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Question about home loans/mortgages

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Jeff7181

Jeff7181

Lifer
So I found what appears to be a killer deal on a condo. It's a nice condo in a nice area (I currently live in the same town), 2 bedroom, 1 bath, about 850 square feet with a $35,000 asking price.

I plan on talking to the real estate agent selling it and my bank tomorrow to see what we can come up with, but I thought I'd get some opinions here first on a couple questions I have.

First, what's the longest loan term I'd be looking at for something in that price range? Seems to me that 30 and maybe even 15 years would be out of the question?

Second, if any of you are in a condo now, what should I expect to pay in terms of association fees?

Third, how difficult would it be for me to get a loan? Currently my bills take up more than 50% of my monthly wages, though I'm sure I could afford this place if I could get a 15 year term at a reasonable interest rate, even if the association fees were a couple hundred dollars a month. I also have around $50,000 in debt currently including student loans, which is more than a years salary for me although it's less than half of my available credit... would banks shy away from giving me a loan because of this? My credit score is 770 and I have no missed or late payments on it.

Lastly, I know there's down payment assistance available for first time home buyers, $8000 as I understand... but I can't for the life of me figure out if all that would be available to me considering it's nearly 25% of the condo?
 
The first time home buyers thing is 10% of the price, up to $8000, and it does NOT go on your down payment. It's something you later claim on your taxes.
 
KillerCharlie said:
The first time home buyers thing is 10% of the price, up to $8000, and it does NOT go on your down payment. It's something you later claim on your taxes.
Click to expand...

I thought that had changed recently so that it's available immediately rather than claiming it on taxes.
 
Jeff7181 said:
I thought that had changed recently so that it's available immediately rather than claiming it on taxes.
Click to expand...

There are ways to get it so that you can actually use it as a down payment now. The asking price is amazing and will likely result in a payment that is less than what I used to pay for rent. Different areas, I know (I'm near Chicago, IL), but still.

You'll probably want a 15 year loan. Association fees can be all over the place. When I was looking at places I saw some as low as $125/mo and some as high as $400. Your realtor or the seller should be able to give you an exact amount for association and a pretty close estimate on taxes.
 
Which would be more likely... that the condo is so cheap because they charge a relatively high association fee, or that the association fee would be relatively low because of the low value of the condo?
 
Jeff7181 said:
Which would be more likely... that the condo is so cheap because they charge a relatively high association fee, or that the association fee would be relatively low because of the low value of the condo?
Click to expand...

It's unlikely there's any correlation. You're in Michigan, real estate is in the dumper (or so the news tells me). Do NOT get a 30 year loan on that; heck if you can swing it, get as short a mortgage as you can. And don't jump in just because it's cheap, there is just as much likelihood it will go down $10K over the next 5 years as up. If it's where you want to live, good building, etc. then consider it.
 
Like others have said, the US government gives you 10% up to $8000. So, you'd only get $3500. Unless they changed it recently, you get that when you file taxes, not as a downpayment. But that is a moot point, since you should be filing taxes right about the same time as you buy the house, so you'll get it a few weeks after you buy the house.

I went over to INGDirect and put in your numbers. It looked like ING will be quite glad to loan you ~$20k at ~4% interest rate. If you want to pay that loan off in 10 years, that'll be $212.13 monthly payments. For 15 years, the payments are $158.16. I really don't see a reason to go for more than 10 years since it barely affects your monthly payment. Heck, a 5 year loan will only be $377.42/month (and I'd highly encourage you to try to do that, even if the loan term is longer). Of course add in real estate taxes, insurance, and condo fees. Combined those could easilly be $500 or more a month depending on the circumstances.

So, it looks like you'll need to come up with about $15k for a downpayment, $3k for closing costs, and the government will kick back $3.5k. You must have SOME method of coming up with $15k.
 
Do you rent currently? How much do you pay for housing? That condo is only the price of a luxury car, you get a lot more room but no horsepower.
 
if that's not a typo, there probably will be a lot of bidding on the house. Your student loans sometimes don't count against you when figuring your assets and debts for these types of purchases.

I'd contact the agent listing the property and take a look at it.
 
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