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Advice on Buying First Home

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ithalvey
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Advice on Buying First Home  Reply with quote  

Hello, so i am very interested in buying a house in southern Nevada, either in Henderson or Boulder City. I don't plan on buying a house for another few years, probably not until 2020. I am in the military and will probably stay in till 2020 just so i can save up some more money and do some schooling. I know i will qualify for a VA loan. I have no credit, would you recommend that i try to start building credit with a credit card? What kind of loan would you take out for a $300,000 house and what would the monthly mortgage payments look like? i have no idea. Any help or tips would be greatly appreciated.
Post Tue Jun 09, 2015 10:39 am
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oldguy
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quote:
What kind of loan would you take out for a $300,000 house and what would the monthly mortgage payments look like?


You would make about a $30k down payment. The payment on a $270k 30 years 4% loan would be $1289/m. The prop tax would add about $500/m and the home-owners insurance would be about $200/m - so the payment would be about $2000/m total.
Post Tue Jun 09, 2015 1:41 pm
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DaleDegagne
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Fastest way to build credit is to have 2 different revolving type loans. So 1 CC and 1 Line of Credit.

Keep the credit limits very small...even if you qualify for more.

Spend a little each month on each and pay them off within the first 30 days (preferably within the grace period).

You also don't need a traditional credit card. Credit can be built with pre-paids which is a lot safer. http://www.doughroller.net/credit-cards/prepaid-cards-build-credit/

You also must have some form of credit score so request a copy of your report from Equifax or TransUnion.

Also, you can do your own online research about mortgage rates & payments. Google "Mortgage Payment Calculator".
Post Fri Jun 12, 2015 2:55 am
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Wino
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Building credit is the easiest way to get a home loan at a good rate. So, if you're intent on buying, I'd suggest saving for a down payment. Oldguy's 10% is sufficient, but 20% is better to avoid PMI - oldguy will argue that point, but I still hate paying money for nothing on the gamble that things will do better elsewhere.

VA loans stink. Look into conventional lending. VA loans have higher fees, as well as additional fees, and if you default, they'll come after you to the ends of the earth. Get either an FHA, Fannie Mae, or Freddie Mac loan. Fannie Mae usually comes through banks, and Freddie Mac through S&Ls. FHA is a separate program, usually for low income or first-time buyers.

In addition, there are often government programs for first-time buyers, so look to see if you can get the mortgage interest credit deduction. If so, you can usually get a larger loan.

The best way to get the loan is to have a large down payment. Once you have the house title and mortgage, you can see about working the oldguy method to maximize the returns on your assets. Personally, I'd prefer to pay off a mortgage and save separately, but this is an old argument that neither I nor oldguy is going to capitulate. So a combination of large down payment, a good credit rating, and enough stand-by/emergency money is what you need to set aside. Were I in your position, I'd try to save up at least $75K over the next 5 years ($15K per year with no returns from investments), and to insure I'm never late on any bill or payment due.
Post Sun Jun 14, 2015 10:44 am
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oldguy
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VA loans stink. Look into conventional lending.


Yeah, they're a pain to deal with - fees, inspections, yada. In fact when I am selling one of my houses (rentals) and a VA buyer makes an offer, I refuse to budge from my 'asking price' cuz I know that the VA process is going to cost me (the seller) an extra bunch of money.

As for PMI - I have seen many first-time buyers get 80/10/10 loans - 10% down 80% 30 yr first mortgage, and a 10% second loan that has toxic rates and either a shortterm (10 or 15 yrs) and/or a balloon. In many cases it is better to get a 30 yr 90% mortgage, and pay the PMI. Then after 3 or 4 years you can get the PMI removed and you'll be left with a "keeper". a nice 30 yr, fixed rate, 4% loan. So you have to do the math.
Post Sun Jun 14, 2015 3:33 pm
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DaleDegagne
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quote:
Originally posted by Wino
VA loans stink. Look into conventional lending.


I had no idea....that's pretty sad actually. Although I have a friend (ret. Major) who now works at the VA and he was passed over for an internal job transfer interview, despite the requirement to give him one b/c of his prior service. In short, the VA isn't always the nicest organization to Veterans. And it's not just the US - Canada is crap too. I have friends that they make show up and provide proof that their limbs haven't grown back and they are in-fact, still disabled.

But I digress....


@oldguy - if he's buying as a principal residence, why would he ever get a 2nd @ high rate just to not pay PMI?

@Oldguy & @Wino - 10% is a great, and 20% is better yes - but could he not go as low as 5%?

Pros would be - faster in the house, less rent paid, he should get the same rate whether 5% or 10% (I believe) and if I had a gun to my head, prices are more likely (in general) to increase vs. tanking again.

I'm sure you guys can provide the cons.
Post Mon Jun 15, 2015 12:15 am
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Wino
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[quote="DaleDegagne"]
quote:
Originally posted by Wino
@Oldguy & @Wino - 10% is a great, and 20% is better yes - but could he not go as low as 5%?

80/15/5 loans are available again, but as oldguy said, ofttimes the interest rate or terms on the second loan are not good. The good thing about such a loan is that you needn't pay PMI.

The object is, though, to get the first house purchased. Pretty much anything you can do to get this loan is not a bad idea, UNLESS:

Your payment (Principal, interest, taxes, and fees) is more than 25% of your income.
You have no money set aside for emergencies. There's no landlord to call when your heater goes out in January or your AC goes out in August. Both of those have happened to me. The AC happened twice, both times in Houston, and both times in August.
You have other debt that causes your total monthly payments (including the house above) to be more than 35% of your income.
You will likely lose your job or income in the next three to four years.

Owning a house is usually better than renting, unless you are not yet prepared to own it. There may be other reasons not to purchase that I didn't list, but the list above is a good starting point.
Post Mon Jun 15, 2015 6:51 am
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littleroc02us
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IMO, I would only do a conventional loan with 20% down or more, because you avoid PMI and all of the extra fees that VA and FHA loans consist of. Plus they have a lot of hoops to jump through. If your not ready to do this, just continue to save more. Might I add that when your doing the math on your mortgage payments compared to net income, I'd try to stay in the ball park of 27% or less. Why you may ask? Your not house poor and you still have disposable cash to invest, save, spend and donate. Being house poor limits weatlh building.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Mon Jun 15, 2015 8:31 pm
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27Rocks
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Re:Advice on Buying First Home  Reply with quote  

I guess i am late to give you any advice as all the best ones are already given to you. So i'd like to congratulate you for getting your first own house. Get your house insured for sure.
Post Tue Jun 16, 2015 2:33 pm
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