Want to buy a house but feeling so lost….?
My dh and I would like to take advantage of the housing market and try to buy a house soon. My credit is excellent but my dh had a bankruptcy about 3.5 years ago so we’re unsure what his score is even though he’s been getting some great credit card offers in the mail for a while now (some better than what I get!). Anyways, we don’t have any money saved up but are being told about 80/20 loans. How much money will we have to have saved up for closing costs, inspections and any other fees/costs that we have to pay for? I want to be fully prepared for this before I even submit my information for a pre-approval.
Also, what is the very first step for all of this? I know we need the pre-approval but where is the best place to go for this? Should we go to a bank, do it online (ex. lendingtree.com), find a mortgage broker?
What about first time home buyer programs? Should I find those before getting pre-approved?
Any and all advice will be appreciated as we don’t want to make any bad decisions.
(We live in south FL just in case that affects anything.)
July 15th, 2009 at 2:32 am
Regarding the bankruptcy on your husband’s credit you should not worry.If you have been discharged from a Chapter 7 bankruptcy for two years or more, you are eligible to apply for an FHA home mortgage loan (same rules for VA loans, by the way). If you are in a Chapter 13 bankruptcy and have made all court approved payments on time and as agreed for at least one year, you are also eligible to make an FHA loan application.
If you are a first time home buyer you can still qualify for an FHA loan which gives you the opportunity to only put as much as 3% down payment for the house AND accept gift (money $$) from a relative to cover for the house. Also, as a first time homebuyer there are many grants available to you but they differ from state. Check to see what the state of FL offers for first time home buyers. Most offer down payment assistance and cover most of the closing cost without you having to pay that money back. (there are some stipulations though, ex. you may not sell it withing 3-5 yrs..etc).
For inspection you are looking at maybe $300-$500 depending on the inspector. Attorney fees go from $500-$1,000 max.
Lending tree helped me because they match you with a bank that offers FHA loans and are more lenient than the usual banks, i.e. Bank of America, etc.. most of those banks are more concerned in selling you a conventional loan which requires you to put 10% of the cost of the house versus FHA. Also, shop around for interest rates a great website is bankrate.com Good luck!!
July 15th, 2009 at 2:32 am
There are many first time buyers programs available to most people. You should check with the city or county in which you will be buying your home. They normally are the ones that have access to these type funds. If not they will be able to point you in the right direction.
I personally would not go on-line to find a mortgage broker, most are not in your vacinity therefore do not have the knowledge necessay to understand the local customs about paying for certain items by the buyer and seller to include prices and the neighborhood in which you are purchasing your home.
In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage broker, which you can find one in your local telephone book.
Make sure this mortgage broker or mortgage banker is able to do government loans such as FHA and VA loans if you qualify for one.
He will fill out this application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.
The amount of your monthly debt payments you are required to pay as per your credit report and the amount of mortgage you can take on based on your income will determine the amount of house you will be able to purchase.
When you speak with the mortgage broker you will need the following documents to complete the loan application, there will be others, but this will get you started.
#1 One month of pay stubs for each person that will be on the mortgage.
#2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.
#3 Two years of federal income tax along with the W-2 that match.
Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.
Once he gives you this pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.
Now make sure before you get your pre-approval you and your mortgage broker go over all your options as to the mortgage programs you qualify for, the interest rate, monthly payments.
If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan.
You should select the loan that best suit your financial condition at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once.
Make sure your mortgage broker explain all your options so you may make an intelligent decision.
What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else.
So select the best option for you and your financial situation.
You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.
Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign.
Your mortgage broker will now order an appraisal to show proof of the property value.
The mortgage broker might ask for additional information or documentation, don’t get all up tight this is normal, just supply the information or find the documents needed.
After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.
Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you.
I hope this has been of some use to you, good luck
"FIGHT ON"
July 15th, 2009 at 2:32 am
Living in South Florida you are going to find that you are in what lenders are calling a "declining market". No one in that area is offering 100% programs, 80/20’s or anything like that, even FHA. The programs exist but the mortgage insurance companies will not insure those mortgages in south FLA.
Even if you could find a mortgage for 100%, by your own admission you have NO money saved up. The problem we are currently having is because people bought houses with NO money in the bank. Besides the house you have closing costs and expenses involved in buying a home. Even if you get the buyer to contribute 3% of closing costs it won’t be enough to cover the closing costs.
Save some money and come back in 6 months, the bargains will still be out there.