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Thread: Getting a mortgage...

  1. #11
    Maximum Bitrate nasa's Avatar
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    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

  2. #12
    Admin. Linux loser.
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    Bugbyte's Avatar
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    Quote 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.
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  3. #13
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    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)

  4. #14
    Variable Bitrate 84RegalRider's Avatar
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    haha i dont think this convo would even float in San Diego.
    450,000 is avg price, tho that is falling alot...
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  5. #15
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    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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