I agree with that part Right Wing. But if they qualify for "A" paper ther is no way I would ever put someone in an FHA. Just a ton of better options. If the choice is FHA or B-C then I would look at FHA.
I always treat the loan as if it was my loan what is the best product. I think that comes across to my clients and it has been good for business.
I always treat the loan as if it was my loan what is the best product. I think that comes across to my clients and it has been good for business.
I forgot all about this thread. Thanks for the replys. Im about to buy a new home. I have a credit score of 743 according to Transunion I think its called. I am just weighing my options. I am pretty famialier with simple interest loans from a bank. Someone told me an FHA would be the way to go.
I guess the better question would be whats the best home loan option for me and my situation.
Thanks
I guess the better question would be whats the best home loan option for me and my situation.
Thanks
Chop-
It depends on how much money you have to put into the transaction. If you want to go no money down I would think a 80/20 5/1 ARM, HELOC or Fixed Rate Second combination would be your best bet. If you plan on staying in the house for more than 5 years this might not be the best option but most first time homebuyers upgrade within 5 years.
Northern Star did a loan for my sister that closed a little over a week ago (first time homebuyer also). Listen to him, he will give you good advice.
Baker
It depends on how much money you have to put into the transaction. If you want to go no money down I would think a 80/20 5/1 ARM, HELOC or Fixed Rate Second combination would be your best bet. If you plan on staying in the house for more than 5 years this might not be the best option but most first time homebuyers upgrade within 5 years.
Northern Star did a loan for my sister that closed a little over a week ago (first time homebuyer also). Listen to him, he will give you good advice.
Baker
Choptalk:
Where are you buying a home and are the homes appreciating in that market? What type of property is it? A home, townhouse or condo? Any acreage? What is the most important requirement for you (down payment or payments or something else)? Are there any other factors which effect how you would like your mortgage (example alot of times a family may be buying a home and have kids in day care but in three years that will be over and their incomes will increase, so having a low payment the first three years would really help the situation, or maybe you expect your income to rise for some other reason.
Based on what you tell me I will try to recomend the appropriate product and who is an investor that has those products (an what a rate should look like, and how to shop the rates!!!)
Northern Star
Where are you buying a home and are the homes appreciating in that market? What type of property is it? A home, townhouse or condo? Any acreage? What is the most important requirement for you (down payment or payments or something else)? Are there any other factors which effect how you would like your mortgage (example alot of times a family may be buying a home and have kids in day care but in three years that will be over and their incomes will increase, so having a low payment the first three years would really help the situation, or maybe you expect your income to rise for some other reason.
Based on what you tell me I will try to recomend the appropriate product and who is an investor that has those products (an what a rate should look like, and how to shop the rates!!!)
Northern Star
Choptalk:
Let's assume a house for $97K just for example purposes. You offer $100K and ask the seller to pay $3K in closing costs and prepaids. This allows you to borrow more ane bring less to the table.
If you do a first mortgage of 80% of the purchase price or less then you don't have to pay private mortgage insurance. So you will take out a first mortgage of $80K. This could be a variety of products, a 30 year fixed rate mortgage is the most conservative and has the highest rate and your rate will always be the same. Other good options would be a 5/1 adjustable rate mortgage (fixed for 5 years and then goes up or down every year for the next 25 year, gets you lower payments for the first five years and if you only live in the property 5 years or less you are ahead, if you live there longer you may start giving some of those savings back but it will also be in tommorrows dollars). Also within the first mortgage is an interest only option. Carries a slightly higher rate but a lower payment option if that is important. Each month you can pay the interest only on the loan. Usually you can do this for 10 years and then you have the next 20 years to pay off the loan. This is a good option if you want the payment lower. You can always pay additional each month you just are not required to do so. Example $80000 30 year fixed rate loan with principal and interest at 6% would have a payment of $480 a month. An interest only loan at 6.25% has a payment of interest only of $417 a month (which basically just services the debt, if you pay $417 for 10 years you still owe $80,000). Just depends what is most important. I would recommend staying away from loans with a negative amoritzation and give you a payment lower than $417, they are not good products for most people.
Next you would follow it up with some sort of second mortgage for 15K. This could be in the form of a home equty line of credit (HELOC) which is usually tied to prime and the interest rate goes up or down every month with prime. Prime is currently 7.25%. This is like a big credit card which can be paid off and borrowed against. This option would work good with the interest only option above, and if you want to make extra principal payment you could make it on the heloc. The other option is just a fixed rate second. This will probably be at a rate higher than the heloc.
One other way to go is do one loan for $95K and have private mortgage insurance. I would only recommend this if you were planning to fix a property up right away and add square footage so you could get rid of the private mortgage insurance in a relatively short period of time. Interest is tax deductible and private mortgage insurance is not. The FHA loan has private mortgage insurance on it and plus and upfront fee on private mortgage insurance that is why you should avoid that loan.
If you have mattress money, you want to get it into the bank right away to avoid what is called seasoning of your funds. Investors don't look kindly to cash, another thing is gift money from parents, easier to get it now and put it into the bank and avoid the whole gift rules.
Hopefully this helps if I had more specifics I could help you more.
Let me know if you are looking to offer on a house and what you are thinking and I can tell you what rates look like and how to get a better interest rate.
Northern Star
Let's assume a house for $97K just for example purposes. You offer $100K and ask the seller to pay $3K in closing costs and prepaids. This allows you to borrow more ane bring less to the table.
If you do a first mortgage of 80% of the purchase price or less then you don't have to pay private mortgage insurance. So you will take out a first mortgage of $80K. This could be a variety of products, a 30 year fixed rate mortgage is the most conservative and has the highest rate and your rate will always be the same. Other good options would be a 5/1 adjustable rate mortgage (fixed for 5 years and then goes up or down every year for the next 25 year, gets you lower payments for the first five years and if you only live in the property 5 years or less you are ahead, if you live there longer you may start giving some of those savings back but it will also be in tommorrows dollars). Also within the first mortgage is an interest only option. Carries a slightly higher rate but a lower payment option if that is important. Each month you can pay the interest only on the loan. Usually you can do this for 10 years and then you have the next 20 years to pay off the loan. This is a good option if you want the payment lower. You can always pay additional each month you just are not required to do so. Example $80000 30 year fixed rate loan with principal and interest at 6% would have a payment of $480 a month. An interest only loan at 6.25% has a payment of interest only of $417 a month (which basically just services the debt, if you pay $417 for 10 years you still owe $80,000). Just depends what is most important. I would recommend staying away from loans with a negative amoritzation and give you a payment lower than $417, they are not good products for most people.
Next you would follow it up with some sort of second mortgage for 15K. This could be in the form of a home equty line of credit (HELOC) which is usually tied to prime and the interest rate goes up or down every month with prime. Prime is currently 7.25%. This is like a big credit card which can be paid off and borrowed against. This option would work good with the interest only option above, and if you want to make extra principal payment you could make it on the heloc. The other option is just a fixed rate second. This will probably be at a rate higher than the heloc.
One other way to go is do one loan for $95K and have private mortgage insurance. I would only recommend this if you were planning to fix a property up right away and add square footage so you could get rid of the private mortgage insurance in a relatively short period of time. Interest is tax deductible and private mortgage insurance is not. The FHA loan has private mortgage insurance on it and plus and upfront fee on private mortgage insurance that is why you should avoid that loan.
If you have mattress money, you want to get it into the bank right away to avoid what is called seasoning of your funds. Investors don't look kindly to cash, another thing is gift money from parents, easier to get it now and put it into the bank and avoid the whole gift rules.
Hopefully this helps if I had more specifics I could help you more.
Let me know if you are looking to offer on a house and what you are thinking and I can tell you what rates look like and how to get a better interest rate.
Northern Star
Hey Northern Star. Sorry it took so long to get back to this thread. Just wanted everyone to know that I got hooked up with a credit union with a better deal than I think anything else I could find on the market. It cost me $250 bucks to join the credit union but I get a loan with no PMI or pre payment penalities. I am at peace with my decesion.
Thanks everyone for talking me out of the FHA. Poor choice for my situation.
I have come to find out that FHA is only good if you have bad credit and no other options.
Thanks everyone for talking me out of the FHA. Poor choice for my situation.
I have come to find out that FHA is only good if you have bad credit and no other options.
