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Thread: Mortgage Management

  1. #21
    MRD
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    Quote Originally Posted by Broadway View Post
    rt1ky... is it your realtor that wants you to get a commitment letter from the mortgage company that's pre-qualified you? And are you just in a low income situation, or do you have bad credit, too?

    In my opinion, and that's all that it is, the first thing I would do is figure out exactly how much per month you can afford (and make sure you take into account property taxes.. so many people forget and then they have no money for them!!!) and then calculate, using today's interest rates, how much of a house you can afford. If that first person that has pre-qualified you has done so at the rate of what you can afford, then there's really no need to get multiple pre-approvals. Also, if they have approved you for MORE than what you've calculated, do not try to buy a house at that higher value as you know that you can't afford it. It'd be tempting (well, they qualified me for that amount), but don't get yourself into trouble.

    I believe my first loan was a Fannie Mae. My mortgage company also had to set me up with two mortgages in order to afford my first place... the first was at 7% and the second was at 12%. I can't remember what they call that type of thing, but it was a good deal for me at the time (2000).

    Ask the mortgage company whether they keep your loan, or whether they sell it. That might be a deciding factor as to whether you get another pre-approval.... as it's beyond a pain in the ass to get involved with a mortgage company that sells your loan. The next company might raise rates, change the deal, or sell it again, etc... Dangerous.

    I don't know anyone that has bought a foreclosed house, but it does seem like it would have risks. I'm not sure if you have an opportunity to inspect foreclosed homes before you buy them or not. If not, stay far far away.

    And, if you're looking at condos (I'm on my third!), then make sure you take into account the association fees when you look at them. You may qualify for $150,000 house, but $100/mth association fee can turn that into being able to afford $130,000 place if you do your calculations. But they're definitely a great, great option if you don't want to do your own lawnwork and outdoor maintenance.

    Lastly, this might be the perfect time to get into a deal with the expectation of refinancing in one year. It would appear that the rates will start dropping again due to the inflation that's setting in. Ask your mortgage lender if you can refinance in 6-12 months if that's the case. Some let you do it once a year, but if you've got a credit situation right now... getting into a place at a slightly higher rate and then proving that you'll be able to keep up with payments will encourage them to lower your rate.

    Good luck! It's a fun time!
    Foreclosed homes can be a good deal. Any lender is going to ask for a title search binder before they give the loan, so they will know ahead of time if the title to the home is clear and free of liens, etc. So sometimes a foreclosed home can be a great way to get a decent home for less. AGain, Hud will inspect it and require it be in tip top shape if you go with them.

    As broadway said, figure out what your payments would be. there are several sites that run amortization schedules (which is what your payment would be. You put in the loan amount, the interest rate and the term (20 years, 30 years). And you can call your local tax office to find out what tax rates are and what rate they give for homestead exemption. Here they take $25,000 off the home and figure out your taxes on the appraised value of the home minus $25,000 for homestead exemption.
    Homeowners ins. is sometimes figured into your montly loan payments too.

    Selling mortgages. IT's done all the time, but the buyer HAS to go by the terms of your mortgage. What you sign is a contract and if they violate that, then you can come back on them. Even tho someone else has bought your mortgage, they still have to abide by the conditions layed out in the mortagage papers. But read it carefully because they could put in provisions that say should the loan be assigned to someone else, they have the right to readjust the interest rate.

    ASK ASK ASK ASK ASK ASK ASK lots and lots of questions of your lender, your realtor, your title insurance people, etc.

    I know that some of what we've told you sounds scary and most people don't have any problems, but it pays to be very informed when buying.
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  2. #22
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    Quote Originally Posted by Broadway View Post
    Noway... if you have never been involved, you wouldn't know. No worries.

    Refinancing is where at some point in the future you can renegotiate your mortgage at a different interest rate. So you might get a higher loan rate right now because you're an unknown, and then at some point down the road your lender would be willing to refinance you and lower your rate once you've proven your ability to pay and pay on time.

    It's not as big of an issue if you don't have credit problems, but sometimes unknowns can be risky, too.

    ANd you don't have to refinance with the same lender that initially financed your loan. If Bank A gives you a loan at 9% interest and in a year you decide you would like to finance after having a year of good payments recorded on your credit report, then you could go to Bank B or C and get them to refinance your house, paying off Bank A. But look to make sure there are not penalties for paying loans off early.

    AND DO NOT TAKE AN INTEREST ONLY LOAN. Those are bad news. Our neighbors have one of those. The first 4 years they are only paying interest, not principal, so for the first 4 years, they are not building up equity (the amount of the home YOU own and not the bank). Should they need to refinance or get a 2nd mortgage for an emergency, they have no equity in their own home in which they can do it.
    These loans look attractive because the interest payment for the first few years is not that high, but after the interest only time period ends, then you start paying down on the principal, your montly paymen increases.
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  3. #23
    Dreamer rt1ky's Avatar
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    Thanks. I think I'm going to ask my realtor and the mortgage company if I try for a larger loan. Right now I am approved for a loan that is lower tha most of the homes in my county. I think it must be my graduate student salary, because my credit is good. I'm currenly looking into other loan program websites and calculators to see what can be done.

  4. #24
    Scrappy Spartan Broadway's Avatar
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    Cool... but again, don't try to max out your qualifications. Sit down and take an honest look at what you can afford per month. That'll take into account your mortgage payment, escrow (which will cover property taxes) and your utility costs.

    Just an example.... I financed $120,000 loan (i had a significant down pymt.) Your 30 yr mortgage (at 5.5%... so this amount will go up with the current rates) would be just shy of $700/mth. My property taxes are $1300 every six months so add in another $250/mth. Then add in association dues of $175/mth, electrical bill of $100, gas bill of $40, water bill of $2, and phone bill of ? and you've got significant monthly expenses. I don't even remember what PMI expenses run these days.. but you can expect to pay that if you're not putting 20% down. And don't forget homeowner's insurance.

    Just a warning... even if they approve a higher amount you just might not want to take it on a graduate student's salary.
    Never let the things you want make you forget about the things you have.

  5. #25
    Dreamer rt1ky's Avatar
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    I just did some mortgate and loan calculators over at the FHA site. Things don't look good. My problem is that I have asthma and my new downstairs neighbor smokes cigars and the smoke comes up to my apartment which causes my lungs to burn. My landlord says there is nothing they can do about it. I already have to avoid situations are work because of my asthma, I don't want to have to deal with it at home too. Oh well. I need to stop talking about this before I cry again.

  6. #26
    Scrappy Spartan Broadway's Avatar
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    Oh no. That's so not a good situation.

    And don't cry! It'll all work out!
    Never let the things you want make you forget about the things you have.

  7. #27
    Dreamer rt1ky's Avatar
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    Quote Originally Posted by Broadway View Post
    Oh no. That's so not a good situation.

    And don't cry! It'll all work out!
    Thanks for the encouragment. I've already got so much medication and so many hopsital visits because of my lungs that I really feel like I'm trapped between a rock and a hard place. I can't afford to buy, but staying here is potentially killing me.

  8. #28
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    Ask the realtor and the mortgage person about programs that help first time home buyers and low income home buyers. There are programs that do help.
    You should be able to find something and get out of that situation. My daughter has asthma and so I know what you are going through.

    Have you talked to the neighbor to explain what his indoor smoking is doing to you?

    Good luck
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  9. #29
    Dreamer rt1ky's Avatar
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    Quote Originally Posted by myrosiedog View Post
    Ask the realtor and the mortgage person about programs that help first time home buyers and low income home buyers. There are programs that do help.
    You should be able to find something and get out of that situation. My daughter has asthma and so I know what you are going through.

    Have you talked to the neighbor to explain what his indoor smoking is doing to you?

    Good luck
    My landlord doesn't want me to talk with him. They say legally no one can stop him from smoking.

  10. #30
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    Quote Originally Posted by rt1ky View Post
    My landlord doesn't want me to talk with him. They say legally no one can stop him from smoking.

    I'm sorry, but this is YOUR health and your landlord cannot stop you from talking to one of your neighbors. Perhaps you could make him some banana bread, take it down to him and say: Hi, I'm your upstairs neighbor, I brought you a treat and I wanted to talk to you about something. I have severe asthma and your cigar smoking is aggravating it to the point where I am sick. Is there any way you can smoke outside?

    Now how is that so bad? Do it nicely and tell your landlord that you either had to do it or go in the hospital. He (landlord) sounds like a jerk. No you can't legally stop him from smoking, but you can ask nicely and explain the situation.
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