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Question

We are looking at buying a new home. We'd like to be around $300K, and our credit score is 708. We'll put down 60K as a down payment. If the taxes are $1600 a year, what can we anticipate for a monthly payment? I am looking for the mortgage, plus taxes, and add $100 month for insurance. Please let me know about what that monthly payment would be. Also, with our credit score, what interest rate could we anticipate, and what would the interest rate be if we went with a 5 year ARM? Thanks so much for your answers.

Answer 1

Susan, if you already have a lender that you trust, you should be talking with them. However, I recognize that you probably understand that and are here, because you don't have a lender you trust. Therefore, I'm going to address the question's details but also offer some advice on finding a lender you trust. Also, this is not a business forum (Against Yahoo! rules), so be weary of anybody actually pedaling their specific rates here.

Points:
1) Your credit is in good shape, and don't plan on that being a dramatic factor in your rate. Having good credit will sometimes get you a very slight bonus to your rate, but it really just avoids you being disqualified from the best financing.
2) I'm going to let you do the math regarding your taxes and insurance yourself. If you are going to include your taxes and your insurance in your payment, then just divide the $1600 by 12 (months) and add that amount to your actual mortgage payment. Most lenders will give you a slight break to your interest rate for including your taxes and insurance in your payment.
3) One big question is the amount of your down-payment that your are going to put toward purchase. I'm assuming $300K is what you want your loan amount to be, but what is the actual purchase price of the home to be? The difference between the two amounts is what you will need to make as a down-payment.
4) Your down-payment amount will largely determine your interest rate. Basically, if you put more down, then the rate will be lower, and the less you put down, the bank will raise your rate. 20% down has been a common amount for years, but banks, even with the changes in the market, will allow you to buy home even with no money down (100% Financing). If you haven't thought about the down-payment, then the reasoning will basically be: If you have lots of savings but a low monthly income, then put more money down; If you have less savings, but enough income to support the higher payment, put less down.
5) Also, your income will and your employment will largely determine what type of financing you get. Banks want to see that you have been employed in a specific line of work for at least 2 years (although there are exceptions) and that your income level has not only been consistent or rising but also enough to support the payment. If you are self employed there are a number of other questions that can come up here as well. I am going to leave that be, though, and assume that you are W2'd employees. Employment is like credit. If you have been employed for 2 years+, and your income supports the loan, then you just avoid disqualifying yourself for the "best" loans.
6) When you speak of a general interest rate, I'm assuming that you are talking about a standard 30 year fixed interest rate. Telling you the specifics about this rate would be impossible because there are still some unknowns right now. Your down-payment amount is key. I can say that people who put 20% down on a home are seeing rates between 5.75% and 6.25% on a 30 year fixed right now. A rate of 5.75% on a $300K loan would have a principal and interest payment of $1,750. The same information is necessary to identify a 5 year ARM, but you can expect rate to be .5% to .75% lower on such a loan.

This is the point where you call a lender/broker and they talk to you about all of this again, but they are able to get the specifics that were missing here. They will be able to give you a specific figure. Ask them for a Good Faith Estimate, which will both produce their rate and their fees in a line-item format. Then, if you still want to look around, call a couple more lenders and go through the same process. Once you have 3-4 Good Faith Estimates you should have enough information to compare loans and make a decision.

If you don't know where to start, ask your friends about lenders and brokers that they have trusted. Being a referral gives you two HUGE advantages: 1) You are able to trust the loan officer that much more because your friend trusts them. 2) The loan officer is incentivized to please you because they don't want to lose your business or the business of the friend who referred you.

I hope this helps. Best of luck to you!

Answer 2

There are lots of things that go into determining your interest rate, your credit score is just one of them.

You have to know what you are qualified to purchase.

So the first thing you should do is contact a mortgage broker so you can complete a loan application, after which he will run your credit report.

This credit report will give him your credit score. Get a cup of coffee or your favorite beverage when filling out the loan application this is not a 15 minute chore.

Your credit score will tell him what loan programs you are qualified for as well as the interest rate you can expect. This credit score will tell if you are able to get a 100% loan and if not how much cash you have to bring to the table as your down payment.

There are lots of documents and information the mortgage broker will need. I will give you a few to get you started.

#1 Six months of all bank statements you use currently, as well as any statements from your 401k at your place of employment

#2 One months of pay stubs from all that are going on the mortgage.

#3 Two years of federal income taxes and W-2s

After discussing the best loan program for you and agreeing on the program you want, the mortgage broker will issue you a pre-approval letter.

Now once this has been established you should connect up with a real estate agent to find you a home. Upon finding a home you like the real estate agent will then prepare a sales contract for you and the seller to sign.

The mortgage broker will order an appraisal of the house to prove the value.

Once all the documents necessary has been collected the mortgage broker will order loan docs for the program that you agreed to earlier. Again don't plan on spending a lunch hour there to sign loan docs this is a process so be prepared to be there for awhile.

Don't sign the loan docs if anything change from what the mortgage broker explained to you. Call and get an explanation.

I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 3

Because of the easy qualify, no down payment loans, taken by anxious people desperate to get in on a market that was spiraling higher and higher. Encouraged by sometimes predatory lenders and real estate agents. It was often said that if one Realtor said no, another would find a way to say yes. Same with lenders. Granted, sub prime mortgages are getting hit hard, but they are failing because so many were after the quick sale, the fast bonus and biggest paycheck, and the American dream. People were blind to the possibility of failure, because real estate was the "sure thing" and they couldn't possibly lose, and now lenders had more money to give, at higher interests rates and using interest only ARMs. Many went in with good intentions, just not the best financial planning; often with a high debt to income ratio, thinking they could refinance, or flip and sell and come out ahead. And they did this with the blessing of the Realtor and the lender. All three are culpable.

Answer 4

You can most likely count on 1% of the principal. So you are putting down 60 for a 300 home. You will have a 240 mortgage. So, I would say about 2,400/mo for principal, insurance, and taxes. Although, I really don't know if you are estimating your taxes properly. For a 300K home, (at least where I live) you are going to be looking at more like 8000/yr in taxes. You can probably estimate somewhere around 200 for insurance. As far as the interest rate goes, that's for a mortgage broker to help you with.

Answer 5

Whatever you do, don't us Lending Tree or any other online lender! Go to a local mortgage broker, credit union, or bank. By the way, you are much better off going with a 30 year fixed right now rather than a 5 year ARM. I can't do your mortgage for you but if you would like to email me I can give you an idea of what you should be paying.

Answer 6

Your good credit is a nice thing to have. You have worked for it, now make sure the lender you will deal with deserves it. mylenderscore.com provides unbiaised information on mortgage lenders all over the country. They will tell you how often each lender charges a higher interest rate in your county. The information is free and you dont have to register all that.

Answer 7

Fill out an application for a mortgage at

http://www.lendingtree.com/?esourceid=475010&source=475010

The banks compete for your business and you'll get a competitive offer in a short amount of time. It takes the guesswork out of shopping for a mortgage! I've used it to buy several houses.

Good luck!

Answer 8

At 7% your payment would be around $1,600 P&I. The rest you can add up yourself!

Answer 9

1663/mo PITI (based on rate @ 5.75)

Answer 10

This is what your lender is for. Go ask him/her.