or the 80/10/10 solution.

Sent from my SM-G935V using Tapatalk

 

[traveller]

I've heard a lot of folks say PMI is trouble. I've also heard friends say they put 5-10% down with no PMI and no mention of a second mortgage, could that be accurate, or are there mistaken?

Some mortgage companies have those programs. I suspect they just pre-pay the PMI and roll the cost somewhere else into their fee structure. That way the buyer doesn't see PMI as a line item on his bill. There is no doubt that somewhere you are paying for the higher risk that comes with loan to value ratio that is worse than 80%.
VA and some of the other government guaranteed loans (e.g. FHA) allow higher borrowing percentages without PMI.

If I come up short of the 20%, my plan was to borrow from my 401k. I'm 27 so a long way till retirement. I know there are risks but I think it might be a better option than PMI or the 80/10/10 solution.

Oh no, now you've done it !!

Some people feel very strongly that you should never ever under no circumstances whatsoever borrow from your 401k. You may get some emotional responses to that suggestion ;-)

I am not one of those people. I personally wouldn't touch a 401k loan, but that is because you are turning an investment into the purchase of something you use. Also, if you can't pay the 'loan' back for some unforseen reason, you get dinged with taxes and penalties on top of it.

Have 'el flasko' here on this forum lay out the different options available to you based on
- home location
- your income
- any service history

The rest of us here are just spitballing based on our own experience.

I found PMI and a mortgage that got sold and reassigned a bunch of times a giant pain in the ass and wouldn't do it again. Now I am back with WF at 3.65% and the mortgage is just one financial product that shows up on my WF online account.

 

[El_flasko]

There are a few options as far as loan programs available. There are also programs available depending on where the home is located. As far as lenders, which I am not(I am a full time Realtor), your credit union may be able to do something like lower a few fees, but typically an FHA loan and VA loan are the same no matter which lender you use. Also, most credit unions don't "specialize" in mortgages. They offer them as a service, but do not efficiently provide them and quite honestly, they are a little more difficult to deal with during a transaction. A dedicated mortgage lender, IMO, is the way to do. They do mortgages all day, everyday and know the ins and outs to navigate your particular loan and your particular needs.



Ryan is a great lender. Very accurate with his estimates and information. Every one of my clients that I have recommended to Ryan have nothing but great things to say about him.



Lastly, speak to a lender now and get pre-qualified. It's always good to have that at the ready in case you find something you want to make an offer on.

Thanks Tim

OP, forgive the delay in my reply. I'm actually in Florida visiting family until tonight but I am of course happy to answer any questions you may have. My cell is 410-804-5978.

Short version, most banks, mortgage lenders, brokers, whatever, are truthfully selling pretty much the same thing these days minus a handful or specialty products or slight rate swings either direction. What you want to look for is honesty and service imho. Buying a home is nerve racking but it sounds like you are WELL prepared and asking a lot of good questions.

Let me know if you have time to chat or feel free to email me at RLowry@SouthernTrust.com

 

[gwchem]

Don't worry too much about pmi. I did the math many ways and went 90/10, so that I could keep the cash in hand to do some repairs. This was even on a short sale that appraised higher than the sale price by 15%. The PMI was paid up front, however, as that was a lower overall cost compared to years of payment.

My only unsolicited advice is to buy what you can actually afford. If you can't pay your mortgage and bills, fully fund retirement, and save cash on top of those, you're paying too much for housing. Our mortgage/taxes/insurance bill is about 25% of take home income.

 

[gwchem]

Also, I'd estimate we're paying approximately 10-20 percent of our mortgage just on upkeep. Landscaping, upgrades, projects are all extra on top of that amount.