first time home buyer in Texas

Jorgevilladiego · Joined: 23 Jul 2007 Posts: 2 2.16 Dollars($)

I am a first time home buyer in Texas. I have a contract on a $217K home and I pre-qualifed for $230K with BoA "no closing cost, no down payment, 100% financing" loan advertised a few weeks back (now I understand they require 5% down). My rate will be somewhere around 6.965% but for $2170 I can lower it to 6.875%.

My questions are:
1. Am I better off keeping the $2170 and financing at the full rate?
2. Is there a better product with other reputable banks or brokers that will allow me to do 100% financing with a lower rate and reduced closing costs?
3. Is there anything I'm overlooking or other questions I should be asking???

Guest 0.10 Dollars($)

looked at mycommunitymortgage from fanniemae? its one 100percent financing option. another is from naca with no down requirement and 6% rate for 30 yr fxd

miller_st · Joined: 17 Jan 2007 Posts: 917 168.82 Dollars($)

helping_user

No Miller, $2170 is the amount Jorge will have to pay to lower the interest rate of the loan. If it's long term loan that he's been pre-qualified for, he can go for the rate buydown. This way, he will be able to save a lot more in interest than spending $2170 once.

As for the other products, Jorge, you can go for Mycommunity mortgage or FHA loans also. FHA loans will help you get around 97% of the finances required for your home.

You can also read through some of the previous discussion this community had on First Time Buyer Loans. And, just remember, it's a good option to shop around before you decide upon your loan program.

Shopping and gathering information on the loan offers will actually help you to compare the loans before you decide upon the loan program hat will suit your needs. And, if you need help in comparing lenders, just read through Shop and Compare lenders. My cousin took it from this community and that really helped them get a loan the easiest way.. they were first time buyers and now they're into it dealing with the best loan officer they could have ever come across.

Best of luck

kenstampe · Posted: Tue Jul 24, 2007 5:38 pm Post subject:

I'm not working with Jorge, but one of the key components of the loan Jorge is talking about is that there is no PMI payment. My community and FHA are both going to have a PMI payment. My suggestion is to keep your funds and not buydown the rate. Your money will go farther in your posession then reducing your rate just .125%

Good luck

Jorgevilladiego · Joined: 23 Jul 2007 Posts: 2 2.16 Dollars($)

I appreciate the replies. I was just now able to lock my rate and it turns out rates have been increasing. The rate is 7.375. Now the question is, does it behoove me to pay the $2300 to bring it down to 7%? I feel like that money would serve me better in my pocket, but am not sure that's a good idea either. I was also thinking about doing a 30yr fixed, but with the first 10 years as interest only and the remaining 20 years p+i. Any thoughts on that?

kenstampe · Posted: Thu Jul 26, 2007 2:37 pm Post subject:

I'm confused. Are you buying a home at $217,000 or $230,000?

If you are financing $217,000 at 7.375% then your principal and interest payment is going to be $1,498.77 by my calculations. At 7.000% your principal and interest payment is $1,443.71. That is a monthly savings of $55.06 at a cose of 1 points or $2,170. So the breakeven point is 39 payments. If you are going to be there that long, then it makes sense. If you move or refinance earlier then 39 payments it was a bad decision.

Interest only will probably increase your interest rate .125% or increase your points at the same rates you mention above. You have to decide if the feature is worth it.

ezmortgageloanz · Posted: Sat Aug 04, 2007 8:41 pm Post subject:

Whether you should invest in a interest buydown (discount points) is dependent on how long you intend to hold the mortgage/occupy the property as Ken pointed out.

It appears that you are reviewing options exclusively from your local bank---you might want to consider stacking this up against an offer from wholesale (a mortgage broker) to see if you can get any additional mileage...

Regards,

Scott Miller

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