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cluless - please help

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preci0uz
Regular Contributor

cluless - please help

I’m clueless when it comes down to mortgages and different types of mortgages and I am in need of your wisdom!  I have tried to do some research on my own but I became even more confused, seriously confused.  

 

 

I'm 22 and clueless

Mid 700's FICO scores, no debt- (credit card, student/auto/mortgage loans)

No collection, late payments, bankruptcy, nothing negavite in all reports

Annual salary is 76k  (not including overtime etc).

Have been with the company for a while now

Have W2 to prove and paystubs for at least 2 years 

 

I plan to buy a house around $100k-150k in Florida as a second home or rental. There’s a lot of good deals and foreclosures in Miami right now.

 

I was advised since I didn’t have a mortgage that I would be able to list the property as a second home. Also, I was told by a Citibank loan officer that if I didn’t have 20% that most likely I would have to get some type of insurance and because of the market in Florida it’s pretty hard to get. He also said I would have to get hazardous/flood insurance. The more he talked, the more confused I got.  

 

So far, I have saved up around 10k these past few months for a down payment. Not much but I was thinking of taking out a loan etc.  What’s your opinion to this?  Last choice, would be borrowing the money from my mother and paying her back within a couple of months. 

 

You may be wondering why not wait and save and then have the deposit ready?  Well, I'm going to be having surgery in Florida in May and while recuperating I was planning to go house hunting. I'll be there for 2 full weeks. Now, I'm not sure if that would be sufficient. If not, I would have to come back to NY and then fly back to Florida for whatever else is needed. However, since there’s a lot of foreclosures it’s usually dealing with banks. 

 

I know that I want a 30 year mortgage and since I plan to pay it off sooner, I would like something that would not penalize me for making large payments etc. 

 

I’m a member of the NFCU and also PenFed and BOFA and Chase. Citi told me that they can give me a pre-approval (not qualifying) letter within a matter of minutes within asking for documents and verification and I could show it to the person selling the house.  That sounded a little odd to me. However, I was thinking the best route would be a CU. However, how do I know that I’m getting the best rate?  How do you know who to go for a mortgage?  I see some rates anywhere from 4-6%. Does it ever go down to 3%? 

 

What other costs should I keep in mind? 

Closing

Inspection

Hazardous/Flood insurance 

 

Do you think 2 weeks is a little irrational to find something??  

 

Please give me your honest advice- no matter if it’s cruel!

Message Edited by preci0uz on 04-04-2009 06:38 PM
Message 1 of 10
9 REPLIES 9
Anonymous
Not applicable

Re: cluless - please help

I don't know much about second homes and rental units but let me see what I can help you with.

 

FICO scores, job history and income look good. No problem for what you want to buy. Eviently your dti would be good also since you have no debt.

 

Less than 20% down requires Private Mortgage Insurance. I was not aware that it was hard to get, I settle in two weeks and noone said a word to me about it. I do know that it can be fico score based but you have good scores so that can't be the problem.

 

Hazard/flood insurance = homeowners insurance which you probably have on your current home (which I assume you have since you talk about this being a second home)

 

Don't take out a loan for downpayment. You will have to disclose where all deposits to your accounts came from. Some loans do allow gifts but mom would have to sign a paper saying it is a gift

 

I had a preapproval letter. It lets the seller and real estate people know you are serious. I doubt though you will do this in two weeks. Foreclosues and short sales are notorious for their long processes.

 

You can get closing assistance from a seller especially in this market. Don't forget your apprisial and anything that the bank wont fix that the apprisial wants fixed before closing. Foreclosures aren't noted to be in the best condition.

 

I hope this has helped.

Message Edited by teacherhere on 04-04-2009 03:50 PM
Message 2 of 10
medicgrrl
Valued Contributor

Re: cluless - please help

DTI can't be determined without knowing your current housing costs.  Are you actually planning to use this as a second home or are you trying to flip a property?


EQ 778 EXP 782 TU 729
Message 3 of 10
preci0uz
Regular Contributor

Re: cluless - please help


@medicgrrl wrote:
DTI can't be determined without knowing your current housing costs.  Are you actually planning to use this as a second home or are you trying to flip a property?

My current rent payment is $1650.00. It could be cheaper but I like the building and proximity to work.

 

Parents are splitting so I just told my mom to move in to the house once I buy it.  She agreed to pay "rent" which I'll put towards the mortgage. However, even if she didn't pay, I would still make payments on the mortgage without defaulting etc.

Message 4 of 10
preci0uz
Regular Contributor

Re: cluless - please help


@Anonymous wrote:

I don't know much about second homes and rental units but let me see what I can help you with.

 

FICO scores, job history and income look good. No problem for what you want to buy. Eviently your dti would be good also since you have no debt.

 

Less than 20% down requires Private Mortgage Insurance. I was not aware that it was hard to get, I settle in two weeks and noone said a word to me about it. I do know that it can be fico score based but you have good scores so that can't be the problem.

 

Hazard/flood insurance = homeowners insurance which you probably have on your current home (which I assume you have since you talk about this being a second home)

 

Don't take out a loan for downpayment. You will have to disclose where all deposits to your accounts came from. Some loans do allow gifts but mom would have to sign a paper saying it is a gift

 

I had a preapproval letter. It lets the seller and real estate people know you are serious. I doubt though you will do this in two weeks. Foreclosues and short sales are notorious for their long processes.

 

You can get closing assistance from a seller especially in this market. Don't forget your apprisial and anything that the bank wont fix that the apprisial wants fixed before closing. Foreclosures aren't noted to be in the best condition.

 

I hope this has helped.

Message Edited by teacherhere on 04-04-2009 03:50 PM

 

Thanks for the advice Smiley Happy The guy at Citibank made a big deal about the private insurance. He seriously scared me.

 

I've hear stories that they take couple of months. I just hate the waiting. :[

 

No, I actually don't have a current mortgage but since I don't intend to live there full time the guy told me I couldn't apply for it as my "first home" and since I live and work in NY and the property is in Florida. I'm sure it will raise some questions ha ha.

Message 5 of 10
medicgrrl
Valued Contributor

Re: cluless - please help

If mom has income and decent credit then you may be better off doing an FHA with your mom and go on the loan as a non-occupying co-borrower.  This will help mom out and will require a lower down payment. 


EQ 778 EXP 782 TU 729
Message 6 of 10
preci0uz
Regular Contributor

Re: cluless - please help


@medicgrrl wrote:
If mom has income and decent credit then you may be better off doing an FHA with your mom and go on the loan as a non-occupying co-borrower.  This will help mom out and will require a lower down payment. 
 
Ahh I see, thanks. I know what FHA stands for but not know what it actually does. How does we apply for a FHA loan? Like what bank do we go to?
Message 7 of 10
medicgrrl
Valued Contributor

Re: cluless - please help

FHA is a division of Housing and Urban Development.  They basically insure the loan like a private mortgage insurance company would insure a conventional mortgage (which is what you are looking at now)  You would still apply at the bank or local mortgage company.  Your payments would still be made to the bank.  FHA is to assist homebuyers with reasonable financing.  If you are doing this for your mom then this would probably be a great way to go.  It would allow her to have security in the fact that the mortgage is also in her name (if anything ever happened to you!) and would help her to start establishing her own credit history separate from your dad.  It would also only require a 3.5% contribution by you.  Anything above that you could negotiate for the seller to pay.  I would talk to your mom and the bank and see what they think about this and if the two of you together could qualify.
Message Edited by medicgrrl on 04-04-2009 08:26 PM


EQ 778 EXP 782 TU 729
Message 8 of 10
Anonymous
Not applicable

Re: cluless - please help

the idea to list yourself as an nonoccupied borrower is a great idea. HOWEVER, I do believe that they will require that your mom's divorce be final. I think I read that somewhere on here.
Message 9 of 10
medicgrrl
Valued Contributor

Re: cluless - please help

No, they wouldn't.  Dad would just have to sign something (not sure what it is in Florida) similar to a Quitclaim Deed....basically giving up any rights to the property.  A signed and recorded separation agreement would be beneficial though but possibly necessary.  This is where a local loan officer would be able to assist you the best.  It really varies by region as to what legal documents are necessary.


EQ 778 EXP 782 TU 729
Message 10 of 10
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