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Hello All,

I have some questions about the process of buying a home. I am 23, my husband is 28. We both have poor credit, though we are currently working on that.

Homes in the area we currently rent in are going for about 90,000 dollars ( 4 br 2 baths) although we could go with a 3 bedroom, as we only have two children and those are averaging 77,000.

We have about 5,000 saved and by next year at this time, (when we want to be buying) we will have about 12,000 saved.

I have a fabulous relationship with my bank. I've been with them since I was 16 (so 7 years) and I have only overdrafted once, by 17 dollars. They forgave that. My life insurance and my car insurance are both threw my bank.

How do we go about buying a home? Do we start looking now? Do we see if we can get pre qualified now? If not, when do we start the process if we want to be moving next July.

Do we find a house before getting pre qualified. My parents have always rented ( they still do) and I don't feel comfortable talking to his parents about it. The only person in my family that owns a home is my brother and he inherited it. Everyone in his family owns, but I don't feel comfortable talking to them, and I can't trust him to actually ask the right questions.

Any tips on home buying would be great!

Thank you

 

by on Jul. 3, 2012 at 4:19 PM
Replies (41-49):
BewitchedKisses
by Silver Member on Jul. 3, 2012 at 8:23 PM

You need a good down payment. FHA is a good way to go, but you have to prequalify. My friend who is a realtor won't even look at houses with people that aren't prequalified for a mortage. I would talk with your bank first.

The biggest piece of advice is to find a first time buyer's seminar somewhere close to you and go to it. I know here our Remax does them once a month for free.

Sandyr911
by on Jul. 5, 2012 at 10:52 AM

Better have 20% down PLUS closing costs in cash.

We both have good credit and steady employment history and we are still have to come up with $30K to get our house built.  Weve been saving and paying off for a year.

Dont look until you have your money.  Pull your own credit report, when you get close to your needed amount down then go to te bank and get preapproved then contact a realtor.

KitschyGirl
by on Jul. 5, 2012 at 10:54 AM
This

Quoting FooLynRoo:

Fix your credit.

Then save your money

Then - get prequalified.


Posted on CafeMom Mobile
christina0607
by on Jul. 5, 2012 at 10:58 AM

You need good credit...it doesn;t need to be perfect, but does need to be good.

you don't need 20% down. Very few people have that, although if you do have that great.

Look at ASDA loans. those are 100% financing. They typically only give loans for rural areas, but with the prices you quoted that sounds what you are looking at.

I would also not go through a bank. they are typically much harder to  secure a loan from. I would find a realtor and talk to them about a loan officer they use. A loan officer will have a lot more programs than any bank.

FooLynRoo
by on Jul. 5, 2012 at 11:02 AM

i think its important to remember - into first home ownership

do not take any mortgage contract thrown your way - you can assure yourself of financial ruin if you don't consider the interest rate.

And if you go through a mortgage broker - you will probably be approved -but at something like 8% which is insane right now.

Work on your credit - FIX EVERYTHING.

Save your money - save save save 20% is not unachievable! and such a financial security and smart decision.

If you have less than 20% you have to get Private Mortgage Insurance, and the rate you pay is based on your credit scores - lower the score - higher the premium - you could easily be adding 300 A MONTH onto your mortgage - for the next 10 years .


christina0607
by on Jul. 5, 2012 at 11:39 AM

I was going to ignore this reply...but I don't want the op to walk away with this false information.

The difference between a mortgage broker and a bank is not a higher interest rate. The mortgage broker has no control over your interest rate. The difference is a bank will have 3 or maybe 4 programs, and if you don't fit into one then they don't deal with you. a broker has the ability to use many different banks with hundreds of different programs. They can find a bank that will fit you. the bank still makes the interest rate and that still depends on your credit history.I ahve use a broker for all 4 of the homes I have purchased and have never paid more than the national average. The home I am in we bought in February and we have a 3.28% interest rate. My credit is perfect so we got the lowest rate available, op you can get the lowest rate available to you with your credit...thats the best you will do anywhere.

This is correct with PMI. You will have to pay PMI if you don't have 20% down. but the amount it is is not based on your credit. PMI is calculated on a 96.5% loan to value amount. then on that it is .77% of the loan. you would never pay $300 on a loan for 70k. thats outrageous. Of the 4 homes I have bought I have had to pay PMI twice. My second home, I paid $275,000(and I forget how much we put down that was a long time ago) but the PMI was $185 a month. Which we paid for 2 years...not 10. The home I am in now we paid $310,000, put $30,000 down and pay $210 for PMI a month. From my calculations we will be paying that for the next year to year and a half. not 10 years.

It does happen that people pay PMI for 10 years, but thats so unlikely, especially in today's market. Even if you put down 5% you would never take 10 years to reach 22% on your loan with a 70K house. especially with appreciation. Also you can request the cancellation of your PMI at 20% and not wait until the 22%. If you keep your mortgage up to date you should have no problem getting that honored.

If you do pay PMI an easy way to get rid of it as quickly as possible is to pay your mortgage bi-weekly. All banks offer this and it doesn't change what you pay a month. Instead you pay half of your mortgage every 2 weeks. this keeps you paying more towards your principle which gets you closer to that 20% quicker.

Quoting FooLynRoo:

i think its important to remember - into first home ownership

do not take any mortgage contract thrown your way - you can assure yourself of financial ruin if you don't consider the interest rate.

And if you go through a mortgage broker - you will probably be approved -but at something like 8% which is insane right now.

Work on your credit - FIX EVERYTHING.

Save your money - save save save 20% is not unachievable! and such a financial security and smart decision.

If you have less than 20% you have to get Private Mortgage Insurance, and the rate you pay is based on your credit scores - lower the score - higher the premium - you could easily be adding 300 A MONTH onto your mortgage - for the next 10 years .



Make someone happy today, mind your own business.

FooLynRoo
by on Jul. 5, 2012 at 11:53 AM

I didn't say the difference is - Im saying you go through a mortgage broker they WILL find you amortgage - but it MAY be at a higher interest rate - because they pull from unconventional sources.

Where a bank might decline you rather than try to do a high risk mortgage. You just have to be aware like I told her - I was not misinforming her

You have such a bug in your ass for me its pathetic.

So many foreclosures happened because people went blindly into a mortgage BROKER who found them any deal they could - and they were raped - by not knowing.

BE AWARE

don't buy without good credit - and don't buy paying someone a premium to loan you money.



Quoting christina0607:

I was going to ignore this reply...but I don't want the op to walk away with this false information.

The difference between a mortgage broker and a bank is not a higher interest rate. The mortgage broker has no control over your interest rate. The difference is a bank will have 3 or maybe 4 programs, and if you don't fit into one then they don't deal with you. a broker has the ability to use many different banks with hundreds of different programs. They can find a bank that will fit you. the bank still makes the interest rate and that still depends on your credit history.I ahve use a broker for all 4 of the homes I have purchased and have never paid more than the national average. The home I am in we bought in February and we have a 3.28% interest rate. My credit is perfect so we got the lowest rate available, op you can get the lowest rate available to you with your credit...thats the best you will do anywhere.

This is correct with PMI. You will have to pay PMI if you don't have 20% down. but the amount it is is not based on your credit. PMI is calculated on a 96.5% loan to value amount. then on that it is .77% of the loan. you would never pay $300 on a loan for 70k. thats outrageous. Of the 4 homes I have bought I have had to pay PMI twice. My second home, I paid $275,000(and I forget how much we put down that was a long time ago) but the PMI was $185 a month. Which we paid for 2 years...not 10. The home I am in now we paid $310,000, put $30,000 down and pay $210 for PMI a month. From my calculations we will be paying that for the next year to year and a half. not 10 years.

It does happen that people pay PMI for 10 years, but thats so unlikely, especially in today's market. Even if you put down 5% you would never take 10 years to reach 22% on your loan with a 70K house. especially with appreciation. Also you can request the cancellation of your PMI at 20% and not wait until the 22%. If you keep your mortgage up to date you should have no problem getting that honored.

If you do pay PMI an easy way to get rid of it as quickly as possible is to pay your mortgage bi-weekly. All banks offer this and it doesn't change what you pay a month. Instead you pay half of your mortgage every 2 weeks. this keeps you paying more towards your principle which gets you closer to that 20% quicker.

Quoting FooLynRoo:

i think its important to remember - into first home ownership

do not take any mortgage contract thrown your way - you can assure yourself of financial ruin if you don't consider the interest rate.

And if you go through a mortgage broker - you will probably be approved -but at something like 8% which is insane right now.

Work on your credit - FIX EVERYTHING.

Save your money - save save save 20% is not unachievable! and such a financial security and smart decision.

If you have less than 20% you have to get Private Mortgage Insurance, and the rate you pay is based on your credit scores - lower the score - higher the premium - you could easily be adding 300 A MONTH onto your mortgage - for the next 10 years .




christina0607
by on Jul. 5, 2012 at 12:02 PM

If it would be that high with a broker then it would be that high with a bank...or the bank wouldn't even deal with them. Paying 8% right now isn't something I would do, but if the OP chose to on a  30yr fixed then thats a personal decision.When I bought my first home our rate was 11something. Thats just what they were then. so it's not like higher rates are unheard of or completely unreasonable. Thats a choice only she should make.

Your info here was plain wrong, especially everything you said about PMI. She shouldn't be given wrong information about something so serious.  If you want to call that a bug...sobeit.

Quoting FooLynRoo:

I didn't say the difference is - Im saying you go through a mortgage broker they WILL find you amortgage - but it MAY be at a higher interest rate - because they pull from unconventional sources.

Where a bank might decline you rather than try to do a high risk mortgage. You just have to be aware like I told her - I was not misinforming her

You have such a bug in your ass for me its pathetic.

So many foreclosures happened because people went blindly into a mortgage BROKER who found them any deal they could - and they were raped - by not knowing.

BE AWARE

don't buy without good credit - and don't buy paying someone a premium to loan you money.



Quoting christina0607:

I was going to ignore this reply...but I don't want the op to walk away with this false information.

The difference between a mortgage broker and a bank is not a higher interest rate. The mortgage broker has no control over your interest rate. The difference is a bank will have 3 or maybe 4 programs, and if you don't fit into one then they don't deal with you. a broker has the ability to use many different banks with hundreds of different programs. They can find a bank that will fit you. the bank still makes the interest rate and that still depends on your credit history.I ahve use a broker for all 4 of the homes I have purchased and have never paid more than the national average. The home I am in we bought in February and we have a 3.28% interest rate. My credit is perfect so we got the lowest rate available, op you can get the lowest rate available to you with your credit...thats the best you will do anywhere.

This is correct with PMI. You will have to pay PMI if you don't have 20% down. but the amount it is is not based on your credit. PMI is calculated on a 96.5% loan to value amount. then on that it is .77% of the loan. you would never pay $300 on a loan for 70k. thats outrageous. Of the 4 homes I have bought I have had to pay PMI twice. My second home, I paid $275,000(and I forget how much we put down that was a long time ago) but the PMI was $185 a month. Which we paid for 2 years...not 10. The home I am in now we paid $310,000, put $30,000 down and pay $210 for PMI a month. From my calculations we will be paying that for the next year to year and a half. not 10 years.

It does happen that people pay PMI for 10 years, but thats so unlikely, especially in today's market. Even if you put down 5% you would never take 10 years to reach 22% on your loan with a 70K house. especially with appreciation. Also you can request the cancellation of your PMI at 20% and not wait until the 22%. If you keep your mortgage up to date you should have no problem getting that honored.

If you do pay PMI an easy way to get rid of it as quickly as possible is to pay your mortgage bi-weekly. All banks offer this and it doesn't change what you pay a month. Instead you pay half of your mortgage every 2 weeks. this keeps you paying more towards your principle which gets you closer to that 20% quicker.

Quoting FooLynRoo:

i think its important to remember - into first home ownership

do not take any mortgage contract thrown your way - you can assure yourself of financial ruin if you don't consider the interest rate.

And if you go through a mortgage broker - you will probably be approved -but at something like 8% which is insane right now.

Work on your credit - FIX EVERYTHING.

Save your money - save save save 20% is not unachievable! and such a financial security and smart decision.

If you have less than 20% you have to get Private Mortgage Insurance, and the rate you pay is based on your credit scores - lower the score - higher the premium - you could easily be adding 300 A MONTH onto your mortgage - for the next 10 years .





Make someone happy today, mind your own business.

christina0607
by on Jul. 5, 2012 at 12:07 PM

I did a quick PMI calculation ona house valued at 80,000. With a loan amount of 77,000...whether that be through paying less than the value or with 3k down.  The interest rate doesn't matter.

you PMI would be 73.79 a month. 

If you put 5k on the house and underpaid by 2k the PMI would be $45.00

PMI is really not something to be scared of.

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