About to buy a house

[Lottery Larry]

"There's a few 'new' products out there that I don't even remember how they worked now that it's been a while since I bought my house"

From what I remember, it's best to stay away from those products if you'll be in the home long-term.

[Patrick del Poker Grande]

[ QUOTE ]
"There's a few 'new' products out there that I don't even remember how they worked now that it's been a while since I bought my house"

From what I remember, it's best to stay away from those products if you'll be in the home long-term.

[/ QUOTE ]
I think that was my general feeling as well.

[Lottery Larry]

Where did you get that animated Vanilla Ice avatar?

[smokingrobot]

im a mortgage broker:

for the best rate, you might consider paying a 1 point, but make sure you get quotes from 3 people.

ask them ALL to send you a GFE (good faith estimate). That GFE should be pretty close to what you would be looking at at closing. Also, a good comparison is your APR rate. The APR will include all the fees and is the % rate you use to compare one loan against another in terms of fees. Be weary of APR's less than or exactly at your interest rate. Your interest will/should always be lower than your APR. This does not mean you interest rate IS the APR however.

You'll also want to supply as much as possible up front so you dont get into a back and forth with them asking for more crap. Dont just cough it up, but ask the broker or whoever you are dealing with to supply you with a list of things you will need to give them.

it will include things like 2 pay stubs, 2 months bank statements, W-2's or 1099's etc etc.

Inevitably, the underwriter's will then ask for a few more things down the road, but it will make things easier.

Dont give out your SS to everyone. If there are 3 companies that you are talking to that seem to not be BSing you, then go with them.

An 80/20 is not 20% down. An 80/20 means a first and a second mortgage: 80% 1st, 20% 2nd.

This avoids PMI if you are a FNMA Prime borrower (middle FICO above 600 usually).

PMI comes into play when you borrow above 80% of the value (as determined by the purchase price) in a FNMA loan. If you go with a subprime, there is no PMI, but the rate is higher, so you're pretty much in the same situation as if you paid PMI. A higher rate means you'll be paying that till you refinance or sell your home, PMI will fall off after the mortgaged amount reaches 80% of the value of the home. If your area is appreciating, you may end up only having to pay PMI for 6 mo's to 1 year.

PMI amounts vary depending upon your downpayment and the coverage demanded by the PMI company. There is no exact science to it.

If you are not getting a prime loan, go for a 2/28, dont demand a fixed. 2/28 means you have a fixed rate for 2 years, after which it adjusts upwards.

Right before the adjusment period, refinane, and hopefully by then your credit will have improved etc.

If you have any other questions, PM me. What state are you purchasing in?

Another good idea is to get quotes from a direct lender, like Wells Fargo, a mortgage brokerage outfit, and your Bank, if they are willing to write you a loan.

If during the process you have any questions, feel free to write me and i can help you out all you want.

[smokingrobot]

They are the pay option ARMs. If you're a rich dude who gets above 12% returns on investments, you can use the money you'd be paying (deffered interest payment) to invest. If you are not super wealthy, dont let them talk you into it.

[Lottery Larry]

Have you already done things such as:

Close out old credit cards and reduce the number of active ones you have accounts with?

Gotten credit history checks yourself from 2-3 of the companies, to make sure there are no surprises you need to fix first?

Gotten some information on housing resell values, both for the builder and the area that you're in?

Gotten a ranking and history of the school district you're in, which could affect your resell ability?

Gotten an estimate on taxes for the residence and compared them to neighboring areas?

I hope this place is going to be bigger than your current place? Will the builder have any problems configuring the gaming room?

Think very hard about the loan you'll get. I don't see interest rates dropping in the next few years, but how high they go, and how long you estimate you'll be there, is a key factor in your loan type.

We went from an apartment, to a twin (because of A-man) to an apartment, to the current location (because of Z-man)
We sold the twin for what we paid for it, and felt lucky to do so given the area/school district, so we lost money on that.

BTW- are you *ahem* buying this with anyone?

[Lottery Larry]

As I remember it, when I bought AND when I refinanced, most of the products being offered weren't being offered to me for MY benefit...

[swolfe]

subprime doesn't necessarily mean that the interest rate will be higher, it just means that the loan doesn't conform to Fannie Mae guidelines.

if you have good credit, but want something unusual (no doc, interest only, high LTV with no PMI), you're going to have to get that from a subprime lender, but the rates are basically determined by your credit.

[sleepyjoeyt]

1. Once the sale price is established and you have a mortgage broker / bank picked out, ask them about financing the closing costs. Generally the closing costs could run anywhere from 3K - 10K, depending if you are paying points, etc. The banks will NOT finance closing costs. However, if you make an agreement with the Seller to increase the sale price by X, then he agrees to give you a Closing Cost Credit for that same amount, you can essentially finance your closing costs. This will save you from having to pay that money at the closing.

2. Be prepared for unexpected costs that come up at the closing. For instance, in MA, any taxes due within 60 days of the closing date have to be paid at the closing. Depending on how frequently taxes are paid in the town where you are buying, this could be a good chunk of change. For instance, if your town only collects taxes twice a year, you may have to come up with 6 months worth of taxes at the closing, which could be a grand or two.

3. MANY mortgage brokers think it is okay to add [censored] at the last minute, knowing that once you are this far into this lengthy ordeal you are unlikely to back out. Make it clear to them from the beginning that you have to see the whole picture NOW and that you will not tolerate any last minute additions, etc.

These are the ones that quickly come to mind.

I'm an attorney in MA and 95% of what I do is real estate. Feel free to PM me with any questions.

Good luck.

[Lottery Larry]

" However, if you make an agreement with the Seller to increase the sale price by X, then he agrees to give you a Closing Cost Credit for that same amount,"

How does this affect the commissions fees and the taxes?