Mortgage Questions

[Tom Schindler]

Theresa and I are starting to search for a new home. We currently own the home we are in. (well, the bank owns it, but we make the payments) She got this house long before we got married.



We want a house that sits on between 1/2 and 4 Acres, 1800 to 2400 Sq/Ft, and a MINIMUM 2 car garage.



Before we go any further, I need to learn EVERYTHING about mortgages. I am a person that will learn everything about a car I plan to buy, to the point I know more than the guy or gal selling it.



This will be no different. I NEED to learn EVERYTHING I can to make sure I am not getting the shaft.



Anyone know of any good books, Internet resources, or advice for me.



A little rundown. House prices we are looking at is about $130,000 to $160,000. $40,000 to $50,000 down payment to keep the payment low. (I HATE monthly payments and will do EVERYTHING to get it paid off ASAP)





Tom

 

[Todd Z]

Only thing I can offer is a GOOD mortgage attorney on your side, Stay away from real estate agents, they are only working for the SELLER...



Get a fixed rate only, the others have lower payments but bite you big time in the end...

here in NY a good company now will also pay your home owners ins and taxes...

I let them pay the taxes BUT not the insurance, I want control over that...



Watch out for c of o's that are not issued, Get a good survey and i wish you bot the best of luck...



Thats about all I got, I know there is a ton of other things...



EDIT: also try to find a copy of someones mortgage statement and read what it is all about..



Todd Z

 

[Tom Schindler]

Stay away from real estate agents, they are only working for the SELLER...

Not sure how NY works, but a real estate agent can either work for the seller OR the buyer. As a buyer, you can hire an agent to find houses for you and deal that way. You never talk to the listing agent.



I am fortunate as I have a cousin and an aunt that are real estate agents. To keep peace in the family, one will be my buying agent and the other will be the selling agent when we sell our currant home.



Without a doubt, ALWAYS get a fixed rate. I would rather know for a fact what everything is over letting someone else decide what they want to do and I have no choice. (You know, like working for a guy that likes to change the rules to suit him whenever he wants it to.)



As for insurance, MANY lending companies require you to put the insurance payment in escrow so they know for a fact the insurance is paid and up to date.





Tom

 

[Rodger Tellefson]

Also, find a good house inspector to undcover any hidden construction issues so that you know exactly what you are getting upfront.



Go with a real estate buyer's broker:



From Wikipedia, the free encyclopedia



For a general article of the scope of real estate brokerage, see Real estate broker.

Buyer brokerage (or Buyer agency as it is also known) is the practice of real estate brokers (and their agents) in the United States and Canada representing a buyer in a real estate transaction rather than, by default, representing the seller either directly or as a sub-agent. In the United Kingdom the most common term to describe agent is Buying agent.



In most US states and Canadian provinces, until the 1990s, buyers who worked with an agent of a real estate broker in finding a house were customers of the brokerage, since, by most common law of most states at the time, the broker represented only sellers. Only in the last fifteen years or so have states passed statute law to create buyers' agency.



Today, if the buyer is working with a broker other than the brokerage which "lists" the property, he may choose to enter into a buyer-brokerage agreement to be represented. (In some cases where dual agency is permitted by law, even the listing broker may represent the buyer). If the buyer does not enter into this agreement, he/she remains as a customer of the broker who is then the sub-agent of seller's broker.

 

[Todd Z]

EFF those house inspectors... I sued mine afterwords... what a jerk....

Todd Z

 

[Dave S 2]

<<<We want a house that sits on between 1/2 and 4 Acres, 1800 to 2400 Sq/Ft, and a MINIMUM 2 car garage...>

A little rundown. House prices we are looking at is about $130,000 to $160,000....>>>



Good luck finding what you want. But I know of very few places that fits your want for the money even without figuring in the land cost.



I would think your cousin or aunt would be of the most help to you regarding mortgages. Between them both, they should know ALL the ins and outs.

 

[Tom Schindler]

Good luck finding what you want. But I know of very few places that fits your want for the money even without figuring in the land cost.

Actually, there are MANY places in my area that have that to offer, and much, much more.



One we looked at had free natural gas because of a gas well in the area.



Ohio is leading the nation in forclosures and homes hae lost 20% to 30% in the last year, or so. It is definatly a buyers market. My cousin told me that she offers no less than 30,000 below asking price on a home with a $160,000 asking price. She has seen some sellers go with $40,000 less than asking price.



They are out there. There are more than we thought there was.





Tom

 

[A K]

Tom,



Not being a smartass at all, but I recommend picking up a copy of Mortgages for Dummies from the library. As an initial introduction, it's a decent book.



When you're ready for the heavier lifting, lawyer's state bar associations usually provide great practice materials. Ohio's is titled "Residential Real Estate," published by the Ohio State Bar Assn. It should provide you with a holistic view of the entire transaction, including mortgages.

 

[Tom Schindler]

Adam,



We will be visiting Borders after visiting some open houses. One book I plan on checking out is called "Mortgage Ripoffs and Money Savers: An Industry Insider Explains How to Save Thousands on Your Mortgage or Re-Fi" written by Carolyn Warren



Looks interesting.



I know you are not being a smartass about reccommending the "Mortgages for dummies" book. Those books are great.





Tom

 

[Rodger Tellefson]

I strongly feel that if you find a reputable house inspector it well worth it.



Todd, Sorry to hear about your insident with the house inspector.

 

[Robert Stanton]

I was like you when I bought my house (the first one) 4 years ago. I did a LOT of research online, and I also bought a book called "100 Questions Every First-Time Home Buyer Should Ask". It deals with everything from start to finish, and was very helpful.



Beyond that, though, it's good to get an experienced real estate agent who's familiar both with the lending options and the local housing market. I got lucky on that count, as the guy I went through has lived here all his life and used to be on the banking end of things. He was able to give me good advice about my mortgage options as well as the neighborhoods I should & should not consider (and why).



Here's a link to the book I bought on Amazon, for your reference:

 

[Dave I]

1. Study guides to mortgages and 'hidden' costs of home owning

(ie, mortgage insurance, property taxes, homeowners insurance, escrow, etc)



2. Looking at the market it is a buyer's market so you should get a good deal. DO NOT assume you will automatically shave 30-40,000 off the asking price for any or all houses. Those sellers may have been desperate. Consider you may not necessarily want to buy someone's desperation sell. There could be leans or judgments on it that you don't find out about until the house is in escrow.



3. Definitely go with a well known lender, realtor and homeowner's insurance company. Something that big shouldn't necessarily go to the 'lowest bidder'.



4. It will never cease to amaze me what house sell for (with land) in other parts of the Country. I won't even tell you what I bought my house for/or it's worth. I have a good size house with a three car garage, but not even close to the bottom end of your land request. In California, land is PRIMO. Amazing.



5. Whatever you do, please DO NOT buy the first house you see... even if you 'fall in love' with it. Shop around, take your time, there is NO rush.



good luck,



scrubb

 

[Les]

Escrow for taxes and insurance is only required when you borrow over 80% of the selling price. If you are putting down $50,000 on a $150,000 house, you are well within the limits of controlling your own taxes and insurance. This is just another way for the bank to hold on to your money and either not pay you any interest, or very little.

 

[Thomas Rogers]

Caymen,



There are tons of resources but I can't recommend any one over the other.



Some points to consider (many already restated):



1) Have an attorney, one that specializes in real-estate and home closing. Expect to pay $500 (more or less) for this as a one-time fee.



2) Work with reputable mortgage companies that will KEEP your mortgage, not resell it. I can't say anything but praise for "Wells Fargo Home Mortgage".



3. Get the shortest duration, lowest cost (APR), fixed rate mortgage you can qualify for. In today's market I suspect that is around 5% and 15 years. I know your age, I have a feeling for what you make, and you stated your price range so 15 years is what I recommend.



4. Do the math when it comes to paying points to pay down the APR. You may find that though it sounds like you will save a lot in interest over the life of the loan if you pony up some more cash at closing, that all that savings will be lost if you sell in the first few years...figure out the break even date and your liklihood of still being in the house. Kids and schools change that factor quickly. (more on that later)



5. Put down more than 20%, avoid PMI (mortgage insurance) and escrow your own taxes into your own savings account. You manage your own tax cashflow this way, and if you have discipline you should be fine.



6. Get a qualified home inspector to review the home.



7. "Do the math" when it comes to possibly paying down the house early. A home and the interest paid is still a good tax deduction, and if you are paying 5.x% interest, say, there are lots of other investments that you can make that will pay more than the 5.x% you would save by paying down your mortgage.



8. Consider resale. 4 bedrooms homes sell better than 3. Same with 2.x bathrooms instead of 2 or one. A great school district means your home will resell quicker. You may not think this is going to be a starter home, but based on the cost and your age, it probably won't be your last home.



TJR

 

[Richard L]

Caymen,

What Todd means is that both buye'sr and seller's agencys are leaning towards the seller getting the best price because both of there commission are based on the selling price.



In Texas, as well as most other states, the buyer's agent gets 3% of the selling price, and the Seller's agent gets 3%. If the buyer's agent can sell a house listed with with his company, his/her agency can get the full 6% commission for the sale.



Also, remember that neither agent gets a dime if they don't get you to buy a house, so in that sense, both agents are working to get you to buy a house which tends to make them favor the seller.



Yes, a good agent will try to make sure you do not pay an outragious price, and will advise you as to how to place an offer, and what you can and should require of the sellerand what kinds of inspections you or the mortgage company may require to close the deal.



The hard part is making sure that your agent's focus on getting you the best house for you at the lowest reasonable price which means they are not focused on just a fat commission.



And lastly, remember that Real Estate Agents are not true Real Estate Appraisers, so you cannot always believe what they say about the true value of a home, They may be in the ballpark, but when it's your money and they get a commission, they can afford to be inaccurate especially on the high side. They usually will base their pricing opinions on what Comparable homes in that area have sold for in the past. But that's only valid if they actually inspected those homes when they were sold, and the paperwork may not include all the. details worked out between the buyer and seller



...Rich

 

[J Piroth]

Everything's been pretty much covered here, but here's one word of advice we got from our agent when we purchased our home:



- Whatever your payment is, if you make one extra payment against your principal each year you'll pay off a 30-year mortgage in 19 years instead.

 

[Tom Schindler]

Something I learned in school. For your first payment, make a very large payment. So if I put $10,000 down on my first payment, I will have the loan paid off in like 15 years while making payments like it is a 30 year loan.



You get a cheaper monthly payment.





Tom

 

[Les]

The more down payment, the less the monthly payment. The more down payment, the lower the interest rate you can obtain. Don't hold out money you are going to immediately give them anyway. Use it to your advantage when negotiating your loan...

 

[Gavin Allan]

Put at least 20% down so you don't have to pay Private Mortgage Insurance-- that is a total crooked ripoff.



Get fixed rate.



Paying additional points for lower interest seldom worth doing unless you keep mortgage for 5+ years.



I like escrowing taxes and insurance, others don't. Your choice.



Don't put down any more than 20% to save money for other expenses-- maximixe leverage with least amount of down payment.



Get longer term mortgage than you need, then pay additional amounts each month to shorten the term to give you payment flexibility in case of layoff or emergency.



Location location location.



Home inspectors are a complete ripoff.



Get copy of existing title insurance policy and ask to update it, rather than starting from scratch to save money.



Remember, no one is your friend. They all work for themselves, not you. Don't be pressured to cave in after contract is signed. Everyone wants contract to go through. However, they will play psychological games with you after you put down payment and get contract signed. Don't let them get to you-- even though they are screwing with you and making threats to get you to cave, they all still want the deal to go through.



Good luck!

 

[Les]

The less money you use as a deposit, the better. This money is only used to take the property off the market and allow you to go to contract and obtain a mortgage. If there is a dispute, it may take a while to get your deposit back. There is no minimum amount and in today's market, you dictate (as a buyer) the rules.