Anyone know about Mortgages??
 

How bad is it really to get a mortgage only loan?? Is it possible to go upside down on the loan? Is it a good move to do that so that I can afford a home?
I'm working with Country Wide to get a loan on a new home.. yes im a first time buyer.. so im super excited :D :D :D :D :D

Can anyone give any "bewars" or "cautions"..

Or any "good job!" or "way to go"

All those help :D

Good luck with you loan and your new home.
My son works for Country Wide in New York.
It's an exciting time for you and hope everything
works out.


Carol & Buddy

Thanks!! I want to give the kids a place they can call home too :D
Right now, it looks like we are going to be in a cardboard box :p

bump
 

Anyone??

A mortgage only loan? Is that where you only pay on the interest?

Thats what I meant to say.. Interest only.. oops im a nerd! :p

You mean an interest only loan. I'd say it's bad if it's 100%. If you put a decent down payment down then you won't be upside down right away. You never know what the market will do. We are in phase 2 of our neighborhood. The exact same townhomes are built across the street, but were sold for $30k-$50k less than ours less than 5 years ago. Now they are all about the same price - and all of their houses have gone up $30-$50k and ours have maybe gone up $5k. Maybe. In nearly 3 years. And the houses that are on the market are not selling. Who would have known that? The people across the street hit a jackpot while people over here are probably upside down on their houses. The market just completely stalled out. Also, if your house doesn't appreciate much and you go to sell it - you won't have enough for realtor's fees, closing fees, etc.

A good compromise would be to take out an 80% interest only or a 40 year mortgage. Then put something down (even 5%) and take out 15 year 2nd mortgage. Pay THAT down, send extra, whatever you can do until you have 80% equity in your house. That's a much better safety net than being upside down!

I totally understand trying to do whatever you can to buy a house! They say you should only spend 25% of your income on the mortgage - but ours is higher than that even owning one of the less expensive houses in the area. There isn't much to choose from on the low end here - everyone is building $500,000 houses...

I am a Home Mortgage Consultant for Wells Fargo I am going to give you advice as a homeowner and mortgage consultant. In all honestly 100% financing interest only is not terrible. 1.) It gets you into the house 2.) It gives an affordable monthly payment and it's not a loan that you have to stay in forever. Just make sure even with the interest only you can afford the payment. Sometimes people get the interest only or 40 year loan and they still can't afford it. Also, check into the 40 year mortgage it's another good option where the loan is amortized over 40 years and your payment is lower. I would talk to your loan officer about all your options and make sure you feel informed. Remember down the road you can refinance and get into a more comfortable loan program. I am here to help so PM me or email at
mo939rg@aol.com. Good luck;)

ok, so its an 80, 20 interest only loan.
I'm spending about 35% of my income on it.

The thing is that... it's less than $100 difference from renting then it is from owning.. thats why im looking into owning.

I have to pay around low to mid 700 in rent... and with the mortgage, i'd be paying low 800.

I just dont want to get in over my head. :rolleyes:

Yeah we thought that too. Our mortgage was only like $100 more... but our taxes are $4600/yr. Escrowed=$380 a month.

Also, we stretched a LOT of get this house so it took us 2 years just to buy a couch. We are still paying off debt and still have no furniture in our bedroom.

I would only consider it if you've paid off all other debt, drive cheap cars, don't go out to eat, etc. Also, buy the least expensive house you can. Lenders will sometimes offer you more than you can really afford. They know you will pay the mortgage before you pay your other bills!

interest only loan
 

I manage an escrow company in california and I see interest only loans all of the time, in fact I have one on my house and wouldn't go any other way. It keeps the payments low and you can always put extra (like another hundred a month) if you have it, towards the principal whenever you want. Even if you have a prepayment penalty, which most interest only loans have,most prepays let you still pay down the principal every month if you want, as long as the total prepaid amount doesn't exceed 20% of the outstanding principal a year (which most fully amortized loans don't even do!). Just be sure to read the prepay clause and make sure you understand it. Good luck and go for it! :D

Mentioned in previous post - don't forget taxes and insurance. Depending on the area you're in, that could raise your payment considerably. Keep in mind too, that when you own, all repairs are on you. If something does happen, you will have a deductible with your insurance. Owning a home is great, but there are lots of things to consider. Best of luck in making your decision.

I think California is different than the rest of the country. Housing prices there just keep going up. Ours are flat right now. I don't know about Arizona but that's something to consider. If you get a 100% interest only and then the house doesn't increase in value, you won't have enough equity when you go to sell.

That what I was wondering,then what is the point of buying a home?

From buying our first home and from my previous job as a collector for a mortgage company, I can tell you a couple things. As a general rule, your house payment shouldn't be more than 25% of your take-home pay. Do whatever you can to get a 15 year mortgage, if possible. It sounds like that might not be an option in your case. It wasn't an option for me and hubby either when we went to get our first loan 3 years ago because he was self-employed and they wouldn't use his income to qualify. We ended up getting a balloon payment mortgage in order to get into the home on my income only, which we have to refinance in the next few months to a regular mortgage. We are going to do everything possible to get a 15 year mortgage this time.

Here are a few stats you might find interesting about a 30 year mortgage vs. 15 year mortgage....If you borrow $110,000 for your home, your monthly payment at 7% interest is $732 on a 30 year loan. On a 15 year loan, your monthly payment goes up only $256, so $988 per month. When you look at interest, you pay almost $86,000 more in interest on the 30 year loan. :eek: So if you can scrape by an extra $250 per month for your payment, you'll save $86,000 in interest. I've never considered a 40 year loan...yikes.

One other thing I have to say (from experience at my previous job), NEVER, EVER put much money into (and by no means finance) a mobile home. Please tell me this is a stick-built home you're trying to buy. Even the newest mobile homes will depreciate just like cars, no matter what you do to make them seem like a regular home (permanent foundation, basement, etc). In a few years you will owe several times what the house is worth.

And definitely check the housing market in your area. Where we built, land and houses are going up in value like crazy, so I'm glad hubby and I scraped by and built this house when we did. Even though we are looking to refinance shortly, our land and house has gone up significantly in value over the last 3 years. You'll have to check different areas where you live. We live outside the city, in an area where land prices are getting ridiculous. I'm 27 and hubby is 29, which makes us the youngest people in our area (most are retired), but we shopped carefully to find land we could afford in an area where the value consistently goes up.

I hope that helps a little, and good luck! Buying a home is exciting! :D

Thanks everyone for all of your input.

It's not a mobile home, and nor would i ever consider that.
It's actually a condo, and the value is going up on a consistant 15% a year
The payment that i'm looking at includes insurance and taxes.

I called my dad.. the "official business man".. and if he gives me his blessing and says "do it".. then i'm going to do it. If not, then I probably won't.

Regardless of wether i rent or own (using 80/20 30 yeaer interest only).. I will be spending the same amount give or take $75.
So that's why i'm thinking might as well own.

I used to work for Wells Fargo Mortgage. An interest only loan isn't all that bad in Arizona - like you said, our real estate is constantly rising. I guess that's one reason to be thankful for the snow birds (maybe the only reason, lol). Our house has increased in value by about $125,000 in 2 years. :eek:

All I have to say is - if you don't feel 100% comfortable, don't do it! Buying is always better than renting though - at least you're money is going toward something instead of being "thrown away" every month.

Congratulations - I'm sure you're super excited about it!!

Thanks.. I am super excited!!!!!
I know the value will go up. it's in the Gilbert area.. and they are revamping the whole area around it.. so i know value will go up.

I'm just hoping my dad will give me his blessing.. and i can do it :D
Thats the only thing that is holding me back is my dad not supporting me

Congrats on the journey. From what I have read and researched buying with 0 down and on an interest only mortgage is very risky with the market changes. Honestly I would suggest doing a first time home buyers with a 3% down payment. You will pay a PMI insurance which backs the mortgage if you default. You pay a few dollars extra a month for having this. The PMI is a hud based/backed loan. Then at a year you can refinance and put the earned equity into the house and lower your cost. I did that when I bought my house 5 years ago. Best thing I ever did. When you refinance the PMI comes off and you are on a conventional loan. The best part is you are paying on your house and you are paying what is considered the market interest rate. The rate is not higher as a penalty.

I personally won't think of doing interest only with what is going on in the market. There was an article recently in the financial times. I will see if I can find it and pm it to you. My friend just bought a house and took out a conventional mortgage and a piggy back which is interest only. They are trying to hurry up and refinance and consolidate it into one loan only because the interest on that interest only loan is a almost 10%.

Good luck. I will try to find that article to describe the comparison and the downfalls of all mortgage variables.

I agree with misslola about the mobile home, however, I disagree on the 15 year loan vs. interest only. If you apply extra funds to the principal like I mentioned before, your payments are still lower and the principal will decrease just about as fast as if you got a 15 year loan, since most of the payments you make on a fully amortized loan for the first 10 years goes towards interest, not principal anyways. Another deciding factor in purchasing is how long are you planning to live there? If you are talking short term (a few years) versus longer, then you may not have enough equity to sell it without a hardship;however, if you are planning to stay there longterm, then interest only loan may be your answer.

I have to agree with that. The problem is, most people say they are going to pay extra every month and then don't. The appeal of a 15 year loan is that you HAVE to budget in that amount. But yes, if you do fully plan on budgeting extra every month for your payment to pay down the principal, that is a great option.

It sounds like a pretty good deal if the value keeps going up like that, and yes, I would MUCH rather put my money into something I own and can sell for a profit than into rent. I hope it works out for you! :)

I agree 100% - everything is new in Gilbert and there's a ton of growth there. The prices there and here are going to do nothing but climb so I wouldn't be worried at all about getting turned upside down.

I always have to present my parents with facts on paper to back up my thoughts of something like this to get their buy-in (i.e. with the real estate value % of growth each year, etc).

I'm excited for you!!
:D

I hope everything works out for you Dena! Did you say the
Gilbert area?? We have had our Gilbert home increase to
the tune of about $250,000 in about 2 years time and that
is taking the present housing stall into consideration. Gilbert
is one of the most sought after areas in the valley plus it's
safe and it's centrally located for easy access to everything.
We did an interest only to get into our home and I agree with
Britt I don't think it's a bad way to get into home ownership
and since Az's growth rate is very stable and actually out
pacing any other place in the nation right now I think you
have the right idea and are headed in the right direction
where the future is concerned. We have since refinanced
to a fixed rate mortgage and it was easy and definitely one
of the best things we have ever done considering the equity
we are now sitting on. Best wishes to you and I hope
your Dad gives you the thumbs up...

Thank You!
 

Thanks everyone to all of your comments, help and support.

I decided to buy the condo!
The kiddos have a new home!!!!

We move in March 28

:p :D :p :D

Warmest wishes on your new home! Sounds like you have done your homework and will be a great investment for you and your furbabies.

Aside from mortgage, don't forget the property tax which is quite huge, other bills that you don't get from renting such as trash, gas, water, etc. Those really add up. I started out on an interest only and that was fine for us, we've since refinanced. During the interest only, we paid extra on months we can afford the interest plus. Also, look into mortgage brokers who can shop around for different options and packages. I've learned that it really doesn't matter who you loan with (ie, co etc), brokers can typically get you a really good deal. I was so naive when we first bought our home, do your homework and shop around for the best interest rate. There's tons of info on the net, good books to read, and great people on here willing to help you out. Loans are such a confusing world when you don't know anything about it.

On the other side of things, owning a home is such an amazing venture in life! Best wishes to you!

Jennie

Don't forget Condo fees.

My Mom's have raised from $200 a month ot over $500 a month in the past 5 years.

And I'm not being rude but you said it would be like $800 a month instead of $700. So are your taxes, interest, condo fees and all included in this $800???? Or is this just PRINCIPLE???

Congratulations! I hope your transaction goes really really smooth for you and you and your babies enjoy your new home.:)