with these no money down deals... how big of a factor does your credit play?
with these no money down deals... how big of a factor does your credit play?
I think there are special programs that help ppl with bad/insufficient credit.Originally Posted by Dirty Octopus™
Contact a bank or broker and ask questions all day long. Won't cost you a thing except time.
I have tried looking online but I read everything like it is French, because I dont understand. It confuses me and frustrates me to the point that I tell myself "why bother?" Eventually I go back to looking but once again, I get caught up with realtors that are so damn pushy. It is a turn off.
BeFF <beef>
GECKOSQUAD
Some good info in here, and some not so good.
First off, you should can do all the research you want, but you really shouldn't get into the nitty gritty until you're within shooting distance of when you want to buy. The information you get today may not necessarily be accurate a year from now, especially in today's crazy market.
Second, loans are based on risk. The riskier the loan, the worst the terms. It's really not rocket science. Ads and Lenders want you to think it is, but it really isn't. It's all about perceived risk. The riskier you seem to the Lender, the less options they will give you. The trouble with the Mortgage Market that everyone is hearing about right now is due to the effects of doing riskier loans all over the place a few years ago. 3-4 yrs ago, just about anyone could get a home loan with decent terms. That's not the problem. The problem comes in when you lend money at crazy terms to risky people. So now that the market started to adjust UP, crazy cooky interest-only ARM loans that were given to people because that was the ONLY way they would qualify back then are now drowning them because they can no longer afford them when the payment goes up.
*Up on my soapbox for a minute to educate some people*
This is not always, as the media will portray, the "lenders" fault. Lenders lend money to people based on economic factors including supply and demand. If your neighbor refi'd his house and he told you that he got 6% and his new pmnt on his house was $700 while you are at 7.5% with a $1200 a mo. payment. You think, "wow, I want one of those...". Problem is that you didn't take into consideration that 3 yrs from now, the payment shoots up from $700 to something else. If you couldn't afford that "something else" 3 yrs ago, then you are likely not to be able to afford it now. Right? THIS is what's causes foreclosures and problems in the market right now. If you were a broker/Lender back then, you damn sure couldn't afford to turn away all those next door neighbors that came calling asking for those specific loans. That's like complaining about paying $1000 for PS3's when 2 short mos later you could get them for $600. Who's fault is it that you paid $1000 because you wanted it on the very day it came out? Same thing here. Everyone is blaming "bad brokers" for selling a product that PEOPLE demanded. You could preach to them til you're blue in the face, they STILL wanted it. Now, they want to blame everyone but themselves.
*end of soapbox rant*
Third, Mortgage Insurance is indeed a rip off. If you can avoid it, do it like the plague. There are several ways to do it, all of which have pros and cons. The most common is to do 2 loans vs 1 loan IF you don't have the 20% already to put down. There are several combinations, but the idea is that neither loan is over 80%. 80/20, 80/10/10, 75/25, 80/5/15....etc. You get the pic. The down side is that you will have additional closing costs (since there are 2 loans vs 1) and that the terms on the 2nd loan are never as good as the terms on the 1st. With that said, when you put it side-by-side with a loan WITH MI (be it MIP or PMI) it is OFTEN cheaper per month than the loan with MI.
Finally, Your personal qualifications, along with anyone else going on the loan with you, is what usually has the biggest impact on what will be available to you in terms of options. It all goes back to risk. If you are seen as a risk.....no established credit, bad credit, slow credit, jumping from job to job, no rental history, no GOOD rental history, little to no savings pattern, little to no reserves, little to no down payment, lots of existing debt, high DTI's, etc.....all are seen as higher than normal risks. Therefore, you can't really expect to be too demanding on your loan terms. You may have 3 options or you may have none. It's all up to how you look on paper to that underwriter at the time your loan is submitted. That's the real bottomline. You have to be realistic. You can't expect to buy a house that costs $200,000, with NO money down, and also have a $500/mo payment. The math doesn't even make that a possibility unless you're doing a 40 yr loan at 0% interest. Believe me, there is no such thing.
If you have limited qualifications, own up to that and understand that you may not be able to get prime-A interest and/or terms. That doesn't mean you'll have a crappy loan or terms. It just means you may not be able to get that 5% interest that your buddy TOLD you he/she had. Remember, they may have a 5% interest NOW......but that doesn't mean they told you everything that is behind the curtains on that loan either.
Consult someone that knows what they're doing. Don't buy into the hype that is sold on TV everyday. They're all mostly infomercials just like the rest. Ask someone that knows what they're talking about and make up your mind then. Don't try to copy what your neighbor TOLD you he/she has. They may just lead you down a dark alley.
Any specific questions, I'll be happy to try and answer.
But what about the online ads that said I can have a $500,000 house for $1,500 per month??!!?!?!!!
Good info here.
See, this is exactly what screws people up. They see these TV and internet Ads promising all these incredible rates and payments. What people fail to do is use common sense. When you see SOOO much tiny writing at the bottom of the screen that it has to SCROLL........Ummm, HELLOOO, There's your first sign that you should look DEEPER and not take it for face value.
I've seen some of those ads using my TIVO. Just out of curiosity I stopped it and read some of that junk. You wouldn't believe all the "disclaimers" and "conditions" anyone has to meet to get that teaser rate. It's unbelievable. This is where lenders get their bad rep from, bait and switching.
BTW, those ads are really for what we call "negative Am" mortgages or really really short term "teaser" rates. A negative Am mortgage is one where you are eventually owing MORE than your house is worth, hence why you have such a low payment. The "teaser" rates are only good sometimes for as little as 1 month. Yes, 1 month. That gets them out of being sued for false advertising.
So like I said, and I know this doesn't apply to you, beware of what you see on TV and the internet. Ask somebody that really knows and can explain it to you in terms you can understand. Hell, I could use fancy terms and confuse the piss out of you too.....
Thank you.Good info here.
quoted for the sake of quotingSome good info in here, and some not so good.
First off, you should can do all the research you want, but you really shouldn't get into the nitty gritty until you're within shooting distance of when you want to buy. The information you get today may not necessarily be accurate a year from now, especially in today's crazy market.
Second, loans are based on risk. The riskier the loan, the worst the terms. It's really not rocket science. Ads and Lenders want you to think it is, but it really isn't. It's all about perceived risk. The riskier you seem to the Lender, the less options they will give you. The trouble with the Mortgage Market that everyone is hearing about right now is due to the effects of doing riskier loans all over the place a few years ago. 3-4 yrs ago, just about anyone could get a home loan with decent terms. That's not the problem. The problem comes in when you lend money at crazy terms to risky people. So now that the market started to adjust UP, crazy cooky interest-only ARM loans that were given to people because that was the ONLY way they would qualify back then are now drowning them because they can no longer afford them when the payment goes up.
*Up on my soapbox for a minute to educate some people*
This is not always, as the media will portray, the "lenders" fault. Lenders lend money to people based on economic factors including supply and demand. If your neighbor refi'd his house and he told you that he got 6% and his new pmnt on his house was $700 while you are at 7.5% with a $1200 a mo. payment. You think, "wow, I want one of those...". Problem is that you didn't take into consideration that 3 yrs from now, the payment shoots up from $700 to something else. If you couldn't afford that "something else" 3 yrs ago, then you are likely not to be able to afford it now. Right? THIS is what's causes foreclosures and problems in the market right now. If you were a broker/Lender back then, you damn sure couldn't afford to turn away all those next door neighbors that came calling asking for those specific loans. That's like complaining about paying $1000 for PS3's when 2 short mos later you could get them for $600. Who's fault is it that you paid $1000 because you wanted it on the very day it came out? Same thing here. Everyone is blaming "bad brokers" for selling a product that PEOPLE demanded. You could preach to them til you're blue in the face, they STILL wanted it. Now, they want to blame everyone but themselves.
*end of soapbox rant*
Third, Mortgage Insurance is indeed a rip off. If you can avoid it, do it like the plague. There are several ways to do it, all of which have pros and cons. The most common is to do 2 loans vs 1 loan IF you don't have the 20% already to put down. There are several combinations, but the idea is that neither loan is over 80%. 80/20, 80/10/10, 75/25, 80/5/15....etc. You get the pic. The down side is that you will have additional closing costs (since there are 2 loans vs 1) and that the terms on the 2nd loan are never as good as the terms on the 1st. With that said, when you put it side-by-side with a loan WITH MI (be it MIP or PMI) it is OFTEN cheaper per month than the loan with MI.
Finally, Your personal qualifications, along with anyone else going on the loan with you, is what usually has the biggest impact on what will be available to you in terms of options. It all goes back to risk. If you are seen as a risk.....no established credit, bad credit, slow credit, jumping from job to job, no rental history, no GOOD rental history, little to no savings pattern, little to no reserves, little to no down payment, lots of existing debt, high DTI's, etc.....all are seen as higher than normal risks. Therefore, you can't really expect to be too demanding on your loan terms. You may have 3 options or you may have none. It's all up to how you look on paper to that underwriter at the time your loan is submitted. That's the real bottomline. You have to be realistic. You can't expect to buy a house that costs $200,000, with NO money down, and also have a $500/mo payment. The math doesn't even make that a possibility unless you're doing a 40 yr loan at 0% interest. Believe me, there is no such thing.
If you have limited qualifications, own up to that and understand that you may not be able to get prime-A interest and/or terms. That doesn't mean you'll have a crappy loan or terms. It just means you may not be able to get that 5% interest that your buddy TOLD you he/she had. Remember, they may have a 5% interest NOW......but that doesn't mean they told you everything that is behind the curtains on that loan either.
Consult someone that knows what they're doing. Don't buy into the hype that is sold on TV everyday. They're all mostly infomercials just like the rest. Ask someone that knows what they're talking about and make up your mind then. Don't try to copy what your neighbor TOLD you he/she has. They may just lead you down a dark alley.
Any specific questions, I'll be happy to try and answer.
Forgot to add, right now is the buyer market, most of the time the seller will pay for closing cost. Sometimes they don't, it just all depends on the negotiation part. In my case, I did not have to pay ~$6k for my closing cost, the seller paid all. If you buy the house through real estate agent, you won't pay them anything either. They will get paid 3% off of the selling price, and that comes from the seller. Basically the seller pays his or her agent, your agent, and closing cost (this one is maybe). Another thing you need to do is your bank account. Making sure you prep your bank account at least 6 months ahead of time. They will ask for your bank statements for the past 6 months, and review them. Oh, ARM (Adjustible Rate Mortgate) is very dangerous to deal with. You have to be very careful because the interest rate will be much lower than other types, but the interest rate will be varied depend on the market rate after a certain fixed time. Even with ceiling and floor set, it is still very dangerous. Loan officer could mislead you into it.
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I'm going to fine tune your post a little.
Most of this information is true. The one thing I wanted to point out is one main thing:
It is a buyer's market right now, but that's not really the reason the seller pays for your closing costs. The closing costs in fact actually truly belong to the BUYER. Why? Because between the buyer and the seller, it is only the BUYER that is getting a new loan (which is why there are closing costs to begin with). The main reason sellers pay for any closing costs is as an incentive for YOU to buy THEIR house as opposed to their neighbor's. So, yes it is a buyer's market and yes because it is so competitive most sellers are willing to do darn near anything to move their properties.
Good advice.Another thing you need to do is your bank account. Making sure you prep your bank account at least 6 months ahead of time. They will ask for your bank statements for the past 6 months, and review them.
NSF's and Overdraft Protections on someone's accounts are a big NO-NO when you are buying a house. We also check to see how long money has been in the account (which is called "seasoning"). Some programs (majority) don't allow you to plop large amounts of money just before you buy a house into your account. There are ways around this too BTW.
You are partially right.Oh, ARM (Adjustible Rate Mortgate) is very dangerous to deal with. You have to be very careful because the interest rate will be much lower than other types, but the interest rate will be varied depend on the market rate after a certain fixed time. Even with ceiling and floor set, it is still very dangerous. Loan officer could mislead you into it.
ARM's are indeed dangerous IF you use them as the ONLY WAY you can afford a payment. If you are using it, as it was designed, as a short term loan where you are wanting NOT to build equity but to keep your payments down as low as possible BECAUSE you are PLANNING on either moving or selling BEFORE it's due to adjust, then you have a good loan. So, if you are an intern who KNOWS that in 5 yrs you will be relocating to another state because your hospital already told you so, then there is no reason for you to build all kinds of equity. You just get an ARM and call it a day. Save your money now, and then later when you get to a place where you'll permanently grow roots, THEN get that fixed rate mortgage. This type of situation is the only way I would suggest anyone get an ARM.....IF you are planning ahead and KNOW that you have to make a decision BEFORE the rate jumps.
Good info though.
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