Posted on: 31st Jan, 2008 08:43 am
Hi! My husband and I have found a house we like & are looking for a mortage in the area between $185,000 & $200,000. (We haven't closed). We are looking at 80/20s but are interested in any other options.
Our yearly salary is $67,000; we have school & auto loans totaling $600/month-no other debt. Though our cash reserves are $10,000, we don't want to put much money down or on closing costs (we have a lot of furniture to buy, plus we don't want to eat into our emergency fund). Including stocks, mutual funds, bonds, and autos, our assets are $40,000. Our credit scores are 720 & 810.
If there is any more details you need, please let me know. Thanks in advance!
Our yearly salary is $67,000; we have school & auto loans totaling $600/month-no other debt. Though our cash reserves are $10,000, we don't want to put much money down or on closing costs (we have a lot of furniture to buy, plus we don't want to eat into our emergency fund). Including stocks, mutual funds, bonds, and autos, our assets are $40,000. Our credit scores are 720 & 810.
If there is any more details you need, please let me know. Thanks in advance!
Welcome to the forums!
You should be looking at two options.
They are...
Conforming Lenders - multiple programs
FHA Lenders
You should qualify for the best rates but more information is needed to determine that.
You can get no money down financing, however you will need to pay mortgage insurance or do an 80/20 as you have mentioned. (80/20 loans are typically more expensive, currently, than paying mortgage insurance)
Do you have any personal reasons for an 80/20 that I may not be aware of?
Is this your first home purchase in the last 3 years?
If yes, do you rent currently? for how long?
Are you self employed? W-2's? for how long?
It appears you are in the top tier as far as mortgage customers go. You should be able to get competitive rates and terms.
Being with a mortgage broker, I obviously recommend going with one. Typically, and especially on 100% loans, you can get a better rate than dealing with a local bank. But it depends on the situation and they are all different, so you never know. And it never hurts to shop around, just don't let 50 people pull your credit.
You should be looking at two options.
They are...
Conforming Lenders - multiple programs
FHA Lenders
You should qualify for the best rates but more information is needed to determine that.
You can get no money down financing, however you will need to pay mortgage insurance or do an 80/20 as you have mentioned. (80/20 loans are typically more expensive, currently, than paying mortgage insurance)
Do you have any personal reasons for an 80/20 that I may not be aware of?
Is this your first home purchase in the last 3 years?
If yes, do you rent currently? for how long?
Are you self employed? W-2's? for how long?
It appears you are in the top tier as far as mortgage customers go. You should be able to get competitive rates and terms.
Being with a mortgage broker, I obviously recommend going with one. Typically, and especially on 100% loans, you can get a better rate than dealing with a local bank. But it depends on the situation and they are all different, so you never know. And it never hurts to shop around, just don't let 50 people pull your credit.
Be sure to get options. Eric is right a Mortgage Broker has more programs available for your needs.
Look at the 80/20, FHA, My Community 100 for no money down.
Then for 5% down see what you would pay on a 95% Conforming loan with PMI and compare that to an 80/15.
Any others you want to add Eric?
Eric asks some good questions that may affect your ability to obtain any of these loans so be sure to let him know.
Your loan officer will know what these programs are, I hope, and if you want to know more about them just ask.
Look at the 80/20, FHA, My Community 100 for no money down.
Then for 5% down see what you would pay on a 95% Conforming loan with PMI and compare that to an 80/15.
Any others you want to add Eric?
Eric asks some good questions that may affect your ability to obtain any of these loans so be sure to let him know.
Your loan officer will know what these programs are, I hope, and if you want to know more about them just ask.
hi,
please correct me if i am wrong but i've come to know that not many lenders are now offering 80-20 loans.
plantationcat, you have good income and assets and your scores are good enough to help you qualify for some of the best loan offers available. since you don't want to put enough money down, therefore try for fha loans as you can get around 97% financing there. so, that will be pretty close to your 100% financing which you are looking for in the form of 80-20 loans.
moreover, when you take out an 80-20 loan, it's like managing 2 loans - one being a second mortgage, and who wants to take a risk by having another loan against the home.
the debts that you are paying for such as school and auto loans aren't enough, so your debt ratios will hopefully be ok. so, qualifying for fha loans won't be any problem. apart from this, you can try out with mycommunity mortgage or other conventional loans.
in case you wish to put more money down, you can also look for some down payment assistance offered by the hud or ameridream.
regards,
jessica
please correct me if i am wrong but i've come to know that not many lenders are now offering 80-20 loans.
plantationcat, you have good income and assets and your scores are good enough to help you qualify for some of the best loan offers available. since you don't want to put enough money down, therefore try for fha loans as you can get around 97% financing there. so, that will be pretty close to your 100% financing which you are looking for in the form of 80-20 loans.
moreover, when you take out an 80-20 loan, it's like managing 2 loans - one being a second mortgage, and who wants to take a risk by having another loan against the home.
the debts that you are paying for such as school and auto loans aren't enough, so your debt ratios will hopefully be ok. so, qualifying for fha loans won't be any problem. apart from this, you can try out with mycommunity mortgage or other conventional loans.
in case you wish to put more money down, you can also look for some down payment assistance offered by the hud or ameridream.
regards,
jessica
Jessica,
80/20 loans are still available.....Thats not really an issue to do. The question is..what is the best option for the OP and they do have plenty of options available
80/20 loans are still available.....Thats not really an issue to do. The question is..what is the best option for the OP and they do have plenty of options available
Yep, they are. Not as easy to get these days but they are still available with several large wholesale lenders. Compare 0,3, and 5% down products and make a decision based on what is best for you. Also get your loan officers recommendation.
Good advice.
Good advice.
Opps I did it again. :-) My avatar is a lady too.
Ill chime in.
While you can get 100% financing nowdays and from what you have said it seems you whould qualify easily, these types of programs on conforming side will become more expencive for you due to mortgage insurance and higher interest rates. An 80/20 split might send you even higher as far as payments are concerned and might be hard to find. Also if you are in a deterioriating home value area (there are quite a few nowdays) you might not be able to go 100% because the lenders wont allow you.
This is exactly why looking at FHA program might be a good option for you. Even though it is typically a slower to get done and you have to finance 1.5% upfront MI into your loan, FHA offers 97% financing (100% if you use Nehemiah for contributions that can be negotiated with the seller) at typicallly lower rate then 100% conforming products and the monthly MI is lower. As an additional bonus FHA loans are easier to get and FHA is more willing to work with you in the event of you facing financial problems in the future.
If you only have 10k in reserves and want to keep some of it 100% or close to that is the type of financing you need. Nowdays you can easily negotiate with the seller to pay for your closing costs. And with downpayment assistance or 100% financing you should be able to get into a home with litle or no money.
Make sure to talk to a broker who can do FHA and knows what he is doing. Get a second opinion, and perhaps check with local bank to compare. Then go with the best deal.
Good Luck
While you can get 100% financing nowdays and from what you have said it seems you whould qualify easily, these types of programs on conforming side will become more expencive for you due to mortgage insurance and higher interest rates. An 80/20 split might send you even higher as far as payments are concerned and might be hard to find. Also if you are in a deterioriating home value area (there are quite a few nowdays) you might not be able to go 100% because the lenders wont allow you.
This is exactly why looking at FHA program might be a good option for you. Even though it is typically a slower to get done and you have to finance 1.5% upfront MI into your loan, FHA offers 97% financing (100% if you use Nehemiah for contributions that can be negotiated with the seller) at typicallly lower rate then 100% conforming products and the monthly MI is lower. As an additional bonus FHA loans are easier to get and FHA is more willing to work with you in the event of you facing financial problems in the future.
If you only have 10k in reserves and want to keep some of it 100% or close to that is the type of financing you need. Nowdays you can easily negotiate with the seller to pay for your closing costs. And with downpayment assistance or 100% financing you should be able to get into a home with litle or no money.
Make sure to talk to a broker who can do FHA and knows what he is doing. Get a second opinion, and perhaps check with local bank to compare. Then go with the best deal.
Good Luck
Thanks so much for the quick replies!
To answer Eric's questions first:
Do you have any personal reasons for an 80/20 that I may not be aware of? --No, that just seemed reasonable after some research; plus it was our best option when we talked to a couple of banks back in April.
Is this your first home purchase in the last 3 years? --I'm 23...this is my first home purchase EVER.
If yes, do you rent currently? for how long? --We are currently renting a house ($1400 rent...that is way expensive here, you can see why I want to buy a house instead). We've been in it since July, but before that I had a two year rental apartment, and have had an excellent history.
Are you self employed? W-2's? for how long? -Not self-employed; both my husband and I are paid through established businesses & have clear W-2's from the past years. Though--both of us graduated college and have only had these salaries since May--they are clearly well-established jobs for the long-run and we have the educations and experience to stay with same salaries in the future.
To answer Eric's questions first:
Do you have any personal reasons for an 80/20 that I may not be aware of? --No, that just seemed reasonable after some research; plus it was our best option when we talked to a couple of banks back in April.
Is this your first home purchase in the last 3 years? --I'm 23...this is my first home purchase EVER.
If yes, do you rent currently? for how long? --We are currently renting a house ($1400 rent...that is way expensive here, you can see why I want to buy a house instead). We've been in it since July, but before that I had a two year rental apartment, and have had an excellent history.
Are you self employed? W-2's? for how long? -Not self-employed; both my husband and I are paid through established businesses & have clear W-2's from the past years. Though--both of us graduated college and have only had these salaries since May--they are clearly well-established jobs for the long-run and we have the educations and experience to stay with same salaries in the future.
I think Eric is giving good advice.......Since we don't know what market you are in.....it's hard for us to give anything more than generic answers. He mentions FHA because in declining markets it is often times the only option......However......and theres always one of those.......there are still a cpl of portfolio lenders.....with good rates that will do a 100% loan even in a declining market......as an 80/20 or at 100%.....so in essence......you need to talk with a broker or lender who can offer both......let you look at the closing costs........and payments.......side by side.....and make an informed decision.
there is no question that eric is on point with his recommendation of fha financing.
it is readily apparent that the interest rates and costs are overwhelmingly more favorable with fha than with conforming. my community loans are a wonderful product, but the rates are structured quite a bit higher, as they are with fnma flex 100 and the like.
another item worth looking into is whatever bond programs there may be in the area in which you live. as a first time homebuyer, you can do quite well with those programs.
in 2008, my feeling is that 80/20 financing is much less wise than it used to be, particularly since mortgage insurance premiums are tax-deductible.
it is readily apparent that the interest rates and costs are overwhelmingly more favorable with fha than with conforming. my community loans are a wonderful product, but the rates are structured quite a bit higher, as they are with fnma flex 100 and the like.
another item worth looking into is whatever bond programs there may be in the area in which you live. as a first time homebuyer, you can do quite well with those programs.
in 2008, my feeling is that 80/20 financing is much less wise than it used to be, particularly since mortgage insurance premiums are tax-deductible.
"Please correct me if I am wrong but I've come to know that not many lenders are now offering 80-20 loans"
Some offer them but as Eugene pointed out, they can be quite expensive compared to paying mortgage insurance.
"No, that just seemed reasonable after some research; plus it was our best option when we talked to a couple of banks back in April."
I suspected that... and back in April it probably was a better option... but alas things change so quickly in this business... it always seems like we (loan officers) are always trying to sell the same programs different ways at different times.
After consideration of your last comments, I think that FHA is going to be your best option. They are very lenient when it comes to job history coming out of college. You are correct in thinking that your education history will help as far as job history goes. But as I said before it doesn't hurt to check every option, and a typical broker will anyway even if you don't ask them to.
Good luck and happy house hunting.
Some offer them but as Eugene pointed out, they can be quite expensive compared to paying mortgage insurance.
"No, that just seemed reasonable after some research; plus it was our best option when we talked to a couple of banks back in April."
I suspected that... and back in April it probably was a better option... but alas things change so quickly in this business... it always seems like we (loan officers) are always trying to sell the same programs different ways at different times.
After consideration of your last comments, I think that FHA is going to be your best option. They are very lenient when it comes to job history coming out of college. You are correct in thinking that your education history will help as far as job history goes. But as I said before it doesn't hurt to check every option, and a typical broker will anyway even if you don't ask them to.
Good luck and happy house hunting.
My advice is that there is no reason to go FHA and pay mortgage insurance when the poster seems to qualify for an 80/20 mortgage that will eliminate mortgage insurance and reduce payments. It is the best way to go if they are not putting any money down. 5% down with no PMI one would be a better value if they choose to put some money down. Otherwise the 80/20 should provide the best structure at the zero money down level.
Looks like you got a ton of great advice, good luck on your decision.
Each of you has been very helpful--I really appreciate the advice and support that you give. You are underappreciated!
My husband went to several banks Friday & spoke with a couple of brokers. Based on his research (plus the first hand mortgage experiences of close friends) we are going with a bank (I won't name it, since yall would all recognize...) Our best option NOW seems to be FHA loan with 97% financing. If we pull a couple thousand out of savings and sell a small portion of mutual funds, it will serve us better in the long run. Plus, the mortgage we're being offered will be at a 5.6% rate; no PMI; no closing costs; no application fees. Basically our only out-of-pocket cash will be towards the down payment.
Interestingly of the banks he talked to, absolutely none offered any 100% financing anymore. Not too suprising considering the mortgage market.
Again, thank you all very very much. --I'm still willing to take any parting advice should I need it!
My husband went to several banks Friday & spoke with a couple of brokers. Based on his research (plus the first hand mortgage experiences of close friends) we are going with a bank (I won't name it, since yall would all recognize...) Our best option NOW seems to be FHA loan with 97% financing. If we pull a couple thousand out of savings and sell a small portion of mutual funds, it will serve us better in the long run. Plus, the mortgage we're being offered will be at a 5.6% rate; no PMI; no closing costs; no application fees. Basically our only out-of-pocket cash will be towards the down payment.
Interestingly of the banks he talked to, absolutely none offered any 100% financing anymore. Not too suprising considering the mortgage market.
Again, thank you all very very much. --I'm still willing to take any parting advice should I need it!
Make sure to have them give you a "Good Faith Estimate". That sounds like a really great deal. I can't say that I ever saw FHA financing without PMI though. Are you getting a 15 year loan or 30 year. That rate and fees is amazing.
Could you private message me the name of the bank? I would greatly appreciate it.
Could you private message me the name of the bank? I would greatly appreciate it.