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jjjayb
04-16-2008, 10:55 PM
Well, the time has finally come. Me and the missus decided it's time to stop renting and buy a house. We found a house we like and talked to a mortgage lender. We have excellent credit. The lender approved us for the house on a 30 year FHA loan at 6%. There is of course a lot of things in the loan agreement I know nothing about. Any things I need to watch for in order to not be taken advantage of? Any advice would be greatly appreciated.

HMc
04-17-2008, 01:06 AM
i cant believe you guys can get 30 yr loans fixed at 6. Around these parts, day to day consumer savings accts are paying 7 friggin percent.

ChiefsFanatic
04-17-2008, 01:56 AM
Well, the time has finally come. Me and the missus decided it's time to stop renting and buy a house. We found a house we like and talked to a mortgage lender. We have excellent credit. The lender approved us for the house on a 30 year FHA loan at 6%. There is of course a lot of things in the loan agreement I know nothing about. Any things I need to watch for in order to not be taken advantage of? Any advice would be greatly appreciated.

I am in a very similar situation, so I hope this thread gets very informative.

wutamess
04-17-2008, 02:23 AM
i cant believe you guys can get 30 yr loans fixed at 6. Around these parts, day to day consumer savings accts are paying 7 friggin percent.


Show me a freaking savings account that draw 7%. :grovel:

Saggysack
04-17-2008, 02:32 AM
Show me a freaking savings account that draw 7%. :grovel:


http://www.internetbanking.com.au/online-banking/

Amnorix
04-17-2008, 06:04 AM
1. Understand your numbers. Understand that banks will give you enough rope to hang yourself, because you are dealing with SALESMEN. Think of them like you think of a car salesman -- don't trust them -- they are NOT looking out for your best interest.

2. Check the tax rate in the town that you are in. Know if the bank is escrowing your property taxes monthly or not. Either way, you're paying for it, so calculate the monthly amount and understand that it's a carrying cost of the property that YOU must pay monthly/quarterly. Make sure you can afford it. If you stretch too far and didn't know this, then you may snap.

3. Same thing with Insurance. House insurance isn't horribly expensive, but it is an added monthly cost.

Remember -- "PITI" is what you pay monthly if you're escrowing -- principal + interest + taxes + insurance.

All the online mortgage calculators and your banker will ONLY talk about PI. Principal + interest. But the other two, TI, are going to be hundreds of dollars every month.

Run your cash flow numbers and understand what you can realistically afford while maintaining the lifestyle that you want to have, or what sacrifices you need to make.

Buying a house is the most expensive thing you can do, and a huge percentage of people have NO FREAKING IDEA WTF they are doing. They don't understand the numbers, and end up letting the bank dictate how much they will borrow.

cookster50
04-17-2008, 06:09 AM
I would think you could do better than 6%

Scaga
04-17-2008, 06:46 AM
The wife and I are in the process of building a new house ourselves. We're also looking at 30 year, fixed rate, at 6%. Nothing is locked in yet and I don't know what to expect the rates to do within the next few weeks. Anybody?

Amnorix
04-17-2008, 06:48 AM
The wife and I are in the process of building a new house ourselves. We're also looking at 30 year, fixed rate, at 6%. Nothing is locked in yet and I don't know what to expect the rates to do within the next few weeks. Anybody?

My crystal ball is as cloudy as yours. :D

angelo
04-17-2008, 08:02 AM
I am not sure of the rules and regs of the board.
I have had excellent luck with Person to Person Mortgage.
in the Kansas City metro area.
They helped me secure a 30 yr mortgage at 6.5% last year for one of my employees with very reasonable closing costs. Her credit was just above average.

The owners theory is he would rather make a little money on a lot of mortgages than a lot of money on one.

She was about to sign a 5-1 arm at 10% with $13,000 dollars in closing costs, before I stopped her and took her to Person to Person.

phisherman
04-17-2008, 08:07 AM
geez, was your employee getting her home loan from payday loans?

Chief Wiggum
04-17-2008, 08:50 AM
I agree with what Amnorix said. Depending on how much you put down at closing, you may be able to forgo mortgage insurance, which is beneficial. Mortgage insurance is what you pay as a fee in case you ever default on your loan so your bank has some doesn't take the full loss. Another thing to consider is that you can write-off your interest paid on your income taxes (different rates depending on how expensive the house is) which will affect your income as well.

At the end of the day, closing costs are what hit people the hardest because it won't affect principal and has to be paid up-front. Like Amnorix said, put the cashflows in a spreadsheet and map them out over the first five years so you have an idea how it will affect your wallet and the loan's principal.

Agency 30 yr product is pretty cookie-cutter and isn't too tricky to figure out. Just read through the documentation, ask as many questions as you can, and don't over-stretch if this is your first home. The housing market is probably going to be down for a while.

BTW, 6% for a 30yr fixed is pretty good here in CA - not sure about back there. Check out sites like lending tree to get an idea what rates are like back there around this time.

Amnorix
04-17-2008, 09:03 AM
I agree with what Amnorix said. Depending on how much you put down at closing, you may be able to forgo mortgage insurance, which is beneficial. Mortgage insurance is what you pay as a fee in case you ever default on your loan so your bank has some doesn't take the full loss. Another thing to consider is that you can write-off your interest paid on your income taxes (different rates depending on how expensive the house is) which will affect your income as well.

At the end of the day, closing costs are what hit people the hardest because it won't affect principal and has to be paid up-front. Like Amnorix said, put the cashflows in a spreadsheet and map them out over the first five years so you have an idea how it will affect your wallet and the loan's principal.

Agency 30 yr product is pretty cookie-cutter and isn't too tricky to figure out. Just read through the documentation, ask as many questions as you can, and don't over-stretch if this is your first home. The housing market is probably going to be down for a while.

BTW, 6% for a 30yr fixed is pretty good here in CA - not sure about back there. Check out sites like lending tree to get an idea what rates are like back there around this time.

Agreed to all of this. His point about PMI (Private Mortgage Insurance) is a good one. If you can put 20% down on the house, try to do it. If you can't, then be SURE your cash flow can support buying this house. Why haven't you been able to save 20%? Sometimes there's a perfectly good reason why, of course, but you need to make sure you understand the dramatic effect this mortgage may have on your cash flow.

Keep in mind that houses cost more than apartments. Mowing the lawn, mulch, and whatever else you do is on YOUR dime, not the landlord's. The heating/cooling costs will be higher (electrical, oil/gas) even if you were paying them before, unless you were renting a house before.

Bill Lundberg
04-17-2008, 09:19 AM
Check out sites like lending tree to get an idea what rates are like back there around this time.

I was going to stay out of this one, but I can't let this mis information be left untouched. Lending Tree is probably the biggest scam out there. I blow away Lending Tree brokers on a daily basis. The thing is it costs so much to be a part of the Lending Tree network that the only way members make up those costs is by raping the consumer.

Example: Borrower called me and wanted to refinance to a 30 year fixed rate loan. At the time I could do 5.75% (he had plenty of equity). He tells me the lender from lending tree could do 5.375%. I asked how many points they were charging him to get that rate. He said 3.5, what is a point? I explained to him that 3 points on his $162,000 loan equaled $5,670. My loan had no points. The difference between the two rates in terms of payments equaled $38.14/mo. Meaning it would take him roughly 12 and a half years to make up the $5,670 and begin realizing the savings. Most homeowners are only in a loan for 3 -7 years. Needless to say after taking the time to explain this and going through every detail of the loan in writing, I closed his refinance and he walked away very happy.

The lesson: there is much more to comparing loans than just looking at rate alone.

Scaga
04-17-2008, 09:53 AM
I was going to stay out of this one, but I can't let this mis information be left untouched. Lending Tree is probably the biggest scam out there. I blow away Lending Tree brokers on a daily basis. The thing is it costs so much to be a part of the Lending Tree network that the only way members make up those costs is by raping the consumer.

Example: Borrower called me and wanted to refinance to a 30 year fixed rate loan. At the time I could do 5.75% (he had plenty of equity). He tells me the lender from lending tree could do 5.375%. I asked how many points they were charging him to get that rate. He said 3.5, what is a point? I explained to him that 3 points on his $162,000 loan equaled $5,670. My loan had no points. The difference between the two rates in terms of payments equaled $38.14/mo. Meaning it would take him roughly 12 and a half years to make up the $5,670 and begin realizing the savings. Most homeowners are only in a loan for 3 -7 years. Needless to say after taking the time to explain this and going through every detail of the loan in writing, I closed his refinance and he walked away very happy.

The lesson: there is much more to comparing loans than just looking at rate alone.

What's the latest on the rates? Seems they're going back up in the last few days?

Bill Lundberg
04-17-2008, 10:01 AM
What's the latest on the rates? Seems they're going back up in the last few days?

They have crept up a bit.

Standard 30 year fixed is roughly 6.125%, 15 year is roughly 5.625%.

ChiefButthurt
04-17-2008, 10:04 AM
I was going to stay out of this one, but I can't let this mis information be left untouched. Lending Tree is probably the biggest scam out there. I blow away Lending Tree brokers on a daily basis. The thing is it costs so much to be a part of the Lending Tree network that the only way members make up those costs is by raping the consumer.

Example: Borrower called me and wanted to refinance to a 30 year fixed rate loan. At the time I could do 5.75% (he had plenty of equity). He tells me the lender from lending tree could do 5.375%. I asked how many points they were charging him to get that rate. He said 3.5, what is a point? I explained to him that 3 points on his $162,000 loan equaled $5,670. My loan had no points. The difference between the two rates in terms of payments equaled $38.14/mo. Meaning it would take him roughly 12 and a half years to make up the $5,670 and begin realizing the savings. Most homeowners are only in a loan for 3 -7 years. Needless to say after taking the time to explain this and going through every detail of the loan in writing, I closed his refinance and he walked away very happy.

The lesson: there is much more to comparing loans than just looking at rate alone.


Good post Bill. He should be happy you didn't stay out of this one.

phisherman
04-17-2008, 10:04 AM
man, i'm thinking that i made a killing a couple months ago, i got a 30 year fixed for 5.25 w/out paying any points. must've been a good day to refi.

ChiefsFan4Life
04-17-2008, 10:10 AM
man, i'm thinking that i made a killing a couple months ago, i got a 30 year fixed for 5.25 w/out paying any points. must've been a good day to refi.

I got a 30 year fixed at 4.85 w/out points in Sept '05

Right time, right place, right deal