where do I start? - First Home Purchase...

[morgan180]

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before you apply, you might want to obtain yoru credit report and make sure its kosher (nothing on it that shouldnt be).

get together your W-2's or 1099's tax returns from last year and the year before.

get your bank statements together.

for a mortgage payment, take the price of the home you want to purchase, divide by 1,000 and multiply that nuber by 6.

that will be your principal and interest payment assuming a 6% rate.

add that number to your monthly expenditures (only the ones that show up on your credit report) and divide that number into your monthly income. make sure thats below 50%, if not, buy a lower priced home.

ex:

Purchase price 100,000
p&i = 600

monthly CC bills and auto loan = 400

monthly income = 4300

1000 / 4300 = 23%, < 50%. so its good.

thats called your debt ratio btw.

if you wanna know anything else, pm me. i can write more for you later, but im about to fall asleep.

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this is exactly right.

a few other things. many banks have 1st time homebuyer programs with little/no down needed. you pay a premium for it but don't have to come that much out of pocket. ideally if you can bring 10% down to the table you'll get some better interest rates.

there are some loan programs that will lend 103 - 107% of the purchase price so that your one-time non-reoccuring costs are in the loan too (title, escrow, lender fees, etc.)

make sure you don't over extend yourself. everyone is talking about a housing bubble, which may or may not hit. a safe assumption is to assume perhaps a 10% decline in the market value of your house over the next year - if you want to be a pessimist.

also negotiate like hell. come in low on the offer, review your HUD (settlement statement) thoroughly. throw out any junk fees, like sub escrow, admin fees, rush fees or any of that crap its all padding. also negotiate down the processing fee and underwriting fees. finally when you get near the end ask your real estate agent to cut their commission by a grand or two - they'll be so afraid to lose the deal that they usually drop their skirt.

[MrMon]

If you work for a financial institution, yes, that should give you the best possible deal. Where you'll really save is they'll usually charge little to nothing on origination fees, processing fees, etc. And you should get the best rate, especially if you'll agree to payroll deduction. (I work for a branch of Cendant and got a great deal on my rate for a refi, had to pay the standard 1% origination though.)

Also, since you're just inquiring about how much you can afford, you don't need all that other stuff. You can guesstimate. Be as accurate as possible. Only when you actually apply will you need all that other stuff. Just go at lunch and they should be able to tell you almost instantly.

Anyone who thinks you can get a prime loan at a 50% debt ratio is sadly mistaken. Industry standard has been 28%/36% of gross for some time now. (That's 28% of income for housing, 36% total debt including housing.) There are cases where you can push it, but you'll pay a higher interest rate. High income people can also push it, as they have more disposable income. Ratio is pretty stand for Average Joe.

[OtisTheMarsupial]

Don't try to buy in Baton Rouge. Apparently because of Baton Rouge's proximity to New Orleans, ALL the available real estate in BR has been sold. Amazing.

[whiskeytown]

my only serious debt (besides a $100 cable bill, $50 electric, $60 phone) - is a $4000 credit card bill - rent ant other expenses are approx. 25% of my POST tax wages, pretax maybe 15-20 percent - I don't know if that counts -

I am way up there in credit rating - near 745 according to my CC company - so I'm gonna make that go away first before applying -

RB

[smokingrobot]

you get qualified off your gross income, so dont worry about that.

also they wont count your cell phone bills or cable bills against you either.

if you have a fico above 700, you can get pretty much whatever you want. you might even want to contact a local bank instead of a broker or mortgage bank.

they sometimes wont charge for things that a broker or banker would normally still have to charge.

[whiskeytown]

like I say, I work for a major banking institution -

I just looked it up, and here's what I see for benefits for going with my company...
------------------
Waived origination fees, typically 1.0% of loan amount for active team members

Waived processing fees

Savings on private mortgage insurance premiums

Special options to reduce appraisal and closing costs

[Bulldog]

I just moved into my first new home this week. Here is some advice I got here recently:

thread

[Bulldog]

My salary is almost exactly 25% of the purchase price of my home. I got an 80/10/10 mortgage, which is basically a way to get around PMI (mortgage insurance, which is like lighting cash on fire) by getting a first and second mortgage at the same time. I put about 16% down, but I also needed about $7,000 more for costs, taxes, etc. If not for those other costs, and wanting to keep a fair amount of cash, I would've had 20% to put down.

The whole thing was relatively simple. Find a good real estate agent (recommendations from people you trust), and let the agent recommend lending sources. Also, plan for $3,000 to $5,000 in appliances and other expenses (stuff adds up quickly), more if you need a lot of furniture.

[sublime]

owning a home is a LOT better than owning a condo.

[sublime]

[ QUOTE ]
owning a home is a LOT better than owning a condo.

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i will go a step further. buying a condo is a mistake. the condo fee is reason enough. save up until you can afford a home you plan to live in for a long time.