Give me some advice on my upcoming mortgage loan attempt

[Anonymous]

I'm looking to apply for a first time homebuyer loan sometime around the first of September.  My current FICO score with Experian is 740. I can't remember what the scores are with Equi and Trans, but I think they were close to my Experian score.  I have around $1000 in credit card debt which will be paid off within the next couple of weeks and a car loan in the amount of &10,000.  I think I will be approved for possibly up to a $170,000 mortgage and I'm unsure if I'll meet the required FICO for the lowest interest rate.  My concern is that I don't have anything for a downpayment and I'm wondering if that will hold me back from going through with getting in a house.  Any idea's on what all I'm in for with everything I've listed above?

[rockymtngrl]

Unless you qualify for a USDA or VA mortgage you will have to have a minimum of 3.5% of the purchase price for a down payment, plus closing costs.

[Lel]

From what you've written, there's nothing that sounds like it would stand in the way of approval.  But you should take a look at the contents of your credit reports, not just your credit score, to see if there are any black marks that could hamper your efforts.

By the way, unless you obtained your Experian score from a loan officer, lender, or other creditor, then it might not be a true FICO score.  Experian FICO scores are not available for purchase by the general public.

I'm concerned by your statement that you "don't have anything for a downpayment".  As has already been mentioned, there are government programs such as FHA that would require only a small down payment.  A recent thread described some no-money-down programs.  You could also consider the NACA route; there is a very active thread on these forums that deals solely with NACA.  However, does having no money for a down payment also mean that you have no money saved at all?  If you do not have some savings to get you through unexpected hard times - and we're seeing a lot of this these days - then buying a house at this time is perhaps not the best thing to do.

[Anonymous]

I'm agnostic on the savings/reserves issue. As others have noted, you'll probably need a minimal down payment of c. 3%-5%, unless you qualify for one of the more specialized (VA, USDA) loan guarantees. People who have nothing invested in their homes are, philosophically, just paying rent under another name, and have no stake in the success of the mortgage. On the other hand, if you can achieve a mortgage payment equal to or less than your current monthly rental expense, then I see no disinclination to undertake the mortgage. An example: I closed for 3.5% FHA minimum a loan that left me c. $3,000 in the bank, and awaiting a $8,000 refundable tax credit (received in approx. 5 weeks). More important, though, was that my mortgage payment -- even with extra principal added to equate to a 15-year loan -- was about equal to my previous rent + debt service (now retired) on a monthly basis. I used the tax credit and savings to avoid additional debt for maintenance, moving, and furniture, so I'm only paying out what I've always been paying out (okay, maybe a bit more for utilities, but I was previously saving 1/3 of my income!). Don't expect something for nothing. Don't hesitate to improve your situation, if possible.

[Lel]

It's true that with the interest tax deduction and the current tax credit, it is possible to do a little better than your rental payments.

When I was referring to emergencies, however, I was actually talking about the unexpected expenses that go with homeownership.  Unless you're buying new construction, there's always a possibility of something going wrong that requires a significant outlay.  If your furnace breaks down, you're on the hook for a replacement that could cost a few thousand dollars.  When our dishwasher literally flamed out and when the garage door opener came crashing down, we had to pay for this.  When our sewer got clogged and we discovered that we didn't have an accessible clean-out, we had to pay for the installation of a clean-out plus the snaking.  We discovered evidence of subterranean termite activity in our crawlspace, and had to pay for the exterminators to treat the perimeter and around the pier posts.

It's just a good idea to have a bit of a cushion for the unexpected surprises that come with homeownership.  

[Anonymous]

I'm a bit confused here on reading all these people saying they are getting the full $8,000 check for the first time buyer.  I can't believe that all these people are really buying houses $800,000 (for the full $8,000).  It's only 10% of the purchase price of the home.  Am I missing something here?  It seems to be most people would probably be buying their first homes in the $200,000 to $300,000 range for only a $2,000 - $3,000 refund?

http://federalhousingtaxcredit.com/2009/glance.php

[Lel]

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prioritybubble wrote:

I'm a bit confused here on reading all these people saying they are getting the full $8,000 check for the first time buyer.  I can't believe that all these people are really buying houses $800,000 (for the full $8,000).  It's only 10% of the purchase price of the home.  Am I missing something here?  It seems to be most people would probably be buying their first homes in the $200,000 to $300,000 range for only a $2,000 - $3,000 refund?

http://federalhousingtaxcredit.com/2009/glance.php

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$8000 is 10% of $80,000.

[SonorityGenius]

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@Anonymous wrote:

I'm a bit confused here on reading all these people saying they are getting the full $8,000 check for the first time buyer.  I can't believe that all these people are really buying houses $800,000 (for the full $8,000).  It's only 10% of the purchase price of the home.  Am I missing something here?  It seems to be most people would probably be buying their first homes in the $200,000 to $300,000 range for only a $2,000 - $3,000 refund?

http://federalhousingtaxcredit.com/2009/glance.php

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Someone needs to go to their math class!!!!

Message Edited by SonorityGenius on 08-11-2009 03:41 AM