First Time Home - Low/No $ Down?

I would reccommend going and realistically talking to a reputable mortgage broker in your area; they will tell EXACTLY what you need to do or not need to do.

As far as experience, FHA is normally the best way to go for the best interest rate, but you need NOT ONE unpaid collection, judgment etc; FHA also requires 3% DP. Traditional financing can benifit you for no money down with modest credit, and some unpaid collections, judgments etc but a higher interest rate. Private investors are also popular with these circumstances, but u'll pay a higher rate and sometimes they put 2 liens on your property. It's not all bad though. Sometimes it's better to take to higher rate, pay on it 6mos-1yr to show stability and then refi for a lwr rate, or after you pay any unpaid colelctions etc.

Your best bet though is to talk to a mortgage broker. They will not lie to you (hopefully!). Their interests are in it too and they will not allow closing on real estate if they are afraid of something like an unpaid judgment attatching itself as a lein, (though there are restrictions on this in most states.) Basically, they won't let anything come between them and the property!

Good luack and keep us posted.

 

opps

 

I bought my house for 102,600 in March of 2001 with 0 down and 7.5% VA loan. Scores were 640ish.

I refi-ed it in June of 2003 for 123,800 FHA with 0 down and 5.5%. I only borrowed 80% of the value on the re-fi. Scores were 605ish.

 

Depending on where you live and how much time you're willing to invest, you might want to check out www.naca.com.

 

If you qualify for VA, that's probably the way to go. I don't know what the requirements are now, but when I got my first house, it was 1% down and that goes toward closing costs. We went to the table with about $500 ($50,000 loan). The seller paid the rest, and the house was 100% financed. As mentioned, FHA will also go with low down, but I think it's at least 3%.

 

Do a search for posts by MARCI. She listed the steps she followed to buy her first home last year. I think she had no down payment as well. You may also want to browse www.creditboards.com
They have a mortgage section that is very informative. FLATAN is the moderator I think. He is a broker that frequently posted here in the past.

 

find some way to put 5% down; first time homebuyer programs, family member, etc. get the seller to pay closing costs. if you dont' put any money down you'll end up with a jacked rate and no equity in the event of an emergency. check out programs in just about every state to assist with this and some employers offer grants as well.

 

Simple. Just get yourself an 80% first mortgage, combined with a 20% second mortgage. You can get in to a house with no money down, except closing costs.

These loans are a much better alternative than doing an FHA or 3-5% down mortgage, since you avoid paying $50-150 a month in mortgage insurance, which is required with a traditional loan.

 

And you have NO equity (not even 3 or 5%) in case of emergency. That's why you have to pay PMI. The statistics prove out that if you can't afford a down payment of some sort, you really can't afford a house. My ex-husband and I were lucky when we bought with that little down. But we were military, he was guaranteed an income, and his housing allowance almost paid the mortgage. Looking back on it, we weren't as smart as we thought. We would have been better off renting for a year or so and saving a down payment. We actually did have some savings and could have paid a 3% or so down, so we had some emergency money. And we needed it!!

You are all of a sudden in a position where you can't call the landlord and just pay your rent when the furnace breaks. Now you have to pay the mortgage AND buy the new furnace AND pay the increased property taxes, etc. This is the part that gets a lot of people in trouble. You think that if you find a house with a mortgage payment that is about what your rent is, you're in good shape. You are, until the first problem.

 

rather than argue - go talk to a mortgage lender that can run the numbers for you.

is there some reason you have to buy a house now rather than wait until you've saved for a down payment?

 

Re: Re: First Time Home - Low/No $ Down?

Tax savings on a $100,000 mortgage? Exactly $0. Unless you have a lot of tax deductions already each year.

If you're married, you're already getting about $9,000 in standard deductions on your tax return. The interest on a 6%, $100,000 mortage is only about $6,000 the first year. So, your mortgage interest won't even be tax deductible, unless you have at least $3000 in other deductions.

You must also add in the property taxes and insurance that you don't pay when renting. On top of that, you can add closing costs to the pile.

Renting the apartment is cheaper, it's just not as much fun

P.S. If you're so confident that home prices will increase, and that you willl build equity, why would you even bother putting any money down to buy a house? If you believe house prices will rise, get yourself an 80% first mortgage, and a 20% second mortgage, avoid paying the mortgage insurance, and wait for the equity to roll in so you can refinance both of them in a few years. You would save thousands doing it that way.

Stop worrying about your 3% downpayment. It's not worth the hassle in this market environment.

 

You can easily get 100% financing. It will cost you in percentage points. For a 30yr fixed at 100%, 8.5%, national avg.for blemished credit, ie BK.

For a 2/28 with the same credit, no money down, 7.25% national avg. This is a good deal since you lock in for 2 years, then you can Refi.

I'm in the process of mtg shopping myself in the south. My wife's credit is better, scores that is, than mine, with a BK7 for her too.

My first call gave me the quotes above, at worst case scenario. I'll be trying to get her conventional rates if possible. I don't want to settle for 8.5 or 7.25 which seems high even with the BK7. She has decent history since the BK, low D/I ratio and an excellent job.

Most mtg companies will do their best to hook you on the first call. I'm ecstatic after raising her scores 100 points myself after 3 months and I'll be telling her this evening that things are looking good.

We were both nervous about mtg shopping, but we always worry too much. One has to nowadays

 

why would you pay 8.5% for a mortgage? just because you want it NOW doesn't mean you should. if your credit is that bad or you cant put anything down, you shouldn't get a house. CAN you find a lender - of course.

i keep hearing the excuse "house prices will go up". yes they will, but is it worth paying 8.5% to get into one - NO. and what kind of rate do you think will be available in say 5 years when you decide to refi - which by the way, unless the interest rate is more than 1% lower, you actually lose money. (you pay the interest upfront on mortgage loans so you will no sooner begin to make a dent in the balance and you will be starting all over) not to mention closing costs to refi.

if you find you must do an 80/20 - use the 3% you would have put down to buy down the rate to something decent; have the sellers pay the closing costs; and please have 3-6 months worth of house payments saved up.

 

I wouldn't JUMP at an 8.5, which is the worst case scenario and it was only the first offer I got, preditory as it sounds.
I'm not that impulsive, others are.

 

Re: Re: Re: Re: First Time Home - Low/No $ Down?

Are you kidding?

In almost all markets in the US you can rent cheaper than buying right now. Landlords are hurting, and are willing to make a deal..

Of course the taxes and insurance are rolled into the rent, but the rent still comes out cheaper than the mortgage + insurance + taxes + repairs + homeowner association fees.

A typical $150,000 home will cost $1500 a month with no money down. This includes mortgage, average taxes and insurance, as well as a little for upkeep.

Please find me a housing market in the US where you cannot rent a $150,000 home for less than $1500 today. There isn't one.

Ask yourself this, too ---- How many people buy a house and don't sink 5 or 10 thousand dollars in to it the first few years they own it?

The only reason to buy is becasue you believe houses will increase in value beyond your cost to own one. The increases in property values over the past few years, mainly due to low interest rates, are not typical, and must be factored in to the risk.

 

Re: Re: Re: Re: First Time Home - Low/No $ Down?

In some parts of the country, prices are already starting to fall.

Also, most people "need" (want) a lot more things when they get into a house. Curtains, carpet, new furniture, more furniture, repaint, repaper, etc. And all of these things typically go on a credit card. Now we have the cards maxed. Now the furnace breaks. Now the homeowners association decides to plant some more flowers or put up a brick wall. So that monthly cost goes up. Sorry, the city decided they needed more money for poor people. Property taxes up 10%. Oops, prices went down this year so we have no equity. And the taxes are still up because our property isn't reassessed this year, so the taxes are up 10% even though the value is down. I guess we'll just declare BK, try to keep the house we can't really afford and move on.

If you rented (either an apartment or a house), you could just move to another location.

 

two things people dont figure in on property taxes:

1) assessments for street repairs - typically about $100 per square foot of frontage

2) school levies


some people are better renters than homeowners. everyone i meet feels they need to own a home except my sister - who at almost 40 has never owned a home. she figures she would rather pay a landlord to deal with mowing, shoveling, furnace breaking, window repairs, etc, then do it herself.

once my kids are grown - i'm buying a townhouse. i'll pay an association to mow the lawn, shovel snow, and they are responsible for the exterior of the home - not me. i'd rather travel.