Mortgage Shopping: have any tips?

[Squawks]

So I'm in the market right now looking for a home loan for a cheap house (300k at most) in the Ithaca region within the next year or so.

I understand some of the loan concepts and what not (ARM, fixed, etc.) and probably considering a 5/1 or 7/1 ARM seeing that I probably won't be staying in Ithaca for more than 7 years.

With that said, I was wondering what tips/advice you current (or past) home owners have in regards to shopping for the best mortgage. I'm an amateur at the moment and so far have consulted with LendingTree. Sometimes, however, I get a feeling that I may not be getting the best loan/rates possible.

Any takers on this? Thanks in advance!

[Asiann]

Go to www.bankrate.com and learn all of the terms. An ARM is a good thing if you kow for sure that you do not want to stay in the area for a long time. It offers lower rates and payments as well. The only down side is when you stay longer than the term and have to refinance which will cost you more money. 7/1 ARM sounds good but you need to sell before that time comes up. Definately search around for low rates and try not to pay for any points if you can help it. The lower the better. Take into consideration of not just the mortgage payment but also insurance, HOA fees, maint fees when considering how much to spend or what your payments will be. Often several hundred dollars area added to the mortgage. Don't start paying off all of your debt either. Best to keep cash on you until you purchase the home. Lenders like it when you have cash in the bank. They only look at the minimum payments anyway for all you debts. Hope you have good credit since that will affect your loan rate. Try to put down enough to avoid PMI (Private Mortgage Insurance) as the will add to your payment. Some people can and some can't. Close on the property on or near the last day to avoid paying for insurance and other fees that are prorated for the month. Were you ever in the military? Use the VA certificate. Go to www.va.gov for more info. Research is your best friend and try to use a national or well known bank when dealing with these matters. Saving a couple of bucks with another bank could lead to trouble later. Find a good realtor as well to get the best price for your home. If military or prior service, use USS Movers Advantage Program. Hope this helps. The Bankrate website has a ton of answers and give you a better idea of everything. Learn the terms! Points, PMI, HOA, and so forth.

[Asiann]

Oh yeah, try to avoid paying closing cost. Depending on the seller and activity in your area closing cost are paid by the seller. Some may pay all or make the buyer pay some. Realtors fees are usually split with 3% for each and added as closing cost. This can get expensive so have some cash avail for cloding. You can add the closing cost to the mortgage to get you in with little money. Prepaids are something that you will have to pay at closing regardless. You will pay for interest which is why I said top close at the end of the month. Insurance for a year is prepaid. Loan origination fee applied to every loan. Property tax and Hazard Insurance for 3 months in a reserve or escrow. They will usually tell you what you need to bring to the table for closing cost.

[CnoteMD]

I went through the same process a while back. I would highly recommend checking out the rates on bankrate.com. There you will find the range of rates in your area and the fees associated. If you don't plan on living there long term, a 5 or 7 year ARM may be the best option for getting a low rate.

You should also try to avoid PMI (private mortgage insurance) if you are putting down less than 20%. There are many options for putting down a lower down payment and still avoiding PMI. The first mortgage is for 80% and the remainder is paid by a HELOC and cash (i.e. 80/20, 80/10/10, 80/15/5).

Also be sure to budget for about 2-3% in closing costs. There are application fees, title work, legal fees, appraisals that all need to be paid. As far as loan qualification goes, they will generally approve you for a housing expenses of 28% of your gross monthly income, with a total debt ratio of 36% (housing + other expenses). The 28% includes, principle + interest, HOA/condo/coop fees, property taxes, homeowners insurance.

Hope that helps.

[Squawks]

Thanks Cnote and Asiann! I think I will be stuck with PMI because I won't have a HELOC since I'm currently renting - but from what I've calculated it shouldn't be more than $150 at worst considering a maximum loan of $300k.

It's little amusing that LendingTree pre-approved a loan for me based solely on my assets - they didn't seek information regarding debt and monthly expenses.

[Explorer3253]

I am looking into purchasing a place as well..Mines 250k so I too am in the works of getting any information available. Thanks for your help in advance!

[Squawks]

Originally Posted by BadBob

Just for comparison, here's what 375k gets you around here.


http://www.doncies.com/property/prop...PhotoPageNum=b

WHOA! And I was thinking upstate New York would be a steal!

[CnoteMD]

Originally Posted by Squawks

Thanks Cnote and Asiann! I think I will be stuck with PMI because I won't have a HELOC since I'm currently renting - but from what I've calculated it shouldn't be more than $150 at worst considering a maximum loan of $300k.

It's little amusing that LendingTree pre-approved a loan for me based solely on my assets - they didn't seek information regarding debt and monthly expenses.

It doesn't matter if you currently rent. You basically take out 2 mortgages on the property you plan to buy. The benefit is that you can write off the interest on the 2nd mortgage, but you can't write off PMI. You just make 2 payments each month. Do a google search on "piggyback mortgages".

[KevinC]

Get a referral to a good mortgage broker, one that will find you the best deal for YOUR needs. Really good ones are out there, as well as many that aren't so great. Good luck.

[ASAP]

Kind of a loaded question but-

What kind of closing costs would folks expect on a $200k loan?

Does $9.5K sound about right?

$1100 Origination Fee
$400 rate buy down
$3500 of taxes

Rest is title work, title insurance and home insurance / tax prepaids.

Does that sound about right?

[celsdogg]

This thread is from before the mortgage bubble burst.

[cmyx6go]

Originally Posted by celsdogg

This thread is from before the mortgage bubble burst.

A spammer brought it back to life this morning. It boggles my brain how they can find stuff....

[vreihen16]

Originally Posted by cmyx6go

A spammer brought it back to life this morning. It boggles my brain how they can find stuff....

1) Use your web search engine du jour to look up a keyword that you want to associate with your web site, and find a link that comes up on the first page of the search results.

2) Use your spambot to add your link to that forum page, no matter how old.

3) Voila! Your web site's rankings improve from the SEO.

BP's Universal Forums (like OT) are extra-juicy for SEO, since they display the same posting on a dozen or more distinct host URLs. They score a ten-for-one (or better) with each spam post, since the spammed link appears to be on many different web servers.

This is why I keep suggesting that the admins restrict BP-OT and the other Universal Forums here to only be accessible by logged-in users, and with no search engine access. If the search engines cannot index the Universal Forums, the SEO-spamming cockroaches will move on to another forum site.....

[infinitekidM2C]

Originally Posted by KevinC

Get a referral to a good mortgage broker, one that will find you the best deal for YOUR needs. Really good ones are out there, as well as many that aren't so great. Good luck.

[zx10guy]

Originally Posted by vreihen16

1) Use your web search engine du jour to look up a keyword that you want to associate with your web site, and find a link that comes up on the first page of the search results.

2) Use your spambot to add your link to that forum page, no matter how old.

3) Voila! Your web site's rankings improve from the SEO.

BP's Universal Forums (like OT) are extra-juicy for SEO, since they display the same posting on a dozen or more distinct host URLs. They score a ten-for-one (or better) with each spam post, since the spammed link appears to be on many different web servers.

This is why I keep suggesting that the admins restrict BP-OT and the other Universal Forums here to only be accessible by logged-in users, and with no search engine access. If the search engines cannot index the Universal Forums, the SEO-spamming cockroaches will move on to another forum site.....

One forum I'm on requires a minimum number of post before you can post in their version of the OT.

[vreihen16]

Originally Posted by zx10guy

One forum I'm on requires a minimum number of post before you can post in their version of the OT.

...and even more posts before a new user can even read the classifieds section to start scamming people.....

[Mr. Jonathan]

Do you qualify for a VA loan? If so, have your agent look for homes with a VA transferable. You can assume the rate the seller has. I found one for 2.75% last month....

[bosstones]

Originally Posted by vreihen16

1) Use your web search engine du jour to look up a keyword that you want to associate with your web site, and find a link that comes up on the first page of the search results.

2) Use your spambot to add your link to that forum page, no matter how old.

3) Voila! Your web site's rankings improve from the SEO.

BP's Universal Forums (like OT) are extra-juicy for SEO, since they display the same posting on a dozen or more distinct host URLs. They score a ten-for-one (or better) with each spam post, since the spammed link appears to be on many different web servers.

This is why I keep suggesting that the admins restrict BP-OT and the other Universal Forums here to only be accessible by logged-in users, and with no search engine access. If the search engines cannot index the Universal Forums, the SEO-spamming cockroaches will move on to another forum site.....

I think you are looking at this pessimistically. I, for one, have become octolingual under the current forum rule set.

[Bc2005]

Back many years ago when mortgage rates went high, lenders found interesting ways to make it work. I don’t know if there is anyone doing the same right now.

1st example - previous owner had an assumable VA loan at 8.5%, but had quite a bit of equity. Current rates were even higher.
- Put about 10% down, assumed the existing 8.5% loan, and the owner gave a 2nd mortgage at 10% for 10 years to cover the remaining equity.

2nd example - new build qualification
10% down, 80% on a 30 year fixed mortgage, 2nd mortgage for 15 years to cover the other 10% ( broker called it an 80-10-10)

[spazzyfry123]

Originally Posted by ASAP

Kind of a loaded question but-

What kind of closing costs would folks expect on a $200k loan?

Does $9.5K sound about right?

$1100 Origination Fee
$400 rate buy down
$3500 of taxes

Rest is title work, title insurance and home insurance / tax prepaids.

Does that sound about right?

Seems high. My closing costs for a good bit higher value construction loan were close to that amount. I closed a little over a month ago.

[RPM33]

Originally Posted by Squawks

So I'm in the market right now looking for a home loan for a cheap house (300k at most) in the Ithaca region within the next year or so.

I understand some of the loan concepts and what not (ARM, fixed, etc.) and probably considering a 5/1 or 7/1 ARM seeing that I probably won't be staying in Ithaca for more than 7 years.

With that said, I was wondering what tips/advice you current (or past) home owners have in regards to shopping for the best mortgage. I'm an amateur at the moment and so far have consulted with LendingTree. Sometimes, however, I get a feeling that I may not be getting the best loan/rates possible.

Any takers on this? Thanks in advance!

Avoid taking on new auto loans, boat loans, personal loans, etc. Increase cash savings.

[Donatello.]

Wait. Seriously, this market will go down. Only a matter of time