Question about a first home purchase?

Question

Can i roll the closing cost and lets say $10,000 into my mortage amount to pay for new furniture and moving?

I have heard of a 110% loan...What are these?

Answer 1

Due to recent issues in the real estate industry, there are a lot of changes. As a first time buyer it may make it harder for you.

You will see a lot things advertised and lots of people will tell you things they do.... until you actually start to apply.

HOWEVER, the short answer is that there are NO restrictions as to what you can roll into a loan, although you wouldn't roll the costs of furniture and moving "into" the loan, you would write the loan for a higher amount than you need to borrow and then get the $10,000 in a check at closing time. Same result, just different in how it is actually done.

Hope I'm not confusing you. Let me give you an example although I'm not sure of what you're looking for in a house.

A Typical loan will be 80/20 loan to value. This means if the house is $100,000, you would put a $20,000 down payment and finance $80,000. Assuming you have a good credit history, you'd probably pay around 6 1/8 percent on a 30 year loan today.

Anything LESS than the 20% down will typically require that you carry Primary Mortgage Insurance (PMI) which will cost you maybe another $50 per month or more on your mortgage. They stick you with that cost to reduce the risk of you defaulting and 20% is magic number with most traditional banks (there are some other options, bear with me).

So, following a normal mortgage, if you found a house WORTH $100,000, i.e. an appraiser would say it was worth $100,000 and you convinced someone to sell it to you for $70,000 and pay the closing costs, you could tell the banker that you wanted to get a mortgage for $80,000, meet the 80/20 rule and get $10,000 net at closing.

Hope that made sense.

There are other programs you can find that won't require the 20% down and will waive the PMI.

I strongly recommend checking out Third Federal Bank (www.thirdfederal.com) because they have programs that are first time buyer friendly and they don't "sell" their mortgages after they right them like other mortgage brokers do. (NOTE: I am not affiliated in any way with 3rd Federal). I believe they can go as low as 5% down without PMI. That means if you find a house on the market (and depending on where you live... there's lots of them right now and you are in a good place to find one and make an aggressive offer) you can do the math and try and get the additional money cushion you need.

Please do be careful though. Many first time buyers will try to buy every bit of house they possibly can instead of what they need. Part of the issue in the market today is that many home buyers bought "Jumbo" loans (Loans that are higher than what FHA insures (currently anything about $417,000) with higher payments, or worse, they got 3 or 5 year adjustable rate mortgages or interest only mortgages so they could afford an even bigger house. Many believed they could "ride" the wave of housing prices constantly going up and then sell later and make a profit.

Many of those people have now lost their homes and are going bankrupt.

It's important to know how much house you can afford. Sorry for preaching; not my intent to suggest you don't.

Anyway, good luck, try to find a house that you can get below the market such that you can put some down and still have the money out that you need and enjoy.

One other thought. If you do buy a home but can't get it below the market enough to get you the money, you can consider adding a Home Equity Line of Credit to it:

. Buy a $200,000 home at, say, $190,000
. Put 5% down for no PMI = $8,000
. Main Mortgage will be: $182,000.
. That means you have $18,000 of "equity" (value) in your home the day you start.
. You can get a Home Equity Line up to $18,000 at a variable interest rate (I think they are in the 8 - 9% range right now.
Then you can use that line, get the $10,000 you need and then pay it back monthly.

Good luck!

Hope this was helpful.

Answer 2

You should take a Home Equity Loan, provided that your income can still support a primary mortgage payment on your intended new home. The ration is about 28% of your monthly income to qualify. Home Equity Loans generally are higher rates and are based only on a 15 year payment schedule, as opposed to a 30 year schedule that a first mortgage would give. You should consider a First Mortgage Loan for the amount you need in total to buy the second house. This presumes that the the inherited house can support such a loan. If not, borrow what you need as a First Mortgage on the inherited house so that you give yourself 20% down on the second house you buy.

Answer 3

You can get a loan for an amount more than the price of the home and then get a HELOC so that you can have cash to get furniture or whatever. I just closed on a loan like that a couple of weeks ago. The borrowers were first time buyers and the home appraised for $275. They got a loan for $300K and they then got a HELOC. So it can be done.

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First Capital Mortgage
www.fcmdirect.com

Answer 4

Absolutely not.
Most banks wont even give the 100% anymore.
What you can do, is raise the purchase price by 10k and have the seller pay all closing costs so that you pay nothing at best. Anything left over after that may be released back to you at the close of escrow.

Answer 5

most likely not...however, if you dont have a 10k cushion, i'd suggest waiting to buy a house....

what if you move in and blow the electric, or the plumbing leaks, or your heating system blows (all of those things have happened to me personally within a week of owning a houses less than 10 years old). the heating systems blew because of a brown out and cost over 6k to replace....i had to write a check that day to the heating company.

I'd not suggest buying a house without at least 4 months house payment in the bank for emergencies.

Answer 6

If the seller is willing to do a seller consession, you will be able to have a no - closing cost mortgage. As far as your furniture goes, you should save money before you intend on buying the house, because the only thing that you can roll into the mortgage is the closing costs.

Answer 7

Just to point out that would also mean you'll be paying for your furniture and moving cost for the NEXT 30 YEARS. Not a good idea.

Answer 8

Those programs no longer exist that allow you to finance closing costs, and financing personal property such as furniture is not allowed in a mortgage.

Answer 9

Not advised.

Your focus should be to reduce the mtgge as quickly as possible. To tack on additional borrowed sum will end up costing you more than you borrowed.

10,000 will over a period of time is actually 15000 and you have not even paid of it.....!!.

Do with what you have - living within your means is the best policy to come out ahead.

Answer 10

You cannot "finance cash" while buying real estate. There are some "creative" ways to do this, but not legally.
You can always get a line of credit right after you buy a house (if there's enough equity, of course.)