Should you ever buy a house with no money down?
 

I talked to a mortgage guy and he said that my credit is so good I could get a mortgage with no money down, no docs, and no pmi but the rate would be 7.2.

Is that dumb to do that? I know theres a lot of real estate investors who would know immediately if a nothing down deal with a higher rate is a good idea or a bad idea

dont do it

Are you first time home buyer?

If you do it, establish a savings account with your bling in it, in case anything really bad ever comes up and you have to miss a payment, trust me, been thru that in a way that my credit is _destroyed_

pay cash

is that a fixed rate or variable?

with nothing down your monthly payments will be pretty high, I might consider doing it with a revenue producing property but probably not with a private residence. I'd rather pay 10 or 20 percent up front and lower the payments.

Of course, if you're renting now you're just throwing money out the window basically, so you would also want to weigh your mortgage payments against your rent and if they're close, you might go for it.

yeah. Im tired of renting. Boston rentals are too much for too little.

If you got money to put down do that, why would you want to have a high interest rate. :2 cents:

Try to save up 5% (or whatever it is you need for a first time home buyer where you live.) That way you won't get screwed on the interest.

It's 5% in Canada, I think I heard it was only 3% you needed in the U.S for first-timers.

Something doesen't seem right. Without 20% down I don't think you can get a mortgage without PMI insurance.

7.2% seems high even for a fixed rate. I'm in the process of doing a 500k mortgage with a fixed rate of 6.5 and I'm not too happy with that rate.

IM just going by what he said. My score is over 800 and he just said he has investors who would do my mortgage. I didn't sign anything.

I might try lending tree or eloan to see what they say.

I was just wondering what the investment people here think about doing no money down deals

We can do no money down with 6.375% interest fixed. We are going to put down 20% just to make the monthly payments lower.

If you are a veteran you can get in easy with no money down and no mortgage insurance.

Our payments include property tax, school tax, home owners insurance right now.

First off, FHA is the easiest way at 3% down up to typically a max loan of 234,150 in high cost areas, but with PMI, FHA will always have PMI until you get below 80% LTV. Conventional will require 10% at which you will still have PMI till 80%. Any lender that will give you a loan with an LTV above 80% with NO PMI is a subprime lender. Stay away. Be wary of going to moneytree or Eloan, as all they are gonna do is contact 3-4 lenders of which each will pull your credit and load up your inquiries on your report. 800 credit is more than you will ever need for a mortgage. Debt ratio is another angle to look at unless you plan on a no doc loan. There are so many variables. just be careful. There are 100% financing but if he is using a typical lender he is probably gettin hit for .25-.75 which he is passing along to you in the rate. Need advice hit me up 209598065 wife's been in the mtg biz for over a decade. :glugglug

shit where were you a month ago? lol.. I just got the keys to my new house yesterday, loan of 700k 5.25 fixed 30 year

not bad, I could maybe done better but not much and at least I won't be spending 3k/month on rent anymore :thumbsup

Dam! Good info! I might hit u up tomorrow to see if I'm getting a good deal on this loan I'm about to sign. You never can be too safe when it comes to big decisions.

Peace,
BV

Not bad seein as thats a jumbo doc loan, look for the fed to jump rates by .25-.50 basis points soon and possibly another .25 later this year. Rates are on the rise

wow that seems like a good rate, probably before prime went up a point 2 or 3 weeks ago?

No problem man, I am almost done writing my book on the actual inside workings of mortgage brokers. I will catch a fuck load of heat but truth be told, people who don't know the real inside dealing of brokers will shit their pants. Brokers will also be really pissed off. Hit me up man, I got nothing to gain but maybe help out a fellow GFY'er:glugglug

nice informative thread....i'm in the process of looking for a house right now and could use this info

nice info there, i've also been thinking about buying land/house soon. I'm tired of renting and dealing with fucking roommates and shit.

I will be a first time home buyer etc so I'm a newb!

yeah I locked the rate in when they were still low then had 45 days to find a house or lose the guaranteed rate. I got it thru Bank of America, and they took good care of me. Really surprised to find myself saying something good about a bank lol

It sounds nice but wait till you missed just one payment, then you'll see hell!

lol if times ever get tough just pay the interest on the loan for that month.:glugglug

Being a newb I would suggest a house, forget about land at this stage in your life. Land deals are not easy nor fun:2 cents:

Did you use your VA loan for the new place?

I've bought 3 houses but never used my VA loan. Dont know why, just never bothered with it.

This is an interesting discussion.

I am in Canada and I really would like to read stuff about real estate investments and buying a first house. Any of you know any good books that cover these subjects in depth? What is the best way to gain knowledge in those fields? If any of you guys have any informations that apply to Canada, i'd really like to hear about it!

Mortimer

Cant do nothin for ya in canada sorry. But I do have a book coming out soon to educate consumers when working with a broker in the states.:glugglug

if your score is indeed over 800 (good job if so), get a better deal. 7.2? fuck that. Whats the rate on the 2nd?

Having just bought a condo for $315k with zero down, I can tell you, that rate sucks. And I'm around 720.

When I talked to the mortgage broker the first time I told her I didn't want anything to put down, she said 'use it for closing costs anyway'. Easy 2 hours of filling out paperwork. Closed a month ago, have been getting rent back from the current tenants, they moved out today. Easy easy.

If you can find a place that is a private sale, do it. fuck realtors. 6%+ is the going rate out here for realtor fees. Fuck that, I'm not paying 18k to some fucktard that filled out some paperwork.

Im sure it will do well man..
Mortage is a slimey biz

Thats why I had to leave it, we opened a title company years ago. To be real successful you need to be ruthless. I simply cant look in their face and scam them:helpme

Its never dumb to use other peoples money to invest. you want to use as much of theirs as you can and as little of your own as possible.........

FOr sure!
I don't mind making it worth your while if you can give me some inside tricks/ tips that I could use in dealing with this guy.

I'll hit You up tomorrow. Any info you need to know about what I have going on so far with it as far as terms or whatever please just email me at [email protected]

Peace!
BV

No problem man. Tell me what he tells you, then I can assess the fuckin he's tryin to give you.

Heres a great example:

Say Jon Doe has an FHA 30 year mtg he wants to refinance, he doesnt want any cash out all he wants to do is a rate and term refi. BUT his loan officer notices he has a 30 day late on his credit report from his credit card. His loan officer proceeds to tell him, Ya jon I can do this loan BUT the lender is charging an extra .50 on the rate cause of your late payment on the credit card. So jon says "ya I fucked up, ok lets do it anyway" :1orglaugh All the loan officer did was make an extra 500-1500 bucks on the loan because truth be told FHA could care less if your late on every single debt BESIDES your mortgage to them. If you have a clean no late mtg history with fha thats all they look at when doing a rate and term refi :glugglug

An extra point on the back for raising the rate .5%?

It works like this:
say todays lender XYZ sends out rate sheets and they are paying the broker 1% of the loan amount if you give the consumer a 30 yr fixed FHA loan at 6% BUT if the loan officer manages to get the consumer to take it at 6.50% XYZ is now paying 1.375% of the loan amount

So we do the math:

Loan amount 150,000
1% paid to the broker @ 6% rate is 1500 bucks
But he got you to take that .50% bump cause you dont know any better now he is making

150,000 @1.375% paid to broker for the 6.5% rate = 2,062.50

He made an extra 562.50 cause you dont know any better and you are payin more than you need every month cause you didnt buy my book or use my consultation services :glugglug

So I was right?
LOL

theoretically youll never make a full extra point out the back by raising the rate only .5 Typically the broker will make maybe .375-.5 more out the back

is it a fixed rate? if its variable tell him to blow you

Variables are awesome depending on the length you are going to live in the house. My first house I had a 5 year limit set on living there. Taking a 30 yr fixed with no intention on living there for more than 5 years is stupidity at its finest. The variables are not the variables of the 70's and 80's. More misconceptions for uneducated consumers. :glugglug

Ya I was only talking theory not specifics

Ya the rate you are given is totally proportionate to what the broker makes. The higher the rate the more he makes on your loan. He will give you the highest possible rate he can get away with before you go to another broker.

NopE! i won't

:helpme huh?

what? you do realize rates will be going up?

more stupidity from idiots

never do that very bad idea

LMAO I been in the mtg for a long long time.

Yes I urge you to go grab a 30yr fixed IF your plan is to stay there for more than 5-7 years at 6-7% If you have any intentions of staying less than 5-6 years go grab a 5 year arm at 4.5-5% and let me know how much money you have saved IDIOT. Lets talk mortgages smart guy. I love to school uneducated people. 98% of first time buyers dont last in their first home more than 5 years.:glugglug

Depends on a lot of things.

First, you CAN get a no PMI loan at above 80% LTV, but you're generally paying a higher % for it. But it's a good option. I just bought another house and opted for a 1% higher interest rate to avoid PMI. In both cases, the PMI or the higher interest rate goes away after 2 years if the LTV is below 80% including appreciation. Your payments are usually the same either way, but the interest you pay is tax deductable whereas the PMI is not...therefore, you have an advantage opting for the higher interest rate.

If this is going to be a primary residence where you are planning on living for a long time without selling, get a fixed rate and try to put down at least 5% to reduce the interest rate. It'll pay off in the end, unless you have some guaranteed high interest investments you can use that money for (and if you do, tell me what they are ;).

If you're planning on flipping it or selling it within a few years, get a variable rate that's locked for a number of years. You'll save money on the payments and don't have to worry about the rates jumping on you, since you want be holding onto the loan.

If you're buying as an investment property, then no money down works well, because you have a higher leveraged position, assuming the interest rate hike doesn't increase payment dramatically. Theoretically, let's say you put down 10% on a 100,000 home with an interest rate of 6% and rental income of $750/mo (I'm ignoring closing costs, taxes, insurance and maintenance for ease of calculations...just for comparisons). Your payments are $539.60/mo, so your yearly ROI is 19.88%. At 1% down (can't calculate with 0%) and an interest rate of 7%, your return on investment is 27.61% (mortgage payment is $658.65). Cool. It doesn't always work out that way, so you have to play with the number a lot...that's why it's difficult for anyone to give you a straight answer for your particular situation.

Tell me the lenders name who told you the 1% rate increase will "go" away after 2 years even if you get it re-appraised and its at 50% ltv?

Countrywide

ya you're schooling me.

rates may jump 4%+ within 2-3 years. if you would take a 7% variable, you're a fucking idiot