the$inmusicisallmine wrote:what they all said:
Fuck mortgage brokers. You can do that yourself. Get on the net and look at the big national consumer banks - wells fargo, bank of america, look at the strong regional banks wherever you are. Look at the national internet only banks.

There is a lot of truth to this. However, be advised that any bank you walk into be it Wells Fargo, Washington Mutual, Countrywide, or Bank of America has a person there looking to fuck you. Most of the time this person's income is based partially on how bad of a deal they can give you. The only advantage to a mortgage broker is they can give you a lot more options than a single bank can. For example- I wholesale all 4 of these banks loans and I can always beat a rate quoted by a WaMu, Countrywide, BoA, or Wells Fargo inside mortgage person. Actually, stay away from Countrywide they usually try screwing their clients in fees. While a lot of brokers are pieces of shit who would screw over their own mother for a dollar- they still have their place. The biggest issue with mortgage brokers is that most of them are complete and total idiots who don't know what they are doing- literally don't know what they are doing. A honest mortgage broker who knows what he or she is doing will usually get you a better deal than you can get on-line or at a retail bank. I see it every day. The biggest problem is finding a honest and competent mortgage broker.

Wow- both of my careers, Landlord and mortgage broker, really are understandably hated by almost everyone. I really am a nice person- I swear.

Actually, an interest only loan is an excellent alternative to a fixed 30 year mortgage IF you aren't planning on staying in the dwelling for more than a few (3-4) years. A lot of house "flippers" buy homes utilizing this method (often buying run down or repossessed homes) with the intentions of buying it low, fixing it up, and then selling or "flipping" it for a generally huge profit. This way, you make a very low monthy payment, fix it up, sell it for huge gains, pay off the principal, and use the earnings to purchase another home.

If you plan on staying in it for a while, you may want to speak with your states housing authority. They can usually offer you a great rate as well as DPA or down payment assistance. For instance, I live in KY and I was able to get a $5000 forgivable DPA loan (meaning I don't have to pay it back if I live there 5 years, which I planned to do) and a low 5.25% fixed APR for 30 years.

You have been given fairly good advice so far except for the over-generalization to stay away entirely from ARMs. Again, if you plan to stay in the property for a limited amount of time, say, for as little as 5 years, then I would still have your broker price out 5 year ARMs. You can either do a fully-amortized or interest-only ARM, but with the latter compare the amount of money a month you would save in terms of added disposable income versus how much you would pay down your loan balance in 5 years.

I would recommend beginning the process with a reputable mortgage broker, and once he/she pulls your credit report you want to obtain a copy of it. You are entitled to it. Use the credit report to help you shop around for the ideal program with the best interest rate(s) and lowest possible fees.

If you are interested in an ARM, and you have at least 5% equity, then you most definitely have to shop your scenario with ING Bank's retail mortgage division. They have a portfolio product that typically beats most of the competition. You need good credit scores, though. I go against them all of the time in the open market, and I have to cut my margins to the bone (even when I use their wholesale division) to keep the client.

But no matter what do not use any of the online bullshit like Lending Tree. They'll take you for a sucker. Oh, and in most instances paying points up front is also being taken for a sucker. Don't be a sucker.

1. I have had good luck getting banks to bid against each other. So, yes, the jerkoff at the desk in Bank of America wants to fuck you, but he wants the business. You can run the deal by Wells Fargo, and see if they will beat it, and then turn around and grind down Bank of America with the WF deal, etc.

2. If you have some flexibilty in your mortgage payments, then by all means consider an Adjustible Rate. Most of us don't, and I for one feel much more confident knowing that my payment will stay the same for the life of my loan. I think most of us feel that way. Especially with interest rates climbing right now.

good luck.

Sorry- I don't know where to the best place to post this is and I think some people might find it helpful.
FYI-
The yield on the 10 year bond is falling, driving down interest rates on 30 year fixed mortgages. I think you'll start seeing 30 year rates below 6% again in the next week or so.

Tony wrote:You have been given fairly good advice so far except for the over-generalization to stay away entirely from ARMs. Again, if you plan to stay in the property for a limited amount of time, say, for as little as 5 years, then I would still have your broker price out 5 year ARMs.

You may be planning to stay in your house for only 5 years. But what if 5 years pass, you're ready to sell, and nobody wants to buy your place for the price you want?

It seems to me that the slam-dunk nature of the housing market for sellers in big cities over the past decade or so is changing.

Good luck to you, Pure L.

Not even a year old post and I hardly remember writing it......

I'm on a 30 yr fixed now. Couldn't tell you what rate I got though......

Huge, massive debt. It's the new thang.


[whimper]

I have a scenario and a question or two

A newlywed couple are looking to buy their first home. Maybe a 2 or 3 flat to live in one apartment, rent the rest and eventually moving out but keeping it as a rental property for a long time. One of them is a veteran with ok credit, the other has horrible credit. Both have solid incomes. They manage to come up with 25% for a down payment.

So the question is, is the bad credit offset by the large down payment? Is the fact that it's a rental property make it more attractive to lenders? Or does that not matter?

El Protoolio,

A large down payment such as 25% usually offsets bad credit scores/history when obtaining a mortgage. One of the keys to understanding how to obtain a mortgage is empathizing with mortgage lenders. You need to understand the problems caused by a first-time default (meaning: the borrower fails to make even one mortgage payment).

A borrower's bad credit scores/history increases the chances of a first-time default, but because the borrower has put 25% down there is more than enough equity in the property for the lender to profit in case of default. Therefore, they should offset. The other variable to take into consideration is income, or more specifically, your debt-to-income ratio (the amount of your monthly income used to pay off your monthly debt as reported on your credit report as well as is proposed by your future housing expenses). Most mortgage programs allow for 45% or less of your income to go to such expenses.

Also, purchasing a multi-unit property is often times more risky than purchasing, say, a single-family home. The reason is in most cases the borrower is depending upon the rental income to make the mortgage payments on the building. Receiving rent checks on a timely basis is not as easy as it may seem. Keeping the rental units occupied is also difficult.

I like your idea of buying a multi-unit property in the hopes it will cash flow. Trying to find one in an even semi-decent neighborhood in the city of Chicago is increasingly difficult, though. My advice is, before doing anything, to get prequalified with a reputable mortgage broker. Then, begin your search with a realtor who specializes in multi-unit residential properties.

Oh, also, stay from option ARMs and their recently born little brother, hybrid ARMs. They're garbage, and no longer make sense in today's real estate market.

El Protoolio wrote:I have a scenario and a question or two

A newlywed couple are looking to buy their first home. Maybe a 2 or 3 flat to live in one apartment, rent the rest and eventually moving out but keeping it as a rental property for a long time. One of them is a veteran with ok credit, the other has horrible credit. Both have solid incomes. They manage to come up with 25% for a down payment.

So the question is, is the bad credit offset by the large down payment? Is the fact that it's a rental property make it more attractive to lenders? Or does that not matter?

With 25% down you won't have any trouble getting approved for some type of mortgage unless the credit is really really really bad. Also, I'd check out a V.A. loan. Even with marginal credit you can actually get a really good interest rate. Also, Tony's advice is pretty spot on.