Just submitted an app for Navy Federal's Homebuyers' Choice mortgage

[itgirl74]

7%? Ouch! Did you ask / did they mention if you could lower the rate by raising your score to a certain number? My mid mortgage score is currently 701, and I'm hoping to get it up to 720 by the time I apply.

[Calidreaming]

Itgirl, I didn't ask anything about whether I could raise my scores or lower the rate or anything about how they calculated how much I would qualify for but I will once they contact me next week.  I think with a 700 you'll qualify for a much better rate than I did.  The rates for this mortgage have gone up so much though.  The lowest rate you can get with a "very good" score and paying some points is 4.875. 

[Anonymous]

Itgirl I am in the same boat... really hoping for the best rates and my husband and I are both less than 10 points under that 720 mark so trying to hold out a month or two and get those scores up there.

Wondering what you all think... We have turned to this program because we really have no down payment saved up. My husband is active military and eligible for a VA loan, however he used up a portion of his eligibility with a deed in lieu 5 years ago. As a result, he doesn't have enough eligibility left to use a VA loan at the prices we are looking at in DC (conforming limit being 636k for 2017)... we could get something with a VA loan for zero down at around 460k but are really looking at around 200k (desirably) above that which from my research would require us to put 50k down (25% of the extra) using a VA loan. Ouch. We could go lower in price (around 560K) but this would still require 25k down, which would only be achieved as described below...

At a maximum I COULD get $25k by borrowing from my 401k (15k) and taking the $10k allowed from my IRAs (half from roth, half traditional (taxable)). This might open us up to an FHA loan at 3.5% down, and I realize the interest rates would be lower but we would be paying PMI which would not be tax deductible for us considering our income. I also feel like I just don't want to be tapping into my retirement accounts. I know the rates on the NFCU loan are higher but this still seems like the best option for us. We want to stop renting at ridiculous rates and start building equity and really don't want to wait any longer.

[Calidreaming]

IErinmarie the 0% down program does sound like the best option for you under the circumstances. I wouldn't wait a month or two to apply though because the fed has already announced that there are going to be three more 0.25% rate hikes over the next year so things only get worse from here. The loan officer told me they don't have a set credit score for the best rates so you might as well go for it now since especially since you're so close to the 720 mark.

I'm hoping that housing prices either fall or don't rise as quickly given the sharp increases in rates.  But then inventory is still low so I guess we are in uncharted waters. 

[itgirl74]

I wish I didn'thave to wait several months. I could probably get out of my lease early (my landlord is super nice, lives next door, and could easily be getting more rent than I'm paying in this crazy Seattle market), but I need the time to save up for closing costs. Right now inventory is so low that there's not a single house on the market I'd consider buying. Of course, something I love will probably come up for sale early next year, and I'll be sad. That already happened in November, and I'm still not over missing out on that house.

[Calidreaming]

Itgirl, ugh I hate that you had to miss out on a good house. We also missed out on one that would have been perfect. I have to drive by it a lot and I cuss all the way home! My sympathies to you on having to brave the Seattle real estate market. At least you know once you finally get a house you will be able to build a ton of equity. Here in Atlanta the market is far tamer.

[itgirl74]

I got antsy and called NFCU yesterday to ask a bunch of questions about their mortgages, and now it's looking like I won't be able to buy this year. I was under the impression that the FHA's conforming loan limits were used for all types of loans, but the limit for the HBC loan is $424K, even here in my area where the FHA limit is $592K. The houses I'm looking at in the area I want are all about $500K. That means I'd have to go with a jumbo loan, which has a higher interest rate and, more importantly, requires showing 6 months reserves. If I had that kind of money, I wouldn't be looking for a no-down payment loan! By the time I have that money saved, I my end up deciding to go the FHA route instead. I have to do some serious number crunching to figure out which is better, the higher interest rate with no PMI or the much lower FHA rate with MIP. The NFCU rep spent a lot of time on the phone with me running numbers for different scenarios. I am still happy with NFCU, just hugely disappointed and angry with myself for being financially irresponsible for so long.

I am really sorry to hijack your thread with my own sob story!

[Calidreaming]

itgirl74, that really sucks that you can no longer use NFCU HBC to get into a house this year.    On the bright side, at least you found out early on and now you can look at other options while you're saving for the money.  Be sure to check out local credit unions.  I found a local one that offers a 0% down ARM, so there may be options in your area as well. 

Don't beat yourself up for not having a huge wad of cash.  It is really hard to get your foot in the door witha first home.  Lots of people are in your same shoes.

AFM, I still have not heard back from NFCU yet and I'm getting nervous.  Even though I'm leaning against the HBC program now, it would be nice to have the security of knowing that I've been preapproved for something. 

[Calidreaming]

I got my preapproval letter today for the Honebuyer's Choice program. I did indeed get put in NFCU's "fair" tier and that gets me a 6.1% interest rate if I pay the 1.0% origination fee and 1.75% funding fee.

I also have discovered an error on my credit report on the minimum payment for my credit card. It is reporting as $200 higher than what it actually is, so that is part of the reason why I qualified for so much less than what I thought I would. It also seems they roll some of these fees into the loan, which also lowers your purchasing power.

I hope to talk with my loan officer in the next couple of days to discuss my other loan options. It feels good to be preapproved but at 6.1% interest this loan is just not worth it for me. The 3% down first-time homebuyer mortgage offered by my local credit union is looking like the best option so I'll see if NFCU has one that comes close.

[itgirl74]

That's definitely some mixed news, Cali. I'm sorry NFCU isn't working out for you either, but that's great that you have another option with your local CU.

I may also have another option. NASA FCU also has 100% financing option. I hadn't considered it much because I know the minimum score requirement is 720. I didn't think I could get that high anytime soon. However, today I got early exclusion of my last baddie on TU, and my score jumped from 709 to 784. Granted that's FICO 8, but I'm assuming the mortgage score went up also. I don't have a MyFico subscription anymore, but I'll buy another 3B report when that baddie is also off Experian, hopefully by April or early May.

I joined NASA FCU (I should call it "the other NFCU") today and did some rate checking. I'd have to get a jumbo loan with them also, but I don't think they have the 6-month reserve requirement. Also I think their rate is a little lower. I filled out some form and got a summary of charges & reserves, and it's giving me a number of about $7200 as funds needed for closing. That can't be right, but if it's anywhere near that amount, this could be very possible by July. Hope is not lost!