Where to start? Need a mortgage

[phred52]

The last time I needed to take out a mortgage, it was 28 years ago. My memory is fuzzy on the details and my Dad was around to give me pointers.

This time I am on my own. Where do I start? I'm thinking going directly to the bank and not involving a middle man. I saw ING online had offers for a good rate for a mortgage...filled out enough to read the fine print. Its only good for your primary residence. We are looking to buy a second home. It is for 'sale by owner', so there's no real estate person to guide me.

I'd appreciate hearing about your experiences to give me an idea of what to do next. Thanks friends.

 

[fkj2]

When I applied for my HELOC, I had to submit proof of income and list the outstanding debts I had. The bank evaluates the debt-to-income ratio. When speaking with the branch manager, I was told the bank was requiring 20% down. The bank will also consider who else has claim to other secured loans, such as if you have a mortgage on the home you currently live in.

You should have the option of retaining a real estate agent of your own, who would act as the buyer's agent. The house would still have to be appraised by the bank but they'll probably loan as much as they think you can afford.

You should be able to research the selling prices of other and similar homes in the area to get a sense of what's reasonable to pay.

 

[mster425]

The 20% down was true for us too.

If you're married, they'll go by the lowest credit score between you to determine your interest rate, so don't cancel credit cards, buy a car or miss any payments.

Try the bank where you have your checking account or saving account, sometimes they'll give a discount to existing customers. For us going directly to the bank worked out better than a broker; we just acted as our own broker and called a bunch of banks. ETA: if you call a bunch of banks don't give them your SSN; if they run your credit report too many times your score takes a hit.

 

[scrapquitler]

The last time I needed to take out a mortgage, it was 28 years ago. My memory is fuzzy on the details and my Dad was around to give me pointers.

This time I am on my own. Where do I start? I'm thinking going directly to the bank and not involving a middle man. I saw ING online had offers for a good rate for a mortgage...filled out enough to read the fine print. Its only good for your primary residence. We are looking to buy a second home. It is for 'sale by owner', so there's no real estate person to guide me.

I'd appreciate hearing about your experiences to give me an idea of what to do next. Thanks friends.

We bought a second home about 6 years ago, so I can tell you my experiences, but I will also tell you that based on what I've heard from other people, things are slightly different now since the whole financial crisis of the last few years.

Firstly, most of the advertised rates you will see, as you already found out, are for 'primary residences only". The rate you are going to pay for a mortgage on a second home is going to be somewhat higher (in our case, about half a % higher).

Secondly, you are most likely not going to be able to get away with a smallish down payment. We were required to have 20% downpayment with our lender (wells fargo), but some of the other lenders wanted 25% down. My husband has talked to other people in the area (we own our second home in a ski resort area, where there are more second home owners than primary home owners) and now some of the lenders are requiring not only a high credit score but even bigger down payments (like 30% or more). But don't let that discourage you, it might vary greatly by where you are located, I just don't know.

I would suggest calling a 'mortgage broker' in your area who will be able to research loans from several different lenders. At the same time, call a local bank and a local credit union, sometimes they will give you a better deal (the rate might be higher with one but the fees might be lower or vice versa).

Also, be aware that the homeowners insurance is going to be more for a second home than a primary home (and if you plan to rent, even higher still). And the taxes... A lot of areas charge higher taxes to second homeowners just because they can, but that might not happen everywhere.

 

[ssawka]

I would seriously consider getting a buyer's agent. Just because the seller dosen't have an agent, dosen't mean you have to go without one. In fact, you might be able to use the "for sale by owner" to your advantage, unless the seller is very knowledgeable.

Also, your first step should be to get "pre-approved" so the seller knows you are ready to buy when you make an offer.