Real Estate and Home Mortgages - Learning about being a 1st time buyer:)

I found this forum today and looks like it will help alot!!

I have a few noob questions: First the facts - house around 220K is what we are looking at. Combined we make around 110K a year. We have minimal revolving debt. A car loan at 16K. Student loans 20K.

1. I'm getting married at the end of the year is it beneficial to wait and get married in order to get better rates? My credit score is 763 hers is lower 700's. I guess the main question for this one is, is it good/bad to get a loan with both of us on it before we are married? (on a side note we have been together for 9 years already so no worries of backing out on the marriage;) )

2. We are planning on using our penalty free 401k withdrawal to get the 5% down payment. I am getting familiar with the terms of loan options such as 95% fixed 5% down with PMI versus 80 15 5. Still need to learn about points. Is there an accurate way to estimate what PMI would be or should I wait for the pre-approval process to determine the numbers?

3. I understand the difference from pre-qualified and pre-approval and know pre-approval should be my first step in this whole home buying process. Am I able to be pre-approved at multiple lenders or only pre-qualified?

Thanks in advance for the advice:thumbup:

If you need anymore details just ask.

Welcome to the DoItYourself.com forums :)

#1- Yes...marry first :) Not to say something will happen, but this is what I've ALWAYS been taught. You never know what can happen! My friend has been together with this guy for 10 years if not more. He proposed, she said yes, they made plans, got an apartment...next day...WELL...not next day...but a couple weeks later...it was over. COMPLETELY over. Someone else I knew (a relative) had a girlfriend he knew since childhood, thought she was the woman of her dreams, they bought a place together (though she never moved in) and WAS going to propose to her (had the ring ready), never did propose, broke up and had problems over the place but eventually it got sold. There are so many scenarios. ANYWHO... as for the better rates thing comparing single to being married-I've never heard of such a thing. As far as I know you are a person, she's a person, you make money, she makes money and the both of you have good credit (ficos)... the rates aren't based on your "status" (married, single, divorced...etc.) BTW: Congrats on the engagement!!!!

why bother getting pre approved at multiple lenders? Find the one with the best rates - and lock that puppy in. You can always use a different one once you find the home you want.

If at all possible, avoid PMI... It's a chunk of change that goes towards nothing - isn't deductible - and doesn't reduce the principle. IMHO - 80/20 is the best way to go - though I understand that isn't always possible for first time buyers. Points and closing costs will add up to another 3% or so of the purchase price (to be paid at closing). Don't be shy about asking your prospective mortgage financer about their estimated closing costs as well as points. Points vary by mortgage company - sometimes widely.

Marriage: Yes, yes, yes.... Don't enter into a purchase agreement until that item is covered unless you're willing to buy it yourself - and add her to the deed later.... stuff happens... to the best of relationships - and the courts frown on co-habitation contracts vs married ones.

80/20 doesnt exist anymore..5% down is what you will have to do..you make too much money to qualify for any first time programs......one thing to consider is an 80/15/5...with the prime rate falling and going lower in the near future, keep in variable and lock it in around June when the prime is down further..another option is LPMI...I know that at my company, big one, well known, not in the headlines for stupid loans (stage coach) we bump the rate 3/8 right now for 95% ltv for LPMI (lender paid mortgage insurance)...get a calculator and punch in 80% for the first at 5.875 0,0 for the first...then add 15% mulitplied by around 7.5% divided by 12...for payment on the second.....them put in 95% amount with an interest rate of around 6........and see the difference.......don't do PMI at all do an 80/15/5 or an 95% with LPMI.............your credit scores for both are very good (above 680 only these days get you the best rates anywhere).......choose a lender that will be here tomorrow...not one in the news for bad mojo, and not a broker that will get you at the closing table (I know that not all do that..there are some very good ones in the country)...get a GFE and compare apples to apples everywhere...DO NOT LET THEM PULL CREDIT, TELL THEM TO ASSUME THE SCORES YOU GIVE THEM...IF THEY INISIST...RUN FAST...........good luck I will keep an eye here...been doing this for the "coach" for years.........just needed some hot water heater advice elsewhere and dropped in..............

Hey Zster...I thought you have to have a property address to lock in a loan???? At least that's what I thought!...Hmmm...

There's always the 3% FHA loans. No 2nd TD and the MI is .50%

I'd suggest you get married 1st...then find a home...then look for a Lender.

DIY - I've done this so many times in the past few years that specifics get a bit cloudy. It's possible (I honestly don't recall) that I've provided an address before locking in rates..... But can't help but think that the option to lock in a rate (give them a price spread of +/- $100K) has been offered from the start of the homefinding process. We've done this so many times lately that I usually just call my last lender (who I've used 7 times in as many years) and say "Here we go again"... and they respond... give us an address when you find it..... "You're approved for $XXXXXXX.XX . Let us know when you want to lock in current rates"

80/20 doesn't exist anymore?? Wow - that's news to me.... I know my last mortgage was in those terms - but that was almost a full 12 months ago....

nope on the 80/20.........went away around 8/07 right when the $#%^ staring to hit the fan...too much exposure in down markets for investors/banks

I know we're sidestepping here - but?? Too much exposure on an 80/20?? Are you claiming that investment money is more at risk if I put down 20% of the purchase price instead of 5% or 10%??

8/07? Wow! I heard it go out but then it looked like companies were still "advertising" it. Actually, they were advertising the 100%'ers. One whole loan, not 1st and 2nd TDs. I've "heard" just recently or maybe a month ago (?-can't remember) EVERYONE must have a some type of downpayment. I think it's good anyway. FHA's back in business (somewhat) which means...my job's more secure. At least it's on the brigher side of things.

Zster...I just don't think there's a point in locking anything in if you don't have a property. You can make up a property but it won't do any good if you're not buying it. If once they do find a property and the Lender goes and changes the address..it won't happen. They'll have to re-lock which means it'll be the rate/price for that day. You can still get a rate/price each day...no matter what day it is but until you find a property...it can't be locked in. Rates/Prices change every day-mostly.

Thanks all,

Well consensus says get married, but we really want to get out of our $1200 a month apartment due to new neighbors. And take advantage of the recent fed dropping 3/4 points.

Are there options to have some kind of personal or mortgage contract between the two of us that states we are 50/50 owners if something bad did happen between now and September? thezster mentions adding her to the deed later would that hurt my loan interest rate having the loan under just myself or would they consider her income as well??

With just online research I seem to be leaning towards the 80-15-5 and want to see our options with FHA. As for being pre-approved I read it was better to be pre-approved for better negoitiation leverage. So, I'm wondering can I be pre-approved under a FHA and conventional loan to increase my options/leverage.

Sorry so many topics in one thread if you have any input for just part of it I would love to hear it.

Thanks

Well, DIY got me wondering - so I called my mortgage lender and asked about locking of rates. We get relocated by our employer frequently - and they have contracts with a number of lenders. As such, I deal with the relocation department of those lenders and get some benefits that regular homebuyers don't get. One of those is the ability to lock in an interest rate whether or not I have found the house I want to buy at that time. They know I'm gonna buy "somethin" within 90 days or so - and are willing to lock in rates as I see fit.

Normal buyers, as mentioned by DIYer - have to provide an address to lock in those rates.

Regarding 80/20 - I think we have a question of current terminology here. I'm talking 80% of home value is loaned/20% is down payment... and my lenders naturally still offer it - as it has been the basis of the home mortgage industry for years and years and years. The 80/20 terminology that others answering this question have been interpreted as 80% first mortgage/20% second.... YUCK - I see why you would say "No one would do that these days"....

Back to the original Poster's question.... If you, on your own, can qualify for the home you want (your credit score is better than hers if I recall) - then buy the house on your own and add her to it after the wedding. Your rates shouldn't be affected by the income difference (though the amount you would qualify for would, obviously). There might be ways around it - but, for me, based on experience...... I'd never, ever buy a house with someone I wasn't legally bound to.

Don't get in a rush just because of the last round of rate cuts..... as a market trader (for a living) - I can almost (almost??) guarantee at least one more rate cut in the next 12 months by the Fed....... At the worst - the last cut will stand for another 12 months or so.... at best, you'll see another 3/4point drop before it's all over. Housing prices are still dropping across the majority of the U.S... making today the time to start looking - but the next 12 months the time to start buying....... BUY LOW!!!

Sorry...for talking amongst ourselves on other things there above :D

Though "yes" it's good to jump in on the rate but I would still say...get married first.

To answer your question - In order to use her income, she needs to be on the loan and on title. Do you NEED her income to qualify? If you NEED in her income to qualify..you may want to reconsider. This is another reason why I suggest getting married first. Sorry to say that again. Imagine this...things get ugly between the both of you...YOU'RE the only one on the loan and she's on title...you can't afford the payment b/c you depended on income..you depended on her to pay part of the mortgage...you make late payments b/c it was hard...you decide to sell..you can't sell...OR she won't sign the Grant Deed b/c she's mad at you...or whatever. ...or vice versa. Anyway...enough of that. I said my say. Sorry for the lecture. It's your choice :)

Sure...pre-approval would be good leverage. Get a GOOD Lender. If they pre-qualified you...they should be able to give you a pre-approval quickly. I've seen where agents/sellers want to see the paper work of an automated print out of approval. Basically it's a computer generated program that runs the numbers based on your scenario with your credit, income, deposit, loan amount etc. If they beat around the bush or take too long I would suspect something's wrong. I really don't think you'd have a problem.

Zster: Glad you got curious and found your answer ;) Glad you straightened out the meaning of your 80/20 too! I bet you were freaking out about the 20% down payment not available anymore. Too funny.

LO fricken L....yes 80/20 meant 80% first 20% second, 0 down.........every lender in Cal and AZ are regretting those now.....good luck as I said..it's a jungle out there..deal with a primary lender.....the rest have no money to access to fund the loans if need be.....