I'm looking to purchase my first home in the next few months, any advice?

Question

I'm going to a morgage company that was highly praised this week to get preapproved for a loan, however I'm so scared about the whole process. We won't be able to put a down payment towards it so that worries me too.

Answer 1

If you are doing 100% financing, and your credit score is decent, try doing an 80/20. It is two loans, the first is an 80 of the value loan, the second is the 20 percent of the value.
This will keep you from paying PMI

Next,, the second mortgage will be at a high interest rate, expect 9 or above. After you close (or even before you close) go to your local bank, that yiou deal with, tell them you are buying the house, and can they refinance that second mortgage after you close to a better rate, typically yes they can.

Next, no 401K to take a down payment from? ok well assuming there is no retirement account you could take some money from for the down payment, look at the payment. Really Really look.
Now, if it is an adjustable, find out what the worst case scenario is on the first adjustment. If that were the price today, could you afford it.
Dont assume you can afford it when it adjusts....there are literally hundreds (possibly thousands) of people in foreclosure because they assumed somethign would happen and they would magically be able to afford the payment. Now they are losing their homes,.
DONT GET OVER YOUR HEAD.

Beyond that, it is a woderful investment.
Now that you know that things can go bad if you pay more each month than you can afford, if you go ahead and do it, you can not complain. You have had this explained to you, so no crying if it goes bad----In other words, protect yourself, buy what you can afford today, not what you hope to afford in a few years.

It is much easier to buy bigger than to buy smaller.

Answer 2

You definitely should be worried about not having a down payment. It is not a good sign. Here is why.

1. It means that if you had to sell soon after you purchased you are likely looking at paying money out of pocket to sell. You would have no equity and there are some pretty steep buying and selling costs.

2. If you have no down payment you likely also have no cash reserves for minor improvements, moving costs, new furniture or other things that seem to come up when buying a house. Buying a first house seems to have even more as you end up needing a lot of smaller things that were not require when renting (tools, items for the yard, etc).

3. If you lack the cash reserves then you also have no buffer if you lose your job or other issues. Not paying the monthly on a mortgage is a more serious event than failing to pay the rent. Both are not good, defaulting on a mortgage is worse.

The good news?

Buying is something a lot of people do and all did so for the first time at some point. The learning curve is steep for some but most learn as they go. You can be successful if you work at it. There are experts out there to provide advice.

Buying before you are financially ready is not recommended. Separate the desire to buy from the need to buy. What is the rush? In many market house prices are not moving much so there is no rush to get on the property ladder.

Answer 3

My advice is to be patient. The trend in the market place has shifted to a buyer's market. You can continue to wait as prices will continue to fall. Prices will be lower in 2007 than 2006 and probably early 2008.

In addition, avoid any ARM's or exotic loans. Stick to the traditional 30 year fixed loans. Mortgage companies make money from added closing costs, points, and ARM loans. Do not opt for any teaser interest rates that promises a low monthly.

There is no rush.

Answer 4

When I bought my first house, I had the same problem. Take a deep breath and relax! Seriously. You may have to pay what's called PMI insurance. Basically, it is extra money paid to the loan company or whomever that covers the mortgage and insurance. Once you have paid off a certain amount, your payments will go lower and the pmi is paid off.

Also depending on your credit score, you may not get the best rate out there, you my be at a couple of points higher then prime.

Answer 5

Be straight forward with the loan officer first and foremost.

Next have all your financial records with you. thinks such as your combined income. How long you have been working for the companies you are working for. Any extra income you are making etc.

Then have records of ther loans such as car loans and how much your monthly payments are.. Amount you owe on credit cards etc. Also have on hand and be ready to give a good answer as to the reasons you have been late on any payments in the past.

Also be ready to answer any lapses in unemployment and the reason such as being on sick leave etc.

What they are looking for is to make sure you can make the monthly note.

Answer 6

Palo Alto is really expensive. Being so youthful, and likely, no longer having any credit difficulty-free yet (you could't legally get credit till you're 18 for now..by Feb 2010 it truly is going to likely get replaced to 21) you gained't get a loan. no longer on your own in any case. you would possibly want to likely choose your mom and father as cosigners and a hefty down charge. Even then, you've gotten difficulty qualifying through very reality you sound as in case you're self employed and the guidelines for them is what's your internet income a three hundred and sixty 5 days no longer gross. yet another ingredient is, i does no longer tell a lender you want to employ out the rooms. That turns the position into an funding resources, and also you're definately no longer likely to get a private loan for that. As for the tax credit, you likely will be too late to get in on that, as you should have already been approved for a loan, and in escrow NOW to close the deal and performance the deed recorded on your call earlier to December a million, 2009. inspite of in case you've been to get in previously the cut-off date, you should apply the resources as your ordinary position of abode to get the credit, no longer as an funding you would possibly want to be renting to grad pupils etc.

Answer 7

It's really a buyer's market right now; There are plenty of no money down options out there, and plenty of motivated sellers; however you should still take your time and shop around. Don't be afraid to ask questions. Don't fall in love with anything, or get to attached until the deal is closed.

Answer 8

Also try the standard banks especially the one you do business with now. Get a Buyer Agent to work with and don't use the seller agent. Go to www.REBAC.com and www.jackosullivan.net for info on Buyer agency

Answer 9

Ask around and get a referral for a good realtor....they should be able to get you on your way.