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post #1 of 42 (permalink) Old 09-15-2006, 07:13 AM Thread Starter
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1st home purchase question, loans

May be able to swing purchasing my 1st place next year sometime hopefully. Here is a question for all you credit guru's.
I have perfect credit, score in the upper 700's
No credit card debt, only debt is the car.
Will not have the 20% to put down, more like 10%
Am not interested in the interest only options but rather something more traditional like a 5 or 7 yr arm or regular 30yr.
Here is the question. Would it be better to pay off the car and go for the loan 100% debt free or would it be better to take the 10k and add it to the down payment rather than paying off the car?

Just curious, not 100% I will be buying next year and who knows what interest will be then or how the job market will be but this question always perplexed me.

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post #2 of 42 (permalink) Old 09-15-2006, 07:22 AM
 
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Whats the interest on the car ? Interest on the house is obviously tax deductible, on the car not. I would consider those factors. I dont think having a car payment vs not having one is going to make a huge difference in the deal you will get for the rate on the house. I personally would take the money and put it into the downpayment.
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post #3 of 42 (permalink) Old 09-15-2006, 07:28 AM
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I really wish I was in your shoes when I bought my house... I had like 3% down, CC debt, Car debt, motorcycle debt, etc.

I know that you want SOMETHING down, it's much better then 0% down. as for like the 10K as 10% down vs. paying off your car, remember this, paying off the car now will get you a lower payment, because the amount of debt you will carry is the same, but the term by which you pay off that portion of the 10K is stretched out over a much longer period.

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post #4 of 42 (permalink) Old 09-15-2006, 07:28 AM
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well it depends...are you ex military at all? casue if you are, use your V.A. loan and you dont have to put down a single penny...

as far as paying off your vehicle, it all depends on how much you owe on it...but if that is really all you have a debt to, then it wont matter at all...they go by the basis of how much you make $ wise versus how much you owe companies...as long as you are not paying over 500 a month to car payments...you should be just fine...

but looking into a house...you should honestly look into 30 year off the bat or a 15...the only real reason people look into arm loans is cause they dont exp[ect to live at a certain house for more then 7 years and looking to make a profit on it before they move up...let me put it to you this way...i bought my place for a 30 @ 7.5 apr...then 9/11 hit and i refinanced at 5.5 for a 15 year loan and ended up paying the same amount ...

with arms, the payments will go up and down cause you are paying mostly interest...find a house that you really really like and stick with a 15 or 30...all the $ u dump in will not go to waste and to top it off...if you do go with a arm...after that arm is over...you have to pay for closing costs AGAIN when you decide on which payment you want to stick with...you can always refinance after a year...dont be a schlub...do it right the 1st time...

...plus my gf was with me saying "omg slow down, slow down" and I was thinking "Lose annoying squalk box in passenger seat, afford more mods and have less weight in the car and on the back of the bike"...so i dumped her and I'm single again as usual...HERE KITTY KITTY!!!
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post #5 of 42 (permalink) Old 09-15-2006, 07:40 AM Thread Starter
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Thanks everyone, sounds like the car note which is less than 300 is not anything to worry about. An extra 10k towards the down payment seems smarter after reading the posts. We will see what happens, a lot can happen in a year. Mind blowing how expensive everything is. The tables are really tilted against a single buyer. You really need two incomes to afford anything now a days unless you want to move way the fuck out. I refuse to move far out so I am lubing up right now. 200k+ is the norm for a small condo in my area I can't even think about an actual house here, baby steps.....No body gets their dream place as thier first place.

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post #6 of 42 (permalink) Old 09-15-2006, 07:50 AM
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best way to figure it out...is that you take your yearly income and multiply it by 2.5...that tells you how much house you can afford...so say u make 50k a year, then you can spend $125k on a house...down payments do help knock it down so if you have 10k then you can look at houses around 150k...the reason for the 2.5 model is that it wont kill you in interest charges...but also remember all the stupid shit you have to get...like say a new water heater, washer/dryer, etc etc incase something goes bad with one of them...

...plus my gf was with me saying "omg slow down, slow down" and I was thinking "Lose annoying squalk box in passenger seat, afford more mods and have less weight in the car and on the back of the bike"...so i dumped her and I'm single again as usual...HERE KITTY KITTY!!!
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post #7 of 42 (permalink) Old 09-15-2006, 07:51 AM
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Quote:
Originally Posted by Thunderstruck
well it depends...are you ex military at all? casue if you are, use your V.A. loan and you dont have to put down a single penny...

as far as paying off your vehicle, it all depends on how much you owe on it...but if that is really all you have a debt to, then it wont matter at all...they go by the basis of how much you make $ wise versus how much you owe companies...as long as you are not paying over 500 a month to car payments...you should be just fine...

but looking into a house...you should honestly look into 30 year off the bat or a 15...the only real reason people look into arm loans is cause they dont exp[ect to live at a certain house for more then 7 years and looking to make a profit on it before they move up...let me put it to you this way...i bought my place for a 30 @ 7.5 apr...then 9/11 hit and i refinanced at 5.5 for a 15 year loan and ended up paying the same amount ...

with arms, the payments will go up and down cause you are paying mostly interest...find a house that you really really like and stick with a 15 or 30...all the $ u dump in will not go to waste and to top it off...if you do go with a arm...after that arm is over...you have to pay for closing costs AGAIN when you decide on which payment you want to stick with...you can always refinance after a year...dont be a schlub...do it right the 1st time...
im on an arm, a five year arm. and I really question if you know what your talking about with regards to arms. Very few people live in there first house past like 3 1/2 years. Most people that buy there first house do it as there income is still rising, most people do it with other debt to pay off (weddings, school loans, etc)... I bought my first house as a fixer upper. I bought it on a five year arm. My itnerest rate is LOCKed for the first five years, and I saved about 1 point over a 30 year fixed. on top of that, my interest rate is better for the first 6 1/2 years. It can only move a certain amount, like a 1/2 point every six months, it's capped, sof for the first year and a half after my arm is over, my interest rate is locked, and I can only go up NO more then 2 points TOTAL rise... so basically the higest it can ever go is only 1% above a 30 year fixed anyway.

Also, if you don't have enough to put 20% down, you are going to have to pay PMI, and most people are able to get out of PMI after the first two or three years, and the only way to get out of PMI is to have your house refinanced and when you refinance, you do so with a favorable home appraisal that shows the property increased in value the remaining amount. If I know that I am going to refi within the first three years, why WOULDN'T i save the money on an ARM

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post #8 of 42 (permalink) Old 09-15-2006, 07:55 AM
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Quote:
Originally Posted by Thunderstruck
best way to figure it out...is that you take your yearly income and multiply it by 2.5...that tells you how much house you can afford...so say u make 50k a year, then you can spend $125k on a house...down payments do help knock it down so if you have 10k then you can look at houses around 150k...the reason for the 2.5 model is that it wont kill you in interest charges...but also remember all the stupid shit you have to get...like say a new water heater, washer/dryer, etc etc incase something goes bad with one of them...
this also depends on your taxes, and I think because the price of taxes varies SO WIDELY between different places. Consider this, my taxes in cook county on a small home are $2900 a year. for a similarly priced home in Boilingbrook, I was told my taxes would be between 8K and 12K. For every 1000 in taxes you coiuld spend 10K in house price without your mortgage price being changed. So keep that in mind as well.

I bought a house that is slightly over 2.5x what I make, and the mortgage isn't terrible...

<-- Chris

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post #9 of 42 (permalink) Old 09-15-2006, 08:04 AM
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Thunderstruck caught a good point.. you need 'other' stuff as well as the down payment. Figure about $400 for an inspection, $200 for an appraisal, and any appliances not included. If there are any appliances, figure one of them will break within a year. within a year of owning my house the drier went out and the furnace cracked the heat exchanger.

As for paying down debt vs. car payment..will the car be paid off in say..$10K? If you 'pay down' the debt but still owe on it, then it doesn't make sense to dump an assload of money into it. Then you'll STILL have a payment and no money for a house. If it's a couple grand to pay off, then go and do it. But if you still owe $15k or so, I'd just keep making slightly larger payments while saving for the house. Even at $1.5-2.5K per month of saving, it takes close to a year for a down payment.

then again, I'm not Suze Ortman (or whoever that financial guru is), but I play one on the internet

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post #10 of 42 (permalink) Old 09-15-2006, 09:41 AM
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Definitely keep the 10K for down payment and closing costs, etc. 5% down should get you a loan, and anything leftover can be used for closing costs, appliances needed, etc. You will pay PMI, but many people have to do that with their first house (I know I did)

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post #11 of 42 (permalink) Old 09-15-2006, 09:49 AM
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If the car loan has a year or less on it when you go to buy, they don't count it against you.

Figure your gonna pay $7 for every $1,000 you borrow.

Also, an easy way to figure out what payment you can qualify for is to take 38% of your gross monthly income (that's before taxes). Next, subtract payments for any non-cancelable debt you have (car, credit card - not insurance or phone or anything you can actually cancel) and what's left is roughly the payment you can qualify for.

PMI - If you are over 80% loan to value you will pay PMI, but if you split it into two loans you can avoid that.

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post #12 of 42 (permalink) Old 09-15-2006, 09:53 AM
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Yep, property in the city is inflated like crazy. Single buyer is next to impossible on an average salary I'll be damned if I buy a place out in bufu. Guess i'm going to be renting for awhile

Quote:
Originally Posted by under200
Thanks everyone, sounds like the car note which is less than 300 is not anything to worry about. An extra 10k towards the down payment seems smarter after reading the posts. We will see what happens, a lot can happen in a year. Mind blowing how expensive everything is. The tables are really tilted against a single buyer. You really need two incomes to afford anything now a days unless you want to move way the fuck out. I refuse to move far out so I am lubing up right now. 200k+ is the norm for a small condo in my area I can't even think about an actual house here, baby steps.....No body gets their dream place as thier first place.

Under200

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post #13 of 42 (permalink) Old 09-15-2006, 09:57 AM
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I am in the same boat, about to meet with a mortgage broker to see what my options are as far as loans to purchase my first home.

I will be staying away from the interest only, but is an ARM really a good idea these days either? What are the smartest options for someone like me as I am trying to maximize what I can afford because I would like to stay in the area I am currently in...and it's quite overpriced. It will be my girlfriend and myself purchasing a home.

The only debt we have is about $400 in a bike and car payment. Our credit is good.
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post #14 of 42 (permalink) Old 09-15-2006, 10:06 AM
 
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Paying down credit or having a down payment

Lenders expect you to have other debt; it shows how you handle credit.
Call Kristy Middling @ Guaranteed Rate 773.435.7940 and tell her Daniel Turney from Prudential Preferred recommended you call.

Current 30 yr fixed at 6.125%

If you are interesting in buying or selling a house or know someone who is contact me through www.northshorepreferred.com
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post #15 of 42 (permalink) Old 09-15-2006, 10:07 AM
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Here's something to think about.....In order to affect your payment by more then a hundred dollars you must put at least 20 grand down. If you put less then 20 grand down, then you are maybe lowering your payments by about 100 bucks. I put nothing down on my house. I took the 10 grand I had to put down, threw some of it to pay off cc debt, and then took the rest of it and bought stuff for the house and to improve the house. Your credit score is really good, and you could definitely get 100% financing at a good rate. I bought my house 5 years ago this November, nothing down, and my interest rate was 6.5% and my credit at that time was not as good as yours (was 20 at the time). I went through a broker, IMO, it's just easier that way.

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post #16 of 42 (permalink) Old 09-15-2006, 10:13 AM
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Quote:
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Lenders expect you to have other debt; it shows how you handle credit.
I have good credit history. Paid off my car, student loans and I have an Amex card that I payoff each month. I'm not worried about any of that. I just don't quite undertsand how people are able to afford the house they do. Is everyone but me making 6 figures?
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post #17 of 42 (permalink) Old 09-15-2006, 10:31 AM
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Originally Posted by danfalco
Current 30 yr fixed at 6.125%
]
It went DOWN in the last two months?

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post #18 of 42 (permalink) Old 09-15-2006, 10:33 AM
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Here is something to chew on:

$10K @ 5% over 30 years = $10K + ~$9.3K in additional interest

$10K @ 6% over 3 years = $10K + (**$3.3K in additional interest**)
**(assuming that you have only 3 years left on your car payment + most of the interest on a loan is paid up front so the actual interest will be a lot lower for the remainder of the 3 years)

I say use the money towards a down payment & not to pay your car off especially since your monthly car payment consists of mostly principal (since most of the interest is paid up front)

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post #19 of 42 (permalink) Old 09-15-2006, 10:56 AM
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Quote:
Originally Posted by .:K2:.
Here is something to chew on:

$10K @ 5% over 30 years = $10K + ~$9.3K in additional interest

$10K @ 6% over 3 years = $10K + (**$3.3K in additional interest**)
**(assuming that you have only 3 years left on your car payment + most of the interest on a loan is paid up front so the actual interest will be a lot lower for the remainder of the 3 years)

I say use the money towards a down payment & not to pay your car off especially since your monthly car payment consists of mostly principal (since most of the interest is paid up front)

one thing you forgot to mention is the monthly outlay. 10K over 3 years is like $3xx a month, over 30 years its probably like 1/8th of that.

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post #20 of 42 (permalink) Old 09-15-2006, 11:06 AM
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Quote:
Originally Posted by clearwaterms
im on an arm, a five year arm. and I really question if you know what your talking about with regards to arms. Very few people live in there first house past like 3 1/2 years. Most people that buy there first house do it as there income is still rising, most people do it with other debt to pay off (weddings, school loans, etc)... I bought my first house as a fixer upper. I bought it on a five year arm. My itnerest rate is LOCKed for the first five years, and I saved about 1 point over a 30 year fixed. on top of that, my interest rate is better for the first 6 1/2 years. It can only move a certain amount, like a 1/2 point every six months, it's capped, sof for the first year and a half after my arm is over, my interest rate is locked, and I can only go up NO more then 2 points TOTAL rise... so basically the higest it can ever go is only 1% above a 30 year fixed anyway.

Also, if you don't have enough to put 20% down, you are going to have to pay PMI, and most people are able to get out of PMI after the first two or three years, and the only way to get out of PMI is to have your house refinanced and when you refinance, you do so with a favorable home appraisal that shows the property increased in value the remaining amount. If I know that I am going to refi within the first three years, why WOULDN'T i save the money on an ARM


if you would have read my post CORRECTLY...i stated that MOST people do ARMS when they only suspect of living in a house for only a few years...so how about reading a bit better?....plus the way the rates have been for the last 2 years...they have only been going up...so no telling if it will go up further in the future back to the 8.5 and whatnot they used to be...and unlike most people...those that want a FIXED income so they know exactly how much they have to spend for a while will go with a 30 year like i did...and yes...it was my 1st house...i had no idea how long i was staying there...and have been there for over 5 years now...other then needing a 2nd garage and more liveing room...im happy with my place...i was only make speculation...whoever pissed in your cheerios this am...be pissed off at them....not me...learn to read better next time...

...plus my gf was with me saying "omg slow down, slow down" and I was thinking "Lose annoying squalk box in passenger seat, afford more mods and have less weight in the car and on the back of the bike"...so i dumped her and I'm single again as usual...HERE KITTY KITTY!!!
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post #21 of 42 (permalink) Old 09-15-2006, 11:11 AM
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Quote:
Originally Posted by clearwaterms
one thing you forgot to mention is the monthly outlay. 10K over 3 years is like $3xx a month, over 30 years its probably like 1/8th of that.
Right you are, $10K over 30 years will end up being about $58 a month (this includes almost $10K in interest)

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post #22 of 42 (permalink) Old 09-15-2006, 11:14 AM
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Quote:
Originally Posted by Keyhole
I have good credit history. Paid off my car, student loans and I have an Amex card that I payoff each month. I'm not worried about any of that. I just don't quite undertsand how people are able to afford the house they do. Is everyone but me making 6 figures?

no...either they dumped alot of $ into the houses...or they have serious debt in thier pockets...i have a buddy and his wife that bought a 425k home after not owning one at all...they are DEEP in debt...either one loses thier jobs...they will be screwed to say the very least...alot of people think they can afford a house @ 350k, and over extend themselves bigtime...its best to stick with 2.5 of your salary cause you never know what might come down the line later...like a roof...or the furnace...would you rather have a nice home and live comfortably...or a huge ass house to impress everyone and be broke all the time....i know what i want...

...plus my gf was with me saying "omg slow down, slow down" and I was thinking "Lose annoying squalk box in passenger seat, afford more mods and have less weight in the car and on the back of the bike"...so i dumped her and I'm single again as usual...HERE KITTY KITTY!!!
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mmmm pussy
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post #23 of 42 (permalink) Old 09-15-2006, 11:24 AM
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Quote:
Originally Posted by Thunderstruck
if you would have read my post CORRECTLY...i stated that MOST people do ARMS when they only suspect of living in a house for only a few years...so how about reading a bit better?....plus the way the rates have been for the last 2 years...they have only been going up...so no telling if it will go up further in the future back to the 8.5 and whatnot they used to be...and unlike most people...those that want a FIXED income so they know exactly how much they have to spend for a while will go with a 30 year like i did...and yes...it was my 1st house...i had no idea how long i was staying there...and have been there for over 5 years now...other then needing a 2nd garage and more liveing room...im happy with my place...i was only make speculation...whoever pissed in your cheerios this am...be pissed off at them....not me...learn to read better next time...

sorry, I didn't intend on offending you... for that I am sorry, I just wanted to defend arms because I believe they are a viable option for many people and also wanted to show the benefits of them. Often times if people like yourself (respected members of a community) pitch an idea, and nobody else offers a counter point, when the mortgage guy tries to pitch an arm regardless if it's beneficial to under200 or not, he will fell like he is being sold something, or at the very least feel like he is being pressured.

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post #24 of 42 (permalink) Old 09-15-2006, 11:28 AM
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Quote:
Originally Posted by clearwaterms
im on an arm, a five year arm. and I really question if you know what your talking about with regards to arms. Very few people live in there first house past like 3 1/2 years. Most people that buy there first house do it as there income is still rising, most people do it with other debt to pay off (weddings, school loans, etc)... I bought my first house as a fixer upper. I bought it on a five year arm. My itnerest rate is LOCKed for the first five years, and I saved about 1 point over a 30 year fixed. on top of that, my interest rate is better for the first 6 1/2 years. It can only move a certain amount, like a 1/2 point every six months, it's capped, sof for the first year and a half after my arm is over, my interest rate is locked, and I can only go up NO more then 2 points TOTAL rise... so basically the higest it can ever go is only 1% above a 30 year fixed anyway.

Also, if you don't have enough to put 20% down, you are going to have to pay PMI, and most people are able to get out of PMI after the first two or three years, and the only way to get out of PMI is to have your house refinanced and when you refinance, you do so with a favorable home appraisal that shows the property increased in value the remaining amount. If I know that I am going to refi within the first three years, why WOULDN'T i save the money on an ARM
I too am now on a five yr arm. When I first got my home loan I got a 30 yr fixed....I was 20 yrs old, I didn't know a whole lot about loans. My interest rate is locked in for 5 years too. It may go up after 5 yrs, but there is a cap on it too. I believe the cap is 8%. I don't suspect I will still be living in this townhome in 5 yrs, so I'm not really worried about the 8% interest rate, and if for whatever reason, I am, I'll just re-fi again.

I had PMI insurance when I first bought my house, it was $86 a month. When I re-financed last summer, my house was appraised almost 40k more then what I had bought it for....which means, no more PMI for me!!

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post #25 of 42 (permalink) Old 09-15-2006, 11:31 AM
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Quote:
Originally Posted by clearwaterms
sorry, I didn't intend on offending you... for that I am sorry, I just wanted to defend arms because I believe they are a viable option for many people and also wanted to show the benefits of them. people like yourself (respected members of a community)

WHO.....ME?!?!?!?!?!?....not at all, and sure as hell not on this site...

the way you presented it was just felt rude by me...i know what you mean...but some people looking for a place on thier own, like he is stating and NOT with a g/f would be best with a fixed...unless he has serious cash to toss around...but just so people understand...to my knowledge, you will have to repay closing costs a 2nd time when you go from and arm to fixed or whatever...i may be wrong, but to its just as dumb as leasing something...if i want something...i will OWN it...i leased once...NEVER AGAIN...its pissing $ right out the window and into other peoples pockets...

...plus my gf was with me saying "omg slow down, slow down" and I was thinking "Lose annoying squalk box in passenger seat, afford more mods and have less weight in the car and on the back of the bike"...so i dumped her and I'm single again as usual...HERE KITTY KITTY!!!
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post #26 of 42 (permalink) Old 09-15-2006, 11:48 AM Thread Starter
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Damn at 2.5 times my income it doesn't look like I will be going anywhere until I somehow save much more. Anyone have a nice refridgerator box I can stay in Man I need a higher paying job

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post #27 of 42 (permalink) Old 09-16-2006, 12:06 AM
 
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Quote:
Originally Posted by jrock
If the car loan has a year or less on it when you go to buy, they don't count it against you.

Figure your gonna pay $7 for every $1,000 you borrow.

Also, an easy way to figure out what payment you can qualify for is to take 38% of your gross monthly income (that's before taxes). Next, subtract payments for any non-cancelable debt you have (car, credit card - not insurance or phone or anything you can actually cancel) and what's left is roughly the payment you can qualify for.

PMI - If you are over 80% loan to value you will pay PMI, but if you split it into two loans you can avoid that.


it is 10 months or less... not a year.
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post #28 of 42 (permalink) Old 09-16-2006, 01:09 AM

 
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I have been a licensed loan originator since 1997 and am also a licensed realtor. For the record....I deal in a very straightforward manner with people and give them the best loan scenario to match their current and projected future situations. I only say this to establish credibility for the advise that follows. I'm not soliciting a loan...I'm not licensed in Illinois so I CAN'T even do this loan...just trying to help a fellow member out with the question asked.


Under200:

If you would like to be able to afford more home then it might be wise to pay down the car before you apply for the home mortgage. If your debt ratio isn't an issue than keep the car debt (assuming its at an acceptable interest rate) I say this because having no credit isn't the best situation for one to be in...it doesn't allow the prospective lender to determine how you will pay THEM back because you don't have recent pay history for them to determine your willingness to pay. If you would like to purchase more home then pay off the car debt to less than 10 payments before applying for the home. It will still show as an open debt which as a paid as agreed tradeline will strengthen your position as a borrower but won't count against your debt ratio because less than 10 payments remain.

I would NOT...repeat NOT do a 3,5, or a 7 year arm right now. A year ago this might have been an advantage because the arms were very competitively priced against fixed mortgages. For instance you could typically get a 3 year arm for 3/4 of a percent less than a fixed and in some cases could come close to getting it for a full point less. That time is passed and we aren't seeing the huge spread between arms and fixed rates, combine that with the uncertainty in the mortgage market and it doesn't warrant the risk that the arms have built in right now...this could change and to find out what the spread is just as someone in the know what the current fixed rate and arm rate of your choice is and then compare the two payments and figure out if the risk is worth it to you. In the past 6 months I have not originated an arm loan in over 80 loans I have done...they just don't make sense right now. Some people say that arms are good for people that PLAN on living in their home for only two or three years....but is it worth the risk of having the real estate market turn upside down and not being able to sell your home to save $20 - $30 per month?? Go back and think in your life how many times you have made long term plans and how often they go off just like you planned in exactly your timeframe...it often doesn't happen that way. So getting in an arm will put you on a timeframe that you must keep and often times with life getting in the way....its just not possible to keep that timeframe and then you end up refinancing and that my friend will eat up a HUGE chunk of your savings you recieved by doing an arm.

If anyone tells you they know what rates will be next year they are either dillusional or flat out lying. If I knew what rates would be next year I wouldn't be typing this message to you...I would be sitting on my yacht because I would be a millionaire. With that said there are indicators which could give you an indication as to where rates might be next year.

1. We are going to see the campaigning for president start to get heated up in the middle of next year and traditionally both parties will want to keep the economy as stable as possible in order to project an air of stability. This bodes well for you.

2. I am of the opinion that like the last half dozen + times that the FED has tightened up rates to cool a hot economy the FED has gone to far. I think they have over tightened and we will start to see a slow down, when that happens the FED will reverse policy and reduce rates. This bodes well for you.

3. There has been a continuing battle between China and the US regarding the valuation of the chineese dollar. China is artificially depressing the value of their dollar so their goods purchased by other countries are cheaper. The US is starting to take a stronger stance against this and have threatened tariffs if China does not take the initiative to raise the valuation of their dollar on their own...how does this affect you?? Rates are determined by the US treasury bond..when the chineese dollar is valued low investors in that country are more likely to buy american bonds as they bring a higher return than chineese investmesnt because of the difference in valuation...BUT...if the chineese government evaluates their dollar higher than some of that money will stay in china...foreign investors account for a sizeable share of bond purchases and since the bond market works in an inverted fashion (bonds go up = lower rates/ bonds go down = higher rates) with foreign money flowing out of bonds it will cause the bond prices to fall which will in turn raise rates. Same with Japan, the Japanese central bank raised their prime rate for the first time in something like 5 years...all that time japanese investors were investing in america because the returns were better..but with the economy in japan coming around japanese investments might look more attractive causing that money to stay in their country once again causing the bond prices to fall and rates to rise. This isn't good for you at all

so...what are my suggestions?? Do a 80% 1st mortgage and a 10% second mortgage by splitting the 90% between a first and a small second you will eliminate PMI from the equation because your first mortgage is at 80% (anything more than 80% requires PMI)

If you were to do a mortgage today I would be able to provide the following rates:

1st Mortgage: 6.125% 30 year fixed at 80%

2nd Mortgage: 6.94% 15 year fixed loan with a 30 year ammortization

This, in my opinion would be the best mortgage for you and what I know about your situation from your short post.

Disclaimer: Due to lack of information provided in original post I am assuming 720+ score and verifiable income.

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Last edited by Brian#803; 09-18-2006 at 10:33 AM.
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post #29 of 42 (permalink) Old 09-16-2006, 01:17 AM

 
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Quote:
Originally Posted by Thunderstruck
to my knowledge, you will have to repay closing costs a 2nd time when you go from and arm to fixed or whatever.
99% of the time...your statement is accurate...and for all the people that have heard this line from their mortgage person

"I will refinance you without any closing costs"

believe me..your paying them...you just don't know it

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post #30 of 42 (permalink) Old 09-16-2006, 01:29 AM

 
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Quote:
Originally Posted by clearwaterms
and the only way to get out of PMI is to have your house refinanced
This is a false statement. You can petition the lender to have PMI removed by providing your lender with an appraisal that shows that you have adequate equity. We can thank a california senator for this one...he got screwed by a PMI company that wouldn't take the PMI off his house so he sponsered a bill to allow consumers to be released from PMI with adequate equity.

The other way for you to have PMI removed is to pay down the original loan amount. for instance...

If you bought a 100,000 house and put 10k down you would begin the loan owing 90k and would have PMI...if you paid the loan down to 78k then PMI would go away. if you want to apply this principal to your current situation just think of the 100k as 100% of loan value and back the numbers up or down to fit your situation.

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Last edited by Brian#803; 09-16-2006 at 01:44 AM.
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