Do you know anything about mortgages?

Question

My husband and I are thinking of buying our first home (a condo). We have excellent credit and no credit card debt, but we do have a $16,000 personal loan with an 18 percent interest rate. The loan is current and our only other monthly expense is a car lease of $185 per month, insurance, groceries, utilities and the like. Would it make more sense for us to continue to pay on the loan as is (and refinance at a lower rate when that becomes an option) or to get a mortgage high enough to cover the outstanding loan?

And, we have enough stocks for a significant down payment or to pay off the outstanding loan.

Answer 1

If your credit is good, then you have a lot of financing options available to you. FHA loans allow you to get into your first home with 3% down. Many lenders offer 100-103% financing (The extra 3% is to help cover closing costs only). As far as borrowing enough money to cover your purchase and personal loan, you won't be able to do that as a purchase mortgage. You'll need to own your home for a little while and then refinance.

As a Mortgage Consultant, I counsel my customers to NOT do anything that may change their current credit status if they have excellent credit. Your credit score is a financial snapshot at the time it is pulled. We want to keep that picture. Which means keep doing what you're doing now. Keep the loan, pay your bills on time, do not apply for new credit or max out the credit cards you have now.

Best of Luck to you!

Answer 2

Here's the deal. When you buy house lenders will only lend out the lesser of the sales price (on the Purchase Agreement) or the appraised value should the appraisal come in lower than the sales price(very rare but happens). So you will not be able to refinance your loan into your mortgage. I would either ask for a lower rate on the personal loan or just leave it as it is your only line of credit it sounds. As for the mortgage you can get many, many programs that have reduced mortgage insurance for 100% financing or do an 80/20 loan to save some money that way. I would recomend not putting any money down unless you can do the 20%. Good luck and if you have more questions shoot me an e-mail.

Answer 3

Take your monthly revolving debt (car, credit cards, school loan) and divide that by your monthly gross income (its that high dollar amount you wish you get but dont). This will be your Top Debt to Income. Than take what you want to pay in mortgage and add that to your monthly revolving debt and divide by your monthly gross income. This will be your Backend DTI.

recap:
Top = Monthly Revolving Debt / Monthly Gross Income
Bottom = Monthly Mortgage Payment + Montlhy Debt / Gross Income.

Keep Bottom down to 40DTI and you should be able to own a home.
Banks/Lenders offer 100% financing usually to about 620 full documentation or W2. If you are looking for 100% financing for under 620 its available but you want to call a local broker or lender who specializes in Subprime market. If you should go 100% financing than you want a 2/28 or 3/27 arm interest only with as short of a prepayment penalty as possible. Than you take a closed end 2nd since the rate will be fixed for the term of the 2nd note.

You can get closing costs paid by the seller by having the contract state the following:
Seller to contribute 6% to buyers recurring and nonrecurring closing costs. This should pay for all your Title fees, loan origination points, and anything else in the closing costs. Only out of pockets expense may be appraisal and home inspection.

Good luck on your new home purchase and if you have any other quesions please contact me.

Answer 4

Get Pre-approved from the lender and then you will find out how much of a loan they will give you. if it is high enough to cover the purchase and your existing loan then pay off your loan. then you can work on paying back the new one with a lower interest rate. if you can afford it don't just pay your monthly bill. try to pay half or double the amount owed each month-- the extra will go directly to the principal owed. otherwise 90% of what you pay is just the interest owed. but you you should get a pretty good tax write off for the first few years anyway.-because of all the interest you paid.

Answer 5

You won't be able to get a mortgage that covers your outstanding loan. I hope you have some cash saved up, most mortgage companies will not touch you unless you have 10 - 20 percent down.

Answer 6

Here is what you need to know...

A BANK WILL NOT ALLOW THAT TRANSACTION IF THEY KNOW ABOUT IT...

the bank is only going to loan you what the SELLER says the purchase price of the house is... They WILL NOT lend you more then that, it is IMPOSSIBLE!!!!

THE ONLY WAY TO GET AROUND IT IS TO WORK SOMETHING OUT OUTSIDE OF CLOSING!!!!!!

what i mean by that is you reason with the seller to increase the purchase price to whatever you need over what it currently is...

ex: price is $80k..you need an extra $10k....have the seller say the purchase price is $90k....

Here's the thing though...when your loan FUNDS the money is transferred to the SELLERS BANK ACCOUNT!!!

you will need to in writing (outside of closing) have the seller sign an agreement with you saying they will give you the extra $10k back after they receive their funds...

Again the bank will not allow it, but if they dont know about it... and they think the price is the $90k, then they will never know....

You have to have a pretty leniant seller, or one that is desperate to get rid of his house to make this happen...

Do you have a mortgage officer yet to assist you in the financing?

Im a licensed banker...I work with multiple investors that my company is partnered with...

I can help you with this process because I specifically will not be lending the money...the bank will, so i can help...

My name is Jason Fry, i work with Providential Bancorp, a nationwide mortgage lender... Feel free to call me at 312-264-6448, or email me at [e-mail]

thanks,

Jason Fry
Senior Mortgage Specialist

Answer 7

i don't think you can get a mortgage to pay off the loan because it is a purchase...in a few months (or longer ) you can do a cash-out refinance and get cash then.

Answer 8

get a mortage high enough to cover the loan, 18% is crazy

Answer 9

There is a mortgage calculator at www.comerica.com