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  • Getting a mortgage...

    I read though this whole thread: http://www.mp3car.com/vbulletin/off-...-novel-24.html and I really learned a lot. But it made me remember about one of my goals, which is buying a house by next May.

    My only problem is my credit. I don't have much of a credit history:

    -Renting an apartment for almost 2 years (always on time - do lenders look at this for a mortgage)
    -Utility bills in my name for almost 2 years (electricity, cable, cell phone) never late
    -GEICO auto insurance for 6 months, before that Nationwide for almost 2 years
    -Just 1 credit card (Capital One) again never late (had it for 3 months), always paid off every month
    -$5000 personal loan (had a cosigner) I got last month to buy a car, assuming I pay that off fast (its a 5 year loan @ $102/month, so I'll throw down $300/month and have it paid off in around 2 years)

    I'm 19 almost 20...

    But, I just tried to get DirecTV and I have to pay the $200 fee because of my "lack" of credit...so it's still not there...

    Assuming I keep my track record of paying everyone listed above on time, what are the chances of a bank/lender giving me a shot with a mortgage? I would go talk to them, but considering I just applied for the loan a month ago and another credit card, I don't want them to check my credit too much...

    Basically how much credit history did you all have when you were given your first mortgage? Would you say that it is harder or easier then getting an unsecured personal loan? A car loan (I was approved without a cosigner for a $5000 car loan but didn't take it because I didn't want to pay full coverage insurance)? Thanks guys!
    -Josh

    91 Acura Integra RS Hatch
    95 Honda Accord LX Sedan (daily driver)

  • #2
    Just curious, why the hell would you take out a 5k loan to buy a car, and not insure it full coverage?? At least while you have the loan open. That is an absolutely stupid move on your part.
    What if (God forbid) you go out tonight and wreck your ride beyond repair? or if it gets boosted and is never recovered? you are SOL beyond belief. You will owe that loan and have nada for it.

    Sounds like home ownership is not a responsibility you are ready for just yet.

    Comment


    • #3
      Originally posted by Motorcity View Post
      Just curious, why the hell would you take out a 5k loan to buy a car, and not insure it full coverage??

      Sounds like home ownership is not a responsibility you are ready for just yet.
      Where do you see that?

      Anyway, whats your credit score? You can find out by requesting a copy of your credit report. Lack of credit (due to no history) is much better than bad credit. I would talk to some small bank's loan officer. Tell them your situation. Build a relationship. They may want to sell you a house if they repo'd one. Regardless though, think about an fha loan, as they are federally supported, for first time buyers.
      Mike M
      2006 Accord VP Sedan

      My worklog
      http://www.mp3car.com/vbulletin/work...-dads-car.html

      Comment


      • #4
        pm me if you are really interested with a loan.
        I GIVE FREE HUGS!
        Buy Sell or Trade
        If my pm box is full, please feel free to call me any time. 440-328-3382
        Thank you
        Forex
        Rate Mp3car @ FXroot.com

        Comment


        • #5
          Most lenders just look at your fico score.

          All your utility bills, insurance, and personal loan have nothing to do with your credit score, unless you are late and they report it. (Which will only lower it)

          The only thing getting reported on your credit report is you cap1 card and guess what? They only report the highest outstanding balance and not total credit available. Which can hurt your credit score.

          Do you have steady employment?

          Do you have 20%, 15%, 10%, or even 5% to put down?

          Do you even have ~3% for closing costs?

          Do you even know who much you can borrow and the types of homes available? (Take your yearly gross pay and times it by 3.5)

          My suggestion. Rent a low cost apartment for ~1 or 2 years. Save at least 10% for down payment and closing cost (More if you can). Pay off any and all debt (personal or not). Use a credit card for every possible purchase, but pay it off EVERY month in FULL. Do not apply for any NEW credit within a year of getting your mortgage.

          Also I would suggest taking a first time buyers class. Find one that is free and not associated with a lender or real estate agent (no pressure). Sometimes these are ran by local non-profits or government.

          Take a visit to www.fatwallet.com and go to the finance forum.
          ODYSSEY

          Originally posted by Tidder
          Hey, as long as it's not any particular race I'm offending, I can stand to be a pedophile.
          All information expressed in this post is my opinion, and should not be regarded as a statement of fact.
          Digital-Car UK|

          (\__/)
          (='.'=)
          (")_(")

          Comment


          • #6
            slammedteg91,

            Your credit score is the 2nd most important number -- the first being the ratio between your gross income vs monthly payment. Lenders want that to be less than 41% (typically, those who don't are in real trouble right now -- infact most are going under).

            Your credit score will do 2 things - help you get the loan && help with the actual rate. To see what is actually on your credit report, take advantage of the law -- you are allowed 1 free credit report per year (and even more if you are denied credit). Use google and you will find a lot of companies offering you just this service. It's a good idea to review your credit report often -- as it can affect more than your ability to get a loan.

            Contrary to ODYSSEY's belief, a down payment is NOT necessary to get a morgage. It may save you money, however. If you don't have a down payment (of 20%) most lenders will want you to pay something called PMI. PMI sucks. It doesn't do anything for you the buyer, so avoid paying it if you can. One way to do so is an 80/20 split. I won't go in to a lesson on loans at 0230, but I suggest taking a little time to look at all the different loan types that are available.

            One more thing, when to buy. In general, owning a home is a better money move than renting. And at the moment, the housing market is down(ie: it's a buyer's market). That said, take a look at a rent vs buy calculator like this one:

            http://www.vlender.com/cgi-bin/calc/rent_vs_buy.cgi

            to account for your personal situation.

            If you have specific questions, I can try to field some of them. I end up doing the buying/selling thing every 3-5 years....


            Nasa

            Comment


            • #7
              Originally posted by mwmcginn View Post
              Where do you see that?
              did you read the OP's entire post???

              Comment


              • #8
                Originally posted by slammedteg91 View Post
                ......-$5000 personal loan (had a cosigner) I got last month to buy a car, assuming I pay that off fast (its a 5 year loan @ $102/month, so I'll throw down $300/month and have it paid off in around 2 years)

                I'm 19 almost 20...


                A car loan (I was approved without a cosigner for a $5000 car loan but didn't take it because I didn't want to pay full coverage insurance)? Thanks guys!
                ?

                Comment


                • #9
                  Originally posted by nasa View Post
                  Your credit score will do 2 things - help you get the loan && help with the actual rate. To see what is actually on your credit report, take advantage of the law -- you are allowed 1 free credit report per year (and even more if you are denied credit). Use google and you will find a lot of companies offering you just this service. It's a good idea to review your credit report often -- as it can affect more than your ability to get a loan.
                  Your free credit report does not include a fico score. The only place you can get a real fico score is http://www.myfico.com/ or from a lender. Any other site does not use the same formula and is only an estimate.

                  Don't be fooled by all those fake free credit report websites. If you want to get your free report visit here - http://www.ftc.gov/bcp/conline/pubs/...eereports.shtm
                  Contrary to ODYSSEY's belief, a down payment is NOT necessary to get a morgage. It may save you money, however. If you don't have a down payment (of 20%) most lenders will want you to pay something called PMI. PMI sucks. It doesn't do anything for you the buyer, so avoid paying it if you can. One way to do so is an 80/20 split. I won't go in to a lesson on loans at 0230, but I suggest taking a little time to look at all the different loan types that are available.
                  I never said a down payment was necessary. Down payment can lower your interest rate and let your lender know you are serious. You have to pay PMI until you reach 20%.

                  Also the days of 100% financing, interest only loans and creative financing are starting to come to an end (specially with lower credit people or first time buyers) since the housing market is heading downward.

                  Another note, I suggest staying away from ARMs. Get a fixed rate loan, interest rates are going up.
                  ODYSSEY

                  Originally posted by Tidder
                  Hey, as long as it's not any particular race I'm offending, I can stand to be a pedophile.
                  All information expressed in this post is my opinion, and should not be regarded as a statement of fact.
                  Digital-Car UK|

                  (\__/)
                  (='.'=)
                  (")_(")

                  Comment


                  • #10
                    Ok I really didn't explain the $5K loan thing that well, my mistake. I have a 91 integra hatch that needs some work, and I needed a new DD while I was fixing it (and also because the teg is lowered and sometimes isn't a comfortable ride, etc.). I got the $5K personal loan to buy my $3000 95 accord daily driver, used the rest to fix the teg (and I needed a new mattress), and still have $800 left which I am putting back on the loan (today actually I'm going to the bank to do it). Full coverage insurance is really expensive for me, about $420 a month if I wanted it (19 year old single male...) while for both cars I pay $180 liability a month. I do take a chance about it getting stolen or wrecked, you are right. But the $240 a month I save in insurance, after a year would almost pay for the car.

                    And the cosigner/whole personal loan thing - obviously a car loan is secured (I don't pay, they come take my car). No cosigner would have been required. An unsecured personal loan is "harder" to get (and the cosigner was required for me in this case) because if I don't pay, what can they get from me? They don't have the title to my car (I do). Thats why it's a five year loan, it was all I could get approved for. But if I pay $300 a month on it (principle payments) and pay it off in two years, then I pay around 1/3 of the interest. That's how it was explained to me.


                    Anyway, I am now done school so I am getting a second job at night so I can really start saving. I'm going to look into all the information you all told me. Thanks for the help!
                    -Josh

                    91 Acura Integra RS Hatch
                    95 Honda Accord LX Sedan (daily driver)

                    Comment


                    • #11
                      ODYSSEY,

                      Your right about the 100% financing becoming more restrictive -- however, not at a total end.

                      ARM's are a good option (one I am presently using). Let me give a couple of quick examples.

                      1. Your in the military and *know* that within the time frame of the ARM (for example a 5/1) you will be selling the home.

                      2. You are young and just starting your career. You expect to have a higher earning capacity in a couple of years, but don't presently have the means to finance at a full 30/15 year conventional loan.

                      Those said, as of right now -- interest rates for a ARM and Conventional are rather close. In which case, a conventional is a better deal. The fact that the two are close is rather odd, and I doubt will last for long.

                      BTW: rates right now are rather stable. http://mortgage-x.com/trends.htm

                      Nasa

                      Comment


                      • #12
                        Originally posted by slammedteg91 View Post
                        I got the $5K personal loan to buy my $3000 95 accord daily driver, used the rest to fix the teg (and I needed a new mattress), and still have $800 left which I am putting back on the loan (today actually I'm going to the bank to do it).

                        And the cosigner/whole personal loan thing - obviously a car loan is secured (I don't pay, they come take my car). No cosigner would have been required. An unsecured personal loan is "harder" to get (and the cosigner was required for me in this case) because if I don't pay, what can they get from me? They don't have the title to my car (I do). Thats why it's a five year loan, it was all I could get approved for. But if I pay $300 a month on it (principle payments) and pay it off in two years, then I pay around 1/3 of the interest. That's how it was explained to me.
                        Check me if I'm wrong here, but a loan with a co-signer won't count as much towards building your credit. What's the interest rate on that loan?

                        You've already gotten some good pointers and advice. Here's mine:

                        1. Pay down that personal loan as fast as you can. Putting the $800 back in it and paying as much against the principle as you can as fast as you can reduces the interest you owe.

                        2. Save as much as you possibly can towards a down payment. The higher the percentage you can put down, the less you have to finance. Plus, if you put $20,000 down on a house then you have $20,000 in equity on the house. If you absolutely have to get at that money, you can arrange a home equity loan against that $20k, usually at a lower interest rate than other loans. Just remember that borrowing against your equity reduces that equity.

                        3. Lower your expectations. Use the calculator link you were given to get an idea of what kind of house you'll be able to own. See if it meets your expectations. You may need to move that goal of next May back a year or so. I didn't own my first house until I was 24 and its working out just fine right now, so don't worry.

                        4. Housing prices generally rise over time although the may be going backwards right now. Once you get a property, if it is well kept and in a reasonably decent location, it becomes much easier to buy a new one. Especially if your income is going up while you are living in it.

                        5. If you are handy, you can buy a piece of crap house and fix it up while you live in it. This assumes, of course, that you will have the free cash flow to buy materials to fix it. Don't overbuy, even if it is a fixer-upper.

                        6. Stay away from interest only loans. They are based on the assumption that the price of the house will go up, creating equity for you. In the meantime, you are paying only the interest, meaning you will never be able to get out of the home unless the price goes up. Zero down loans aren't quite as bad but usually are accompanied by a higher interest rate, which means you start with zero equity and build it much more slowly than if you put money down.

                        If you save with discipline, you'll be ready in a few years to own. Otherwise, you'll have to do all kinds of stupid financing tricks to get a house and you'll always pay more than you have to. That means not doing stupid stuff like financing a spring break trip on your credit cards by getting a new one and transferring the balance. Just take a lesson from Wizard PC's thread. He's got a plan and he's sticking to it. That's what the words "financial discipline" mean.
                        Originally posted by ghettocruzer
                        I was gung ho on building a PC [until] just recently. However, between my new phone having internet and GPS and all...and this kit...Im starting to have trouble justfiying it haha.
                        Want to:
                        -Find out about the new iBug iPad install?
                        -Find out about carPC's in just 5 minutes? View the Car PC 101 video

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                        • #13
                          Thanks for all the advice Bugbyte, I really like the idea of a fixer-upper actually. I have some skills (but I have friends that are good lol for when I mess up) which helps. The only reason I am in a rush to get out of the apartment is because I hate paying rent. $720 a month for a one-bedroom apartment (it has a washer and dryer inside which is a bonus) is such a waste, I'm not getting anything out of it. Everytime I think about it like that it gets me motivated to get out of this! But I do realize I am getting an early start but I just don't want to waste anymore time (and money) paying rent...even if the first house I buy isn't anything special, I can fix it up in my free time then in a few years turn it around for more (and maybe have more $$$ saved...). Thanks again for the advice, now I have plenty to think about!
                          -Josh

                          91 Acura Integra RS Hatch
                          95 Honda Accord LX Sedan (daily driver)

                          Comment


                          • #14
                            haha i dont think this convo would even float in San Diego.
                            450,000 is avg price, tho that is falling alot...
                            Core duo
                            1tb harddrive
                            256 ddr
                            8 lilliput
                            bu-353

                            still installing...

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                            • #15
                              Location, Location, Location.

                              We're getting ready to start building a house (go Thursday to sign papers).

                              The same house that we're building would be a LOT more if it were in town. We're moving about 6 miles out of town in a newly developing area and are able to save a LOT of money. We're getting a LOT of house for the money we're spending.

                              One other thing to consider when considering what you can afford...you can claim the interest paid on the home loan on your income taxes at the end of the year....meaning you take it off the top.

                              Just some other things to consider.

                              Good luck!
                              Jan Bennett
                              FS: VW MKIV Bezel for 8" Lilliput - 95% Finished

                              Please post on the forums! Chances are, someone else has or will have the same questions as you!

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