I have lots of money for a downpayment but not a high monthly income - what's the best mortgage?

Answer 1

Bubbles gave very solid advise, one more thing to add.

Check on low income programs in your state. One example would be Rural Housing Development. No, you don't have to buy a farm :)

The government has programs to develop rural areas and have substantial benefits.



As an example, I put a person making $1700 a month in touch with the right persons. She had good credit and got a 3% rate. Yes, a 3% rate. Also, closing costs/ down payment can be gifted and you can actually get them through grants

There are also very good programs for School Teachers, Police, and other Government workers. If you are an urban dweller, check around. THey might have revitalization programs for you.



Interest only loans are a very good option for conventional financing, Option ARM's are really only good for seasoned home owners. You have the option of making a minimun payment, an interst only, 15 year, and 30 year payment. Be aware most of the persons that went under were people that could only afford the minimum payment on the loan. The interst rate then adjusts due to the negative equity in the home.

Proper education and research are needed for these types of loans.

If you are a first time home buyer, stick with an interest only if available.

Answer 2

Definitely in this market, you need to do a fixed rate loan - 30 year fixed (means your rate is fixed throughout the entire loan - your interest rate will not adjust or change). For a lower payment (due to your lower income) look for an interest only option on a fixed rate loan which means your monthly due would be interest only for a set period (term of interest only payments could be 5, 10, 15 etc. years). Be careful with this loan, after your interest only period is up your payment will go up to the fully amortized payment (principal and interest). If you know in the near future that your income will increase look at a 30 year fixed interest only option for 5 years.

Another option is doing an FHA loan (usually good for first time home buyers). There are several programs that give you the option of buying down the rate for a set period (similar to the interest only option). Again, I would only do the fixed rate loan on this product too. Also, FHA purchase loans only require you to come in with 3% down (the rest of the money you can put in a savings and buy things for your home).

Answer 3

The market is not as open to a "no doc" loan as it has been in recent years. The lender will want to determine your "ability to repay" a loan. So how are you planning to pay the monthly payment? The standard debt to income ratio is 28% of your verifiable gross monthly income for your housing and 36% for all monthly debt and housing combined. I have included a website below that may additional information.
Hope it helps

Answer 4

The best mortgage is always the fixed rate 80 / 20 because there are no adjustments that will spike your payment later , and with 20% down , you will NOT be wasting $$$$ on Private Mortgage Insurance (PMI) .

Ask several lenders for a prequalification letter ,
Only they can tell how much loan you can really qualify for BUT . . .
Don't let any of them sucker you into an Adjustable Rate Mortgage !

Asking several lenders will let you see who has the best rate also .

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Answer 5

Cash