Mortgage question?

Question

I'm looking into buying a house/condo/multifamily and renting out extra bedrooms/units. This area, Southeastern CT, is expensive. One condo (a typical example of something I'm looking for) I'm looking at is $150k and is 1275 sq feet with 3 bedrooms and 1.5 baths. It has condo fees of $325 and annual property taxes of $1500. It was built in 1973 and the complex includes tennis courts and a pool. I'm still early in the process, I'm just going by online listings at the moment for ideas. This unit is very cheap for the area (probably not updated) and would allow for me to have a 5-10 minute commute to work.

I'm a recent grad making a little over 40k (base salary of 38k + bonuses). My credit scores are 808, 765, and 705.

I know I should probably go see a mortgage broker. How do you choose one? Or should I even bother? All the online mortgage calculators tell me I can afford to choose between owning a trailer or a shitty condo. Friends tell me otherwise. What could I get approved for?

I have some debt: 28,000 in students loans at 3.5%, for which I pay 225 a month. I paid off my credit cards already. I own my car outright, and I only have about $5,000 in savings (I plan on going the PMI route). Again, I'm a recent grad.

Answer 1

As housing market continues to slump, if you don't plan to delay your plan, please interview several and pick a good realtor or agent.

Bad ones will talk you into buying the largest property at your credit limit. Good ones will find you a good deal (Sellers are offering discount and incentives now).

Try to stay away from Adjustable Mortgage, because 30 year fix mortgage rate is very low right now. There is no reason to use Adjustable loans except fatter commission for loan agents.

Interests only loans are not good iether. Mortgage payment consists of two parts: interests and principal. Interests are like rent, which doesn't add to the equity to your house. It simply disappear as your pay it. If you want to use interests only loans, might as well rent, especially during market downturn, because housing price won't appreciate.

Finally, for tax benefits, talk to your CPA or tax accountant. Do not consult finance with realtors or agents. They get commissions when you sign the check!

Good luck!

This article gives you tips on negotiation:
http://biz.yahoo.com/brn/060909/19463.html

Articles about current market:
http://money.cnn.com/2006/09/25/news/economy/homesales2/index.htm?postversion=2006092513

Answer 2

Never ever use a broker unless you have really bad credit or a distressed or unusual property. Why would you pay someone 1% of whatever get's lent to you when you can do it yourself?? Get prequalified at a major bank like Washington Mutual or B of A or Wells Fargo or Citibank. The paperwork will not be that bad.
As for renting your property, be careful when it comes to condo's as the association may block you from renting it out to 3rd parties. Also with multifamily, be careful of rent controlled areas.

Answer 3

Do what I did when I was in the same situation.

Print a hardcopy of all 3 bureaus and go talk to a couple of banks/brokers and see what they say. This will let you get a good idea of what they can offer but without all the hard pulls that will drop your scores.

With that said, the numbers you gave puts you close to $2,000/mo in housing related expenses. if you are making 40K before taxes then that is over 50% of your takehome.

I don't see any way you could afford this and still have enough left over for utilities, a car payment and any kind of savings for yoru retirement.

In my opinion, you will most likely have a hard time getting this approved without a fairly substantial down payment.

Answer 4

they are precise in that it is prevalent prepare. There are regularly lenders that acquire mortgages and there are lenders that provider mortgages. the acquisition employer is the employer you shut with; the employer you additionally could make your first value to. They get carry of the underwriting and closing expenses, yet do no longer choose the difficulty of servicing the interior maximum loan. They then sell it to a lender that centers loans. That employer will provider the interior maximum loan and gather the activity and any applicabe quotes (consisting of late expenditures, and so on). All of it is achieved based on the businesses awareness and needs; some businesses acquire and not provider, some do no longer acquire yet provider.

Answer 5

With your credit score, you could go to your local bank and get financing. Otherwise, selecting a mortgage broker go with friends and family may recommend one. There are many programs outhere which interest rates are very low.
The main questions is how is your debt to imcome ratio.

Answer 6

your debt ratio is little to high to qualify for regular conventional loan, but idea for you to take the roommate will definitely help with your mortgage payment. your monthly payment with association fee,tax and of course mortgage payment could be more then half of your monthly income and the question is can you pay that much? with your credit score you will get your mortgage, but rate will be higher than regular one, just because you will not show them your income. you don't have much money to put for down payment ,so your option is to look for 100% financing .
like people before me tell you- shop around and ask people for good mortgage broker who will help you to find the best program tailoring your needs. don't buy if the payment will kill you, because there is nothing worse,then stress associated with overwhelming bills. good luck.

Answer 7

Definitely shop around for the best mortgage rate.

Apply for pre-qualified loan that will give you better bargaining position.

If you have a retirement account somewhere, it might save you some tax if you borrow from yourself. Check with your accountant.

Answer 8

Don't get something too expensive, at 40K per annum, you should be putting 10% or more into retirement accounts.

Answer 9

go look at the answers on the question below you on the post board.
Buena Suerte