Buying a house...HELP

[RgrPark]

I'm thinking of buying a house for the first time and i need some tips...
I'm currently in the military so I should qualify for a VA loans is...whatever that is...i think it allows me to not make a downpayment?
As you can see, i'm kind of clueless when it comes to real estate, so i need to get smart real fast in the next month or so...
I have about 10k laying around for downpayments but i hear you don't need to make a DP if you use VA loans...?
I'd like to buy a house (3bedroom) in MD near DC...any inputs will be appreciated...

 

[Spac3d]

Since you are eligble for the VA loan, you should defintely look into it. I used to work at the VA and all of my fellow employees talked about how good of a deal they got on thier mortgage.

I am not a homeowner, so I can't really help you out there, sorry.

 

[Ornery]

Wow, MD near DC sounds like mucho bucks! Down payment or not, you have to qualify for a loan. Get totally out of dept and get qualified for a loan at a local bank. That will tell you your price range.

You'll hear it over and over, location is everything, but it may be slim pickings in that area and your budget.

Good Luck!

 

[Johnnie]

I bought my first house using my VA loan.
You'll usually pay a higher rate with VA as opposed to conventional..but the no-money down helps with a first time buyer

Visit Bankrate for the best rates.

 

[RgrPark]

so if you plan on making a downpayment, VA loan is actually worse??

 

[RgrPark]

ttt

 

[isekii]

Originally posted by: Johnnie
I bought my first house using my VA loan.
You'll usually pay a higher rate with VA as opposed to conventional..but the no-money down helps with a first time buyer

Visit Bankrate for the best rates.

can't you always refinance with a lower rate ?

 

[KK]

When I first got my mortgage it was a VA. The rate was about 1/4 - 1/2% higher but it allowed for no downpayment and no PMI since the government backs them. You will have to pay a 2% funding fee that can be rolled into the loan. I have since refinance and got out from under the VA. If you do refinance and stick with the VA loan you will have to pay the funding fee again, although I don't believe it is 2% on refinances. But right now if you do lock in with the rates as low as they are you probably won't have to refinance. Good luck.

KK

 

[orion7144]

The rate is alittle higher but the big thing is that you don't have to pay PMI. That can end up being 1-2 hundred bucks a month untill you get below 80% of the appraised value.

Originally posted by: KK
When I first got my mortgage it was a VA. The rate was about 1/4 - 1/2% higher but it allowed for no downpayment and no PMI since the government backs them. You will have to pay a 2% funding fee that can be rolled into the loan. I have since refinance and got out from under the VA. If you do refinance and stick with the VA loan you will have to pay the funding fee again, although I don't believe it is 2% on refinances. But right now if you do lock in with the rates as low as they are you probably won't have to refinance. Good luck.

KK

 

[woowoo]

You only get out of the downpayment IF the house appraises for the purchase price.
(By the VA Appraiser)

 

[jackschmittusa]

VA loan is a good deal overall. Some lenders won't do VA loans because of the extra paperwork and some sellers won't agree to a VA inspection because they must repair any defects before the loan is approved.

 

[8602081]

I really hope that you have at least 20% downpayment. If you make a 20% down payment, you do not have to get PMI (stupid insurance that protects the bank, but you have to pay for it).

This will reduce your payment quite a bit..

I don't believe that VA loan gives you the lowest rate.. it only guarantees a loan.

The key is 20%. and shop around..

 

[FeathersMcGraw]

Originally posted by: 8602081
I really hope that you have at least 20% downpayment. If you make a 20% down payment, you do not have to get PMI (stupid insurance that protects the bank, but you have to pay for it).

Of course, there are creative financing tricks to get around PMI even if you can't wrangle 20% down. A fairly common one is to take a mortgage for 80% of the selling price, and immediately take a second, shorter-term mortgage on the remaining 20%, minus whatever money you put forward as a down payment.

The money you would have paid in PMI goes to pay the interest on the second mortgage, but the key is that interest on the second mortgage is deductible, whereas PMI payments are not. Of course, you have to be able to afford the higher payments since you're carrying two loans, but interest rates are still the best they've ever looked in my lifetime.

 

[Banana]

My parents sold their house to a Navy guy and his wife/kids for more than $400K. NO DOWN PAYMENT! I was amazed that the buyer was able to pull off such a large mortgage w/o a down payment, plus I assume that the buyer's income was not very high. This was in Hawaii, so it's possible that the VA makes allowances for a region with expensive homes.

 

[HomeBrewerDude]

attend a First Time Home Buyers Seminar. You might even be required to attend one of these before you get a VA loan.

Also, call around and find a few real estate agents that can work with you as a buyer's agent (as opposed to a seller's agent). INterview them so that you can choose the one that you think will be able to communicate with you the best.

Also, start looking at neighborhoods, getting fact sheets and do a few open houses (don't feel pressured to work with the agent showing the house, just tell them you are looking at this point) to get an idea of what you can afford and what you like.

Also, talk to your VA office to find out the detail on their loans, talk to your CU or Bank, get pre-qualified (general credit check) and then get pre-approved (bank agrees to loan you $XXX,XXX and puts in writing).

Also, drink beer when you get stressed out. :beer:

 

[Elbryn]

Originally posted by: FeathersMcGraw

Originally posted by: 8602081
I really hope that you have at least 20% downpayment. If you make a 20% down payment, you do not have to get PMI (stupid insurance that protects the bank, but you have to pay for it).

Of course, there are creative financing tricks to get around PMI even if you can't wrangle 20% down. A fairly common one is to take a mortgage for 80% of the selling price, and immediately take a second, shorter-term mortgage on the remaining 20%, minus whatever money you put forward as a down payment.

The money you would have paid in PMI goes to pay the interest on the second mortgage, but the key is that interest on the second mortgage is deductible, whereas PMI payments are not. Of course, you have to be able to afford the higher payments since you're carrying two loans, but interest rates are still the best they've ever looked in my lifetime.

How does that work? taking 2 mortgages out on the same house that is? I'm also looking to buy a house and dont have enough to put anything near 20% down but can pay higher payments a month. Is there a term for this that i can bring up to a mortgage broker? What other tricks are there? I've read up on the standard type mortages but these tricks arnt common knowledge i suspect.

 

[FeathersMcGraw]

Originally posted by: Elbryn

How does that work? taking 2 mortgages out on the same house that is? I'm also looking to buy a house and dont have enough to put anything near 20% down but can pay higher payments a month. Is there a term for this that i can bring up to a mortgage broker? What other tricks are there? I've read up on the standard type mortages but these tricks arnt common knowledge i suspect.

Mortgage alternatives to PMI explained

FWIW, the site linked above (realtytimes.com is a good site with extensive articles about first-time purchasing, selling, and other aspects of real estate transactions.

 

[HomeBrewerDude]

I don't know about this for sure, but we put 10% down, and will probably be at 20% equity this years end. So one year of PMI isn't so bad.

Maybe money wasted, but you would be spending money on the second mortage too.

 

[FeathersMcGraw]

Originally posted by: yamahaXS
I don't know about this for sure, but we put 10% down, and will probably be at 20% equity this years end. So one year of PMI isn't so bad.

Maybe money wasted, but you would be spending money on the second mortage too.

I'm not a financial expert, but I don't see how you can accumulate 10% equity in one year without either a shorter than standard period loan (5 or 10 year, as opposed to 30 or 15), accelerated payments, or a huge appreciation of home prices in your market.

The primary benefit to the second mortgage approach is that its interest will likely be deductible, whereas PMI isn't. Obviously, any prospective homebuyer will need to run the numbers, but I expect that in terms of actual monthly payments, it will be close to a wash (after all, if the additional 20% financing was super-cheap compared to paying PMI, everyone -- except perhaps for people with badly damaged credit -- would be doing it).

I suspect it also may accelerate how long it takes to reach 20% equity -- granted, some of your payment is going to go to interest, but money towards PMI is essentially just gone, while the second mortgage payment insures that at least some part of that money goes toward your total equity.

 

[Vic]

Originally posted by: woowoo
You only get out of the downpayment IF the house appraises for the purchase price.
(By the VA Appraiser)

If the house doesn't appraise for the purchase price, you don't have to buy it.

VA's are great loans. Yes, the rate is slightly higher, but has no one noticed that rates are in the low 5's right now? VA's have easy credit approval, no downpayment, lower closing costs, and no PMI. If that isn't worth a quarter-point in rate (especially after I saw a thread 2 days ago where people were taking a half-point higher just to get "no closing costs"), I don't know what is.
For a no-down purchase, there is no better loan than a VA if you can get one. End of story. Period. 80/20's pale in comparision.

 

[sciencetoy]

Interesting info here, the official website.

 

[Elbryn]

Originally posted by: FeathersMcGraw

Originally posted by: yamahaXS
I don't know about this for sure, but we put 10% down, and will probably be at 20% equity this years end. So one year of PMI isn't so bad.

Maybe money wasted, but you would be spending money on the second mortage too.

I'm not a financial expert, but I don't see how you can accumulate 10% equity in one year without either a shorter than standard period loan (5 or 10 year, as opposed to 30 or 15), accelerated payments, or a huge appreciation of home prices in your market.

The primary benefit to the second mortgage approach is that its interest will likely be deductible, whereas PMI isn't. Obviously, any prospective homebuyer will need to run the numbers, but I expect that in terms of actual monthly payments, it will be close to a wash (after all, if the additional 20% financing was super-cheap compared to paying PMI, everyone -- except perhaps for people with badly damaged credit -- would be doing it).

I suspect it also may accelerate how long it takes to reach 20% equity -- granted, some of your payment is going to go to interest, but money towards PMI is essentially just gone, while the second mortgage payment insures that at least some part of that money goes toward your total equity.

Well pmi i look at as money just disappearing down a hole. As long as the totally monthly payment remains roughly the same i think i'd be more inclined to take the 2cd loan and at least get the interest deducted on it, and also pay extra to pay that down as soon as possible.

 

[Double Trouble]

Ah yes, welcome to the wonderful world of homebuying I just bought a house a few months ago.... I know how confusing it can be at first.

The first thing you should do, is find yourself a good buyer agent. There are 3 types of agents. A regular "agent" is really a seller agent -- a seller agent represents the best interest of the seller, not you. Remember that, it's a big distinction. A dual agent basicaly represents both sides in a transaction. A buyer agent represents the buyer exclusively, and thus has only your best interest in mind, not that of the seller. A good buyer agent will be familiar with your area, and will be able to walk you through all your financing options to determine what best fits your situation. A buyer agent does not cost any more than a 'regular' agent (to the buyer it's free, the seller of the home pays the commissions).

It's pointless to go into details regarding financing options and strategies to get rid of PMI etc -- nobody here is familiar with lending practises in your area or with realestate in the MD area for that matter. Nobody knows the details of your financial situation, and what options may or may not be available to you.

Here's a good place to get you started: Find a buyer agent