Where do I start? I'm buying a house for the first time.?

Question

My fiance and I have recently been thinking about buying a home after we get married. We are renting an apartment until August 2007, so we have plenty of time. I've heard many mixed messages when it comes to down payments and whether or not they make a difference on your monthly payment - and if so, it can be 5-6 dollars even. What advice can someone provide to a first time homebuyer when it comes to downpayments and mortgages?

Answer 1

Your down payment does make a difference in your mortgage payment, since the bigger the down payment, the less you're borrowing, and the payment depends among other things on how much you borrow. On a $100,000 house, a 10% down payment would save you about $60 on each monthly payment on a 30-year mortgage over having no down payment. You can find an easy-to-use payment calculator at http://realestate.yahoo.com/calculators/payment.html;_ylt=Ap7zweeG1cClLIR9HeQyEr_9j8kF

Many lenders expect you to have 10% or even more of the price of the house saved for a down payment, so you'd have a more difficult time getting a mortgage also if you didn't have a down payment, or would pay a higher interest rate.

Since your house payment will almost certainly include your real estate taxes and insurance, borrowing twice as much doesn't mean your payment will be double, since those other items are also included in the payment.

When you look for a mortgage, try to stay away from ARMs (adjustable rate mortgages) - your payment can go up every year with those if interest rates overall go up. A fixed rate mortgage is preferable, since you know what you'll be paying.

You can talk to a realtor or bank and ask to be "pre-qualified" for a mortgage - they'll look at your finances, and tell you how big a mortgage you'd be able to get - that way you'll know what to look at in the way of houses.

Good luck.

Answer 2

I am a loan officer and I encounter this situation quite frequently. A down payment comes down to a personal financial situation. You need to balance putting the money down versus having it in the bank in case something comes up.

If you and your fiance have good credit, there are plenty of 100% financing programs available. As an estimate, you are probably talking about lowering your payment about $5-6 on a monthly basis per thousand that you put down.

However, the downpayment could make a difference in the program that you qualify for. This could make a huge difference in the payment.

As a general rule, if you qualify for the specialty 100% programs, you will probably be better off keeping the money in the bank. I hope that this helps. If you have any questions, please email me at [e-mail]

Answer 3

The first thing you want to do, before you go to look for houses, is shop for a mortgage and become qualified.

What the lender will do is set forth the terms of the mortgage you can qualify for. The lender will tell you exactly how large a mortgage you can get, what the terms will be, and how much your payments will be.

This gives you a "leg up" on the house-hunting process, because when you go to view the homes, you know how much home you can afford.

As far as down-payment, most lenders will want you to put 10% minimum down on a home, and 20% is better (if you put 20% down, you don't have to pay for Private Mortgage Insurance).

Countrywide Finance, which is one of the largest mortgage lenders in the US, has this site for first-time buyers:

http://firsttimebuyer.countrywide.com/

The HUD website also has some good information:

http://www.hud.gov/buying/comq.cfm

This is another website with good information:

http://www.bills.com/firsttimehomebuyer/

Good luck!

Answer 4

The more you can put down as a down payment, the lower your interest rate will be and the better your chance of being approved (the bank is taking less risk in loaning you the money). Generally, if your loan is more than 80% LTV (loan amount to the value of the home), you have to pay PMI (property mortgage insurance). This can amount to be maybe $150-200 a month. Also, when the mortgage is for more than 80%, then you cannot qualify for one of the government sponsored loan programs like Fannie Mae or Freddie Mac. This means that your interest rate will be higher.

Answer 5

You get a lot of "specials" as a first time home buyer! A few tips, you want to make sure your house payment is "comfortable" because NO ONE likes living paycheck to paycheck. You will always get pre-approved for MUCH more than you really can afford, so lower your price range. AND NEVER let the mortgage company convince you to borrow from your 401K for a down payment.

Answer 6

Hi, I'm a Mortgage Associate, from Edmonton, Alberta. Go to my website www.albertamortgageguy.com and I can give you all the answers you will need. You can even contact me there if you'd like.

Answer 7

i just bought house last year. it was one of the best decision of my life. well if u are paying for it make sure u get ur name in titlie an u have good credit score. make sure u keep ur bank statements and they shud have gud balance in them ,for example if u are buying a house worth 300,000 , u shud at least have 15- 20g's. well if u dont do ur down payment then u have high monthly payments. so dont get lured into the. no down payment.get to know how much does ur agent is charging you. get ur loan passed is most important. u can hav ur loan paased now and buy house later . so go to ur bank and see wat r u worth of......

Answer 8

Well Dubs, you have got all the great answers. If we can have a chance to talk, I can share many more things with you.
Also, if you want I can forward you some excellent literature on the same.

Shall we go ahead and get the home for you now :-)