About to buy a house
 

I'm starting the home-buying process for the first time. I'm going through mortgage pre-qualification right now. Anyone have tips or advice, whether it be from the loan or the purchase standpoint? I'm looking at a duplex in a community being built, so I could have a new place.

Re: About to buy a house
 

Kiss your free time goodbye...God I wish I were still renting. On a more serious note, make sure you mention to your loan agent that you want a HOMESTEAD EXEMPTION tied to your loan. If you don't get this then you gonna pay more property taxes.

Indy

Re: About to buy a house
 

Put in the Purchase/Sale agreement that closing is contingent upon approval of financing. Find a banker that is willing to decline financing if you ask. Find an appraiser that will lowball it for you. Use your appraisal to beat the seller down on price, knowing you always have an out because your financing may be "declined."

Re: About to buy a house
 

Sounds like something that will land you in court...aint too ethical either..

Indy

Re: About to buy a house
 

Make sure that, if you don't have 20% for a down payment, that you get an 80/20 loan (or put 5% down and get an 80/15, etc). You do NOT want to be stuck throwing away money on PMI.

For what its worth, I went through Wells Fargo for my mortgage, and it was a very pleasant experience. I highly recommend them.

Re: About to buy a house
 

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Sounds like something that will land you in court

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Absolutely not. You are abiding by the terms of your contract.

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...aint too ethical either..

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Maybe the way I worded it. But there is nothing wrong with giving yourself an out in the contract, finding an appraiser who supports your position on the valuation of the home, and fiercely negotiating for the best possible price. That is business.

Re: About to buy a house
 

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Make sure that, if you don't have 20% for a down payment, that you get an 80/20 loan (or put 5% down and get an 80/15, etc). You do NOT want to be stuck throwing away money on PMI.


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Or get an 80/10/10. Get a mortgage for 80%, put 10% down, and get a Home Equity against that 10% for the remaining 10%. You can probably get a better rate on the HELOC than on the mortgage (so you're paying less interest against that 10%), and you don't have to pay PMI.

PMI definitely blows, do what you can avoid it.

Re: About to buy a house
 

if its a new build find out if the builder has a mortgage company they "work with". They usually do, they also usually have some incentive to go with them - find out what that is and if its worth it.

Be VERY REALISTIC about how long you plan to live in the house. I'm in my 2nd place in 4 years and probably will be moving in the next 12 months. Both places my wife and I figured we'd be in for AT LEAST 5 - 10 years, so we got conventional 30yr fixed .. we would have saved a TON of $$$ if we had been realistic about the good/bad of the home and how long we'd stay and gotten 5yr variable or some other shorter term loan. Be realistic! There are a TON of finance options out there -- talk to your lender and pic the one that really meets your needs.

Not sure exactly where you are or the property tax laws where you are, but find out if you're going to be hit with a "supplemental property tax" within 12mo of moving in.

ThisHo

Re: About to buy a house
 

What is an 80/20 loan?

What percentage is Property Mortgage Insurance tax?

Re: About to buy a house
 

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What is an 80/20 loan?

What percentage is Property Mortgage Insurance tax?

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80/20 means you put 20% down, and get a mortgage for the remaining 80%.

Generally speaking, if you take out a mortgage for more than 80% of the property value, the lender will require you to pay mortgage insurance.


The reason for mortgage insurance is that if you default and they need to forclose on the property, there's a good chance that they will not recover the full value of the property in an auction, especially after the costs of forclosing and seizing the property.

So, because you are mortgaging more than 80%, they are going out on a limb with you, because if you default early in the mortgage (before you've paid much off), they stand to lose money on the deal. Mortgage insurance insures the lender against this loss, but you have to pay the premiums for it.

You'll get a fee attached to your money payment, and you will have to pay it periodically until you owe the lender less than 80% of the property value.

In recent years, many people have gotten their properties reappraised a year or two after the mortgage is closed, because even though they have not paid much off, the value has increased, which puts them below the 80% threshold and gets them out a mortgage insurance.

Some lenders offer 95/5 or 90/10 mortgages the do not require mortgage insurance, but these are usually special programs. Either they are backed by FHA (which will probably require you to be poor), or they screw you with interest or terms.