The best place to obtain info about these programs is the real estate agents and loan officers. Personally I'd try to avoid mortgage brokers, they normally have higher fees or higher interest. If house prices are going up that high to whaere it is unaffordable, your best bet might be to live farther away and suffer with the long commute times. Eventually the prices in the outskirts should go up to the unaffordable levels, then you'd have a good amount of equity in the house.

 

1depd,

We have considered the long comute option. It just may have to be that way. Sadly things have just gotten out of hand with home prices so its looking very unlikely well find something near our jobs and family. But In the long run it may be whats better for us. Thats ultimately what will make or break it.

Tahnks again,

Luis S

 

I'm also currently looking at homes, we have been approved for $100k, but we put a self imposed limit of $90k. Just because you can get approved for a certain amount doesn't mean you can make the monthly payments without scrimping.

Pay attention to the property taxes. Here, in the houses we are looking at they run between $1400-$2800 year, based on location and square footage. Right there you're gonna have $100-$200 per month, plus homeowners insurance should run you under $100/month, but again, depends on location, value, and square footage. Our mortgage company is rolling all of that into one payment for us.

For closing costs, we are going to need about $6000, but we have to find a seller that will give $3000 back to us to use for closing costs. I beleive that this is what the FHA mortgage allows.

Look for a house that has potential if you wnat to increase the value. Remodeled bathrooms and kitchens are the best things to do, then adding square footage is second. But be careful that you don't over build for the neighborhood. My fiance's parents have a house that appraises at $130K, while the neighborhood averages $90, so it will be hard to sell for that. If people are going to spend $130, they want the $130 neighborhood also.
So look at the price per square foot to find good deals, and to get an idea of what to expect in that area.

It's a lot more complicated than I ever thought. Good Luck!

 

Luis,

The escrow account is basically an account that the mortgage company holds for you. They estimate what your taxes and home owners insurance is going to be, total it up, and then divide it up over 12 months. So if you figure $1300 in taxes plus 500 for home owners, your monthly payment would go up $150 a month. This is in addition to your principal and interest payment. Some states require it, some don't. Regardless you need to budget for these costs.

A HUD-1 is the settlement sheet that breaks down the sellers and buyers costs at the time of settlement. Your are legally entitled to a copy 24 hours prior to settlement. You can review the document and verify the "Amount due by buyer" is what you expected it to be.

Figure on rates going up at least for the next few years. Housing prices keep going up but there has to be a limit. You can check your area and see how much of a bubble you are in. If prices are jumping 30-40% a year it's going to max soon and could come back down quickly. However, every area of the country is different so analyze your area independently.

Conventional loans typically require you to put down a 20% downpayment and than you can finance the remaining 80%. An 80-20 loan basically means you get your primary mortgage that is conventional. Than you immediately get a home equity loan for the 20% that you owe as a downpayment. This is all done at the same time.

They also have 80-15-5 loans where you finance 80%, get a second loan for 15% and then put down 5%.

There are tons of programs depending upon your credit history, financial situation, first time buyer status, etc.

Good luck with it.

 

IMO, this is a good option if you have a good credit score and you plan to keep the house for at least 5 years. Our house was $265k, and we didn't have anywhere near the 20% to put down, so this was a good deal for us. Here are some links that I googled about the 80/20 plan.

http://www.firsthomebuyers.net/8020mortgage.htm
http://mortgage-x.com/library/piggyback.asp
http://articles.worldvillage.com/the..._mortgage.html

 

Great minds think alike, we are doing almost exactly the same thing! Have you run into anyone that does not want to deal with you b/c of your FHA mortgage? I think we got rejected on one offer mostly b/c they didn't want to deal with the FHA stuff. Good luck to both of us!

 

We have only put one offer in, and they rejected it.
They were asking $88,000 for a 4/2/1/2, 1266 sqft. in an alrighty neighborhood.

We offered 82,500 with us putting $3000 down, but needing 3% back from them for closing.

They countered with $85,000 and them not giving anything.

We are going to shop around, and think about offering $85,000 with them giving 3% back.

But it does limit us on negotiations because we need money back. Most people are not going to accept a lower $ amount AND give money back. But every now and then, you get lucky if someone has been transferred or something and has to get out quick.

 

Man I am so jealous. You can't buy a guest house for that round here.

 

It's not BS I promise. I had already suggested taking single payment devided by 12 and adding that to the payment (AKA 1 extra payment a year.) as well as Bi-Weekly.

It definatley is not the same princiable at all, you do not pay any extra per year, month or any other time with Bi-Weekly. 2 different methods that can be combined to better your advantage over interest. You really should talk to a bank and/or a financial advisor before you discredit it. But it is your money and your time so spend them however you want to.

Here is a calculator that will tell you what you will save by making bi weekly payments and nothing extra. Payment savings Calculator
Try it on your truck its neat to play with. It is set for home loans which work different than Credit cards "because CC's do not have a set pay off date so this one won't work for them.

If you already have debt a good financial advisor is worth every penny of any of thier fees. "Beware there are some free ones out there, but like anything else you often get what you pay for. I prefer one that has incenitive to work for me and save me as much money as they can." How ever I first heard of bi-weekly in securitys class as well as Accounts payable class and the bank I use offers financial advisors for thier customer "no fee" and they suggest it and even have loan plans set up for it. (NOTE: it is not an offered option you have to ask for it.")

PS Bi-Weekly also works on car payments and especially well with credit cards. Because credit card interest is often calculated twice daily. "Morning and night 7 days a week, which is 14 times a week, 60 times a month"

Also I'm not a big fan of escrow. Basically an escrow account the bank adds your taxes and insurance etc to your payment and saves the additional that you pay for you so that you can pay the bill when it comes do.
While they save it they are getting intrest for it by putting it in loaning it out to others, various securities, etc. So the idea is that I let them make money OFF of my money and I get nothing in return? I don't think so!!! I will make money off of my money thank you. Even if it's only 4% from a simple savings account that helps keep up with inflation over that year. If they are holding it for you and your not making anything off of it plus you cant use it except for the designated purpuses.. Thats a solid resource and nobody wants solid resources with out any chance of getting a return. Essentially you lost money because it is worth less than what it was when you put it in there. (AKA Inflation) If you have no self disipline and can not put back an alotted amount each month. Then I can see paying the bank to hold your money.. I guess, maybe..

 

In this area, you can get a very nice house for under/around $200,000 in the upscale neighborhoods.

But all we have to look at are our neighbors, cows, flat land, or beautiful trucks. At least you have more natural beauty...and probably get paid more.

In general (except for gas averaging $2.15) our cost of living is very resonable.

 

Yeah, I hear you, it's tough when you need to get seller concessions so you can cover closing costs. We have taken the approach that we'll offer more overall but require $3000 seller concessions, higher monthy payment but allows us to get over the hump at closing. Then again we've had limited sucess so far as well.

 

Thanx PSS, that makes more sense and sounds like a good plan. Anything to get it paid off in less than the 30 years but still keep the payments down. Definitely keep that in mind.

 

Your welcome.
Just noticed on the quote that I said the interest that they presiously charged. That was suppose to be previously charged.

 

Really great advise here. I got to thank you all. This is such a big step for me and my wife. The only thing left thats better is having little ones. But Ive got some stuff to buy for my truck before I go broke feeding extra mouths.

We have an appointment next week with our accountant and then were going to talk to a few brokers that have been recomended to me. I want all my ducks in a row before I even beging to look at a place. Id like as little disapointment as possible. Its to bad I dont get along with the in-laws. My wife's mom is a realtor. No biggie I suppose. She sucks anyway.

So far with the info I read here, Ive pretty much killed the interest only thing (though that may still be a last resort if nothing else works) , getting into a huge payment is something I have to be very careful of( I had no idea how quick that adds up!)make extra payments when possible, and lastly there are many options still to consider.

I am curious about this 80/20 thing though. Sounds interesting. You guys have any more info or links? I checked the one posted already. Id just like a little more detail.

Once again thanks you guys. Your really helping us understand this stuff. When we've talked with brokers and realtors it comes out like a foreign language. Hopefully with the info we get from here well have a pleasant and somewhat low-stress home buying experience.

Thanks,

Luis S

P.s. heybeermantx,

$88,000 for a 4/2.5, 1266 sqft home? I could cry reading that. No friggin way could you get that down here. Not even a condo. Id gladly look at cows and fields all day. Your very lucky to have such options. Good luck, I hope you find a great home. Down here a house in a known druggie neighborhood goes for $180,000. So Youll do great Im sure. Keep us updated!

 

When I was applying for our loan I found out that combining ALL payments into a PITI payment yielded a lower interest rate. I have heard horror stories about people losing their houses because one bank (whom they got their mortgage from) did not pass the tax info onto the next bank (Who bought the mortgage) . I wanted to write out the check to for the principle and interest, taxes, and insurance separately. To have done so would cost an extra few hundred dollars a month....fookin ridiculous. The bank that holds it in escrow still gets $$$$ for holding your $$$ in ecsrow. It sucks, but that's the way it's done.