Mortgage Questions

[Aimster]

I waited a long time and I saved up a lot of money. Now is the time to buy a house. After all this talk I am going to do it. First step is to find out how much I can afford. I used online calculators but I don't want to rely on those.

I have narrowed my choices down to two banks:
Wachovia & Bank of America

Questions
1) How do I know which of those two banks is the best deal? Wachovia's site has higher closing cost. Bank of America has lower closing cost but doesn't give enough information on what the rate is going to be. I don't really trust the people at the banks. Don't they work on commission? Can anyone recommend either of the banks?

2) I want to know how much house I can afford. What is the best process in doing this? A pre-approval just seems like the online calculator dumping out a printout. Should I go for a pre-qualification which is basically saying we guarantee this loan amount?
*Should I do a pre-approval at two different banks? Will this impact my credit?

3) I want an FHA loan. That is what I am interested in. Will a pre-approval/pre-qualification tell me all the different kinds of mortgages I qualify for and the amount I can borrow for each?


4) Has anyone ever done any of this all online? How was it compared to dealing with the bank face to face?

Thanks

 

[Capt Caveman]

Pre-qualification doesn't guarantee anything. I think you have pre-qualification and pre-approval mixed up. Calculators can give you an estimate based on your downpayment, current income and monthly expenses. A pre-approval will help determine the actual rate based on verifying the already mentioned information and performing a credit check.

Why have you narrowed your choice to these two banks? I've had a great experience dealing with highly recommended mortgage broker with Chase.

I wouldn't recommend online, especially since you're first time and you want to develop a relationship with your mortgage broker.

Don't you have any friends that can recommend someone?

 

[OCGuy]

For a FHA/Fannie/Freddie loan you can have up to 55% of your gross income be used for all your total debt that shows up on your credit report, plus your full new mortgage payment and taxes and insurance.

This is assuming you meet the credit requirements.

I underwrite/process mortgage loans all day...

 

[Red Squirrel]

I'd go for the preapproval, that way it's written and you are guaranteed that amount, and you're also guaranteed that interest rate for 3 months I think it is, so if it goes up, you get the interest rate that they gave you for the preapproval. Not sure if this changes from bank to bank though, but mine was like that.

I'll actually be buying for the first time as well, soon. Been looking around.

 

[IamDavid]

Originally posted by: OCguy
For a FHA/Fannie/Freddie loan you can have up to 55% of your gross income be used for all your total debt that shows up on your credit report, plus your full new mortgage payment and taxes and insurance.

This is assuming you meet the credit requirements.

I underwrite/process mortgage loans all day...

Hey OCguy, can u explain how a FHA loan works, how ya get one? Talked to Wells Fargo Mortgage idiot the other day and they said they had no idea what I was talking about. I was lost so I laughed and left. Won't go back there.

 

[pnho]

FHA loans are government backed loans that allows new home buyers (never owned a home within the last 3 years) to buy a house with a down payment as low as 3.5%. The PMI is paid up front if I remember correctly. The major difference is that in a FHA loan the home has to be habitable and all repairs if needed have to be done prior to the close of escrow.

These loans require the loan officers get special training/certification to originate.

As for shopping for a loan, try asking around different banks and different mortgage brokers. Just make sure that they don't run your credit every single time they do a pre-approval. And if they require it, try to keep the credit pulls within the same time frame i.e. within a week.

Brokers and banks make their money either through rates, fees, or a combo of it.

Good luck searching

 

[OCGuy]

Originally posted by: pnho
FHA loans are government backed loans that allows new home buyers (never owned a home within the last 3 years) to buy a house with a down payment as low as 3.5%. The PMI is paid up front if I remember correctly. The major difference is that in a FHA loan the home has to be habitable and all repairs if needed have to be done prior to the close of escrow.

These loans require the loan officers get special training/certification to originate.

As for shopping for a loan, try asking around different banks and different mortgage brokers. Just make sure that they don't run your credit every single time they do a pre-approval. And if they require it, try to keep the credit pulls within the same time frame i.e. within a week.

Brokers and banks make their money either through rates, fees, or a combo of it.

Good luck searching

On the right track.

FHA has higher standards for the property you choose (the appraisal costs a little more, but is much more thorough to make sure it is habital, like you said.

There is an upfront PMI fee that the seller can pay if your real estate agent knows what they are doing. There is also a monthly PMI fee if you are over 80% LTV, just like any other loan.

There is really no point in a FHA loan unless you are trying to put down a lower down payment, have certain out-of-the-box income situations, or are trying to use a non-occupant co-borrower to qualify.

 

[sswingle]

We have an FHA with US Bank and haven't had any problems.

 

[Turin39789]

We're going to start annoying banks to figure this all out soon. Can afford to put 10+% down but don't have 20% yet.

Just found a real nice looking place, it's pushing our upper limit of where I wanted to be though. FSBO and we have no agent yet.

 

[alkemyst]

here is the deal, on an FHA everyone is serving you the same product.

Shop it but don't rely on price only...many brokers will promise the world.

go to fha.gov and read a bit.

EDIT: hit post to fast...
Questions
1) How do I know which of those two banks is the best deal?

Published rates are WORTHLESS. Only when you are locked do you really know the rate. Get them to run your credit and deliver a Good Faith Estimate (GFE)

2) I want to know how much house I can afford. What is the best process in doing this?

They will tell you what you can afford. However only you ultimately will know. Be honest with yourself and put the new payment in the budget.

3) I want an FHA loan. That is what I am interested in. Will a pre-approval/pre-qualification tell me all the different kinds of mortgages I qualify for and the amount I can borrow for each?

Not really...most loan officers don't really stay on top of the game. They will try to focus on a program they know they can qualify you for.

4) Has anyone ever done any of this all online? How was it compared to dealing with the bank face to face?

Online is very popular....at closing you will sit down with a live body. There really is no difference other than it's much easier for a fly by night to create a website and then claim to be a business.

 

[alkemyst]

Originally posted by: Turin39789
We're going to start annoying banks to figure this all out soon. Can afford to put 10+% down but don't have 20% yet.

Just found a real nice looking place, it's pushing our upper limit of where I wanted to be though. FSBO and we have no agent yet.

if you are annoying a bank to lend you money you are picking the wrong bank.

10%+ is really good if your credit is also.

20% is pretty rare today on anything but lesser property.

If you are looking at a FSBO and pushing it, do not get an agent...hire an attorney if you need one.

As long as your upper limit is realistic that's the smart move most of the time.

 

[Jadow]

Originally posted by: Aimster
I waited a long time and I saved up a lot of money. Now is the time to buy a house. After all this talk I am going to do it. First step is to find out how much I can afford. I used online calculators but I don't want to rely on those.

I have narrowed my choices down to two banks:
Wachovia & Bank of America

Why do you want to get a mortgage from a giant faceless bank? Go to a local credit union, you'll get just as good of rates, get serviced a lot quicker, and it just feels better to have an acutal person to call or email, not an 800 number for "customer service"

 

[alkemyst]

Originally posted by: Jadow

Originally posted by: Aimster
I waited a long time and I saved up a lot of money. Now is the time to buy a house. After all this talk I am going to do it. First step is to find out how much I can afford. I used online calculators but I don't want to rely on those.

I have narrowed my choices down to two banks:
Wachovia & Bank of America

Why do you want to get a mortgage from a giant faceless bank? Go to a local credit union, you'll get just as good of rates, get serviced a lot quicker, and it just feels better to have an acutal person to call or email, not an 800 number for "customer service"

because not all local CU's are that great. And you have to join.