(Closed) How to get a house?

posted 6 years ago in Home
Post # 3
Member
1811 posts
Buzzing bee
  • Wedding: November 2012

@lybarra:  I would start with a lender.  They can run your credit, preapprove you (which makes you a more desirable buyer), and most important they can put solid numbers in front of you showing you how much you can spend and what your payments will be.  For a lot of standard 30 yr mortgages you can put down as little as 3.5% of the purchase price, but if you can save up 20% you are putting yourself in a better position with taxes and sometimes interest rates.  Good luck!

Post # 4
Member
1849 posts
Buzzing bee
  • Wedding: May 2014

Save up for a down payment. Anything less than 20% will mean you have to pay mortgage insurance monthly. Start looking once you’re near your downpayment goal. Get pre-approved by the bank for an amount you think you’re likely to end up needing. How much you can put down will have a big influence on what the lender can do for you. Once you’re ready to make an offer on a house, you’ll probably need a letter from your bank saying you’re approved for that amount. Then you wait to hear back. 

ETA: I believe a pre-approval is only good for a month or two, so if you go in way before you have your down payment, you might have to do it twice.

Post # 5
Member
2815 posts
Sugar bee
  • Wedding: March 2012

If you can, check out USDA loans.  They require 0% down and you don’t have to pay mortgage insurance.  Rates are so low right now, definitely talk to a lender soon!

Post # 7
Member
2815 posts
Sugar bee
  • Wedding: March 2012

@lybarra:  We didn’t have any issues with it.  The only thing is that the house has to be an approved area.  It’s to fund rural development, so if you’re looking in a big city, you won’t qualify.  We got the house we wanted and our payments are actually less than we expected!

Post # 8
Member
3886 posts
Honey bee
  • Wedding: September 2011

The USDA loans are generally only available to those purchasing in a rural area (and they have some funny ideas of how rural it has to be) so depending on where you want to live, you may or may not be able to qualify. There are also some other qualifications such as income, and with your fiance and you making $100k/year combined, you may be over the limits where you want to buy.

I would speak with a realtor before contacting a lender as you need someone to explain to you all the programs available in your area, and a lender is only going to tell you about how you can get a loan from them. If your realtor is not willing to teach you the basics, then find another realtor. On a $200k house, that realtor is going to earn $6000-12000 commission. Let them earn it.

As for how much downpayment you need, the days of putting down 3-5% are long gone except for those with exceptional credit. Be prepared to come up with a solid 20% down, but that does have the advantage of taking PMI (mortgage insurance– a percentage you pay every month to insure the lender in case you default on the loan) off the table. If you have a 401(k) you can make a one-time penalty-free withdrawl up to $10k towards the purchase of your first home. There are a lot of rules on how quickyl the money must be spent and what kind of documents you need to file with the IRS, and you’ll still need to pay tax on any accrued interest, but it’s a very easy way to get a nice chunk of money.

Post # 9
Member
11234 posts
Sugar Beekeeper
  • Wedding: August 2013

@fishbone:  As for how much downpayment you need, the days of putting down 3-5% are long gone except for those with exceptional credit. Be prepared to come up with a solid 20% down [ . . . ]

This is not true. FHA loans only require 3% down.

Post # 10
Member
2815 posts
Sugar bee
  • Wedding: March 2012

@vorpalette:  You are correct.  FHA loans do require PMI though.  

@fishbone:  You are also correct with the income limits.  For our area, I think the max was something like $95,000.  

Post # 11
Member
11234 posts
Sugar Beekeeper
  • Wedding: August 2013

@BoiledPNut:  Yep, PMI for downpayments under 20%, but you can refinance and get rid of PMI once your mortgage balance is less than 80% (or something to that effect).

Post # 12
Member
3886 posts
Honey bee
  • Wedding: September 2011

@vorpalette:  This is not true. FHA loans only require 3% down.

Many FHA loans go through Freddie Mac who has tightened lending requirements pretty significantly, making FHA loans increasingly hard to qualify for.  YMMV.

Post # 13
Member
10367 posts
Sugar Beekeeper
  • Wedding: September 2010

It’s very difficult to get financing with less than 20% down right now. If you get approved with less than that down, you have to pay PMI which is quite expensive.

I’d wait until you are in a more solvent position. Buying on impulse just because you are tired of renting isn’t the best reason – it should be a well thought-out plan. It may be the most expensive purchase you ever make. My brother was in your boat – bought what he could afford because it’s all he could afford instead of taking years to save up and plan ahead. He ended up having to walk away from his house in the bubble mess. Just something to think about.

Post # 14
Member
10367 posts
Sugar Beekeeper
  • Wedding: September 2010

@vorpalette:  Except refinancing means paying closing costs, yet again, and if they buy now, and refinance in a few years, they will no doubt be refinancing at a higher interest rate. Interest rates are at record lows right now, which means they are really just setting themselves up for an inflated mortgage payment down the road if they need to refinance to get rid of PMI.

Post # 16
Member
1659 posts
Bumble bee
  • Wedding: July 2012

@lybarra:  Just start with talking to your bank and get a preapproval letter and decide how much you actually can put down and how much you want to spend.  The lender can help you figure out if there are any special programs you’ll want to take advantage of, too.

Once you have your preapproval letter and you know how much you want to spend, get in touch with a realtor and go see some houses.  We found our realtor through Zillow, and he was awesome, especially because we bought a foreclosure.  One of my friends is a Redfin realtor, and it sounds like his clients have great experiences too.

We did an FHA loan and put just about 5% down.  It was worth it to us to NOT put 20% down – we still have a lot in savings for emergencies, and the difference between paying PMI monthly and saving $60k+emergency fund for 20% wasn’t a great tradeoff, plus we bought a foreclosure priced about $60k below comps in a desirable area. 

If 20% is realistic for you, go for it, otherwise there’s nothing wrong with putting less down – just remember that you want to have at least 6 months expenses in savings, plus a lot saved for repairs, decor, furniture, window treatments, etc. when you move in.

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