Need advice- down payment for mortgage!- UPDATE post 104!

[CalDisneyMomof2]

So you didn't feel the need to include a pre approval letter with your offer? Did you include an earnest check with your offer or proof of funds?

 

[tvguy]

Just wanted to note that a VA loan does not require PMI. The VA is the guarantee for the loan. We are on our 2nd VA loan and have never paid PMI. Also, VA loan rates typically slightly lower. IIRC, our last loan was at least .5% less than other comparable options. With interest rates being so low, the difference was much smaller than our first VA loan which was a little more than 1% less than other options.

If you're eligible, a VA loan can be a good option. We were told by our realtors that some sellers won't work with VA loan financing, but we didn't run into any issues with inspections or making offers. But, we were purchasing fairly newer construction homes. For us, we had the option of no down payment/rolling fees & cost into our mortgage, low interest rates, no PMI and reduced origination fee (dh is a disabled veteran).

Like others have said, I would suggest pre-qualifying. This can give you a more accurate picture of cost. Also, review the current taxes paid and utility cost if your local utility company offers this.

Home inspection is a must. Although we had the VA inspection, it is fairly basic. We paid for an independent inspection each time we have purchased a home. We also made our offers contingent on the inspection.

Also, I agree that you should have your own realtor as well. They will have useful knowledge to you as a seller and be a wealth of info.

VA can be a nightmare for both the seller and the buyer. I have a whole chain of letters my dad wrote to them over the two houses he and my mom bought in their lifetimes, angry that he was turned down my the VA. Some much for taking care of our veterans. My FIL was career Air Force and had the same issue. In all three instances VA said the houses were too expensive for their income, in all instances conventional lenders had no such issue, and in all instances they had enough cash on hand that they ended up paying cash for the houses. The median prices home in 1973 was $33,000 and my FIL could not get a VA loan for a $20,000 house.

 

[NY Pirate Princess]

I hope you seriously consider going with a conventional loan over FHA. You will be paying PMI forever unless you refinance. PMI is like rolling down the window every month and throwing money out, so the shorter of a period of time you can pay it, the better for you. My husband and I have excellent credit and were able to buy our home conventionally with a credit union for just 5% down. Our PMI is $35 a month. Whew. We MUST pay PMI for 2 years whether we get below 80% LTV or not. I pay extra on our mortgage each month and expect to be done paying PMI in another year, one year ahead of schedule (we should hit 20% at year 3 in our 15 year schedule if we paid the loan amount exactly). That $35 extra will go right on the loan. We paid much higher PMI on our first, much older and crappier house.

As previous posters have said, FHA requires a special inspection, and the inspector will force the seller (or more likely, you) to put up hand rails, fix peeling paint, and 10,000 other things that are useless, time consuming, and frustrating. The buyer on the home we sold to get this one had FHA, and the demands and delays were incredibly frustrating and costly for both of us.

I understand you have a brother with experience, but I hope you did not waive your inspection contingency, or lowered your offer enough to pay for whatever comes up.

Whatever happens, I hope this awesome house is yours with no problems and a smooth ride sooner, rather than later!

 

[DisneyMandC]

So you didn't feel the need to include a pre approval letter with your offer? Did you include an earnest check with your offer or proof of funds?

Not sure if this was to me or not, but yes, we included both with our offer. We received a prequalification letter several days ago, and wrote a check for a deposit to be held in escrow.

I hope you seriously consider going with a conventional loan over FHA. You will be paying PMI forever unless you refinance. PMI is like rolling down the window every month and throwing money out, so the shorter of a period of time you can pay it, the better for you. My husband and I have excellent credit and were able to buy our home conventionally with a credit union for just 5% down. Our PMI is $35 a month. Whew. We MUST pay PMI for 2 years whether we get below 80% LTV or not. I pay extra on our mortgage each month and expect to be done paying PMI in another year, one year ahead of schedule (we should hit 20% at year 3 in our 15 year schedule if we paid the loan amount exactly). That $35 extra will go right on the loan. We paid much higher PMI on our first, much older and crappier house.

As previous posters have said, FHA requires a special inspection, and the inspector will force the seller (or more likely, you) to put up hand rails, fix peeling paint, and 10,000 other things that are useless, time consuming, and frustrating. The buyer on the home we sold to get this one had FHA, and the demands and delays were incredibly frustrating and costly for both of us.

I understand you have a brother with experience, but I hope you did not waive your inspection contingency, or lowered your offer enough to pay for whatever comes up.

Whatever happens, I hope this awesome house is yours with no problems and a smooth ride sooner, rather than later!

Thanks for the tips! And no, we DEFINITELY did not waive inspection! My brother did just a sort of once-over inspection based on his knowledge of homes, but we will definitely have a certified home inspector checking it out as well. We submitted an offer based on the quotes my brother gave us for changing some of the things we'd want different in the house. Even if the seller comes back and meets us in the middle between that and list price, we will still be in pretty good shape.

I think we're definitely going conventional at this rate based on what we've researched. I'm also going to look into Farm Credit since we're rural, so hopefully I can get a better deal on interest/PMI/etc. through them than I would your standard bank/lender.

 

[CalDisneyMomof2]

Not sure if this was to me or not, but yes, we included both with our offer. We received a prequalification letter several days ago, and wrote a check for a deposit to be held in escrow.



Thanks for the tips! And no, we DEFINITELY did not waive inspection! My brother did just a sort of once-over inspection based on his knowledge of homes, but we will definitely have a certified home inspector checking it out as well. We submitted an offer based on the quotes my brother gave us for changing some of the things we'd want different in the house. Even if the seller comes back and meets us in the middle between that and list price, we will still be in pretty good shape.

I think we're definitely going conventional at this rate based on what we've researched. I'm also going to look into Farm Credit since we're rural, so hopefully I can get a better deal on interest/PMI/etc. through them than I would your standard bank/lender.

Oh good. By reading your previous post it had sounded like you were still unsure about which loan you'd be getting so I assumed you hadn't spoken to a lender. Good luck!

 

[DisneyMandC]

Oh good. By reading your previous post it had sounded like you were still unsure about which loan you'd be getting so I assumed you hadn't spoken to a lender. Good luck!

Thanks! Yeah, I think we'll definitely be conventional, we're just not 100% on what we'll put down yet. Our bank just put in a generic 5% prequalification for us, but I think we might have some family lend us some money as well. It's really important to my mom for us to get this piece of property since it's connected to her farm, which is where we currently live. Basically, if we can't get this property or build on her property (which is looking less and less like a possibility everyday) then she will have to sell our farm when DH and I move to our own place. We ALL want to stay here, so we're really crossing our fingers for this to work!

 

[GaryDis]

We went over and checked out the property today and made an offer!

Great! It sounds like you're doing all your homework, making the right decisions, and things are moving along. Best of luck to you!

 

[DisMom829]

Famous last words. Remember that 'we never will commercial' I like the part he says 'we never going to have another one' and she says I'm pregnant'

Also I know a couple who got married and didn't want children. Six months later she was pregnant.

Trust me on this. It would never happen.

Just a little humor on a Sunday night...see the little cutie pie eating ice cream with the bright blue glasses and the beret on?? That's my "we never will" beautiful sweet girl. I had multiple female surgeries starting at 13 years old. After years of trying and doctors telling me to think of other options, my son was shockingly conceived after we gave up on all meds. Sustained a lot of kidney damage with him. Doctor's said, no more. 5 years later and a total and complete shock to even the doctor, we have a full of life little princess. Even DH was shocked to disbelief. I don't know your situation, but in mine, it taught me to never say "It would never happen". It happened twice for us. And we are BLESSED beyond belief.

 

[Ngwira]

Thanks! Yeah, I think we'll definitely be conventional, we're just not 100% on what we'll put down yet. Our bank just put in a generic 5% prequalification for us, but I think we might have some family lend us some money as well. It's really important to my mom for us to get this piece of property since it's connected to her farm, which is where we currently live. Basically, if we can't get this property or build on her property (which is looking less and less like a possibility everyday) then she will have to sell our farm when DH and I move to our own place. We ALL want to stay here, so we're really crossing our fingers for this to work!

Any update? I'm so excited for you and DH!!!

 

[DisneyMandC]

Any update? I'm so excited for you and DH!!!

WE HAVE A CONTRACT! WOOHOO! Obviously all contingent on inspection, etc., but the property is GORGEOUS. The house is really cute, but definitely needs some updating upstairs. We will likely do some remodeling including knocking down a wall before we actually move in. Provided that everything moves smoothly from here on out. So now it's just hoping and praying that everything goes ok with inspection and whatnot. We were fairly happy with what we came to for purchase price, and seller is paying about 80% of closing. They are also leaving all appliances, including a really nice, year old washer and dryer. So at least we won't have any extra money spent on appliances. Heat pump is less than five years old, so we'll have a good chunk of time left on that hopefully. Our current one is 14 years old. We will also get 1% back from the realtor at closing. So that will be helpful.

So keep us in your thoughts while we get everything squared away on inspections and whatnot! Thank you all for your support!

 

[Ngwira]

WE HAVE A CONTRACT! WOOHOO! Obviously all contingent on inspection, etc., but the property is GORGEOUS. The house is really cute, but definitely needs some updating upstairs. We will likely do some remodeling including knocking down a wall before we actually move in. Provided that everything moves smoothly from here on out. So now it's just hoping and praying that everything goes ok with inspection and whatnot. We were fairly happy with what we came to for purchase price, and seller is paying about 80% of closing. They are also leaving all appliances, including a really nice, year old washer and dryer. So at least we won't have any extra money spent on appliances. Heat pump is less than five years old, so we'll have a good chunk of time left on that hopefully. Our current one is 14 years old. We will also get 1% back from the realtor at closing. So that will be helpful.

So keep us in your thoughts while we get everything squared away on inspections and whatnot! Thank you all for your support!

Wonderful news!!! We bought our first house in November 2013, after being renters for 10 years. I would suggest getting service contracts on all major appliances and systems. We have service contracts on our fridge, dishwasher and gas oven/stove. We also have service contracts on our gas water heater, furnace and central air unit. I made the mistake of not doing this and 3 months after we moved in (polar vortex) our heater broke costing about $700.00.

Good Luck on getting through inspection and hopefully closing!!!

 

[DisneyMandC]

Wonderful news!!! We bought our first house in November 2013, after being renters for 10 years. I would suggest getting service contracts on all major appliances and systems. We have service contracts on our fridge, dishwasher and gas oven/stove. We also have service contracts on our gas water heater, furnace and central air unit. I made the mistake of not doing this and 3 months after we moved in (polar vortex) our heater broke costing about $700.00.

Good Luck on getting through inspection and hopefully closing!!!

Thank you! Now when you say service contract, do you mean like a home warranty? We will have a one year home warranty paid for by the seller for one year. I'm not sure if we'll continue it after that or not, if this goes through. I think it would partly depend on how the septic pump looks as well and if that's covered (we're out in the country, no sewer).

 

[NY Pirate Princess]

AWESOME SAUCE on your signed contract!!!! Remember that your inspection won't turn up everything, but will give you a good idea of what you'll be looking at for issues down the road. You can renegotiate your offer if there are any major flaws (meaning you will pay less for the home overall or they will give you $ back in concessions at the closing table) and I am so pleased for you!!!!!! We put the 5% down that was allowed since we had no idea what we would get out of our sale. The money we net at the table went to things we needed in the house and then straight to a maintenance account for the house. We didn't have 20% no matter which way we spun it so I took the PMI in order to bank the rest. Looking forward to hearing about your CLOSING!!!!!

 

[Ngwira]

Thank you! Now when you say service contract, do you mean like a home warranty? We will have a one year home warranty paid for by the seller for one year. I'm not sure if we'll continue it after that or not, if this goes through. I think it would partly depend on how the septic pump looks as well and if that's covered (we're out in the country, no sewer).

Yes, a home warranty, at least for the first year while you build back up your savings. P.S. DH and I are attorneys, as well .

 

[GaryDis]

We didn't get a home warranty (they're not that common for relatively new homes in the greater Boston area), but there was an original warranty on the central air that transferred to the new homeowners. It came in handy when a stuck relay blew the compressor, one year before the 15 years were up on the warranty.

 

[DisneyMandC]

Hello all!! Just a little update! We signed the paperwork on our mortgage tonight! I've never been so excited to give someone all our money! We ended up going conventional with 5% down. Everything is looking good on that. PMI isn't THAT bad. Definitely not what I'd prefer to spend my money on, but we are allowed to pay directly towards our principal so hopefully we can make some extra payments with DH's bonuses and get down closer to that 78% mark to get rid of it. Now the only thing we're biting our nails on is the appraisal Hoping that comes back as high as possible, obviously, so keep us in your thoughts on that! Inspection is next week as well. We already know some things that are going to come back on that that my brother pointed out to us when we went to look at it, so we're expecting that. Nothing too major, though.

Closing is set for Sept. 30 right now, but may get pushed back depending on seller finding a new house by then. We told them we would be flexible on that though.

Everyone keep your fingers crossed for us!!

 

[barkley]

Hello all!! Just a little update! We signed the paperwork on our mortgage tonight! I've never been so excited to give someone all our money! We ended up going conventional with 5% down. Everything is looking good on that. PMI isn't THAT bad. Definitely not what I'd prefer to spend my money on, but we are allowed to pay directly towards our principal so hopefully we can make some extra payments with DH's bonuses and get down closer to that 78% mark to get rid of it. Now the only thing we're biting our nails on is the appraisal Hoping that comes back as high as possible, obviously, so keep us in your thoughts on that! Inspection is next week as well. We already know some things that are going to come back on that that my brother pointed out to us when we went to look at it, so we're expecting that. Nothing too major, though.

Closing is set for Sept. 30 right now, but may get pushed back depending on seller finding a new house by then. We told them we would be flexible on that though.

Everyone keep your fingers crossed for us!!

so happy for you-keep us updated.

def. take advantage of paying extra towards the principle-that worked wonders for us in paying off early. one thing you might consider doing-if you have a cpa who does your taxes have them run the numbers on what the impact will be w/home ownership. if you end up ahead (more than the difference btwn renting and mortgage (w/pmi, property taxes and homeowner's insurance) you could think about have your withholdings adjusted so that you see more per pay period and then set up an automatic payment to strictly principle each month. if you've got some projects you want to do to the place the same practice can be put in place w/a separate bank account dedicated to it so you've got a fund that's building up little by little (we try to do one big project per year-sometimes it's cosmetic like finally swapping out the nasty low grade carpet our place came with, and sometimes it's 'rural practical'-as in getting yards and yards of gravel to redo the driveway).

very excited for you (and also your mom-she must be thrilled).

 

[DisneyMandC]

so happy for you-keep us updated.

def. take advantage of paying extra towards the principle-that worked wonders for us in paying off early. one thing you might consider doing-if you have a cpa who does your taxes have them run the numbers on what the impact will be w/home ownership. if you end up ahead (more than the difference btwn renting and mortgage (w/pmi, property taxes and homeowner's insurance) you could think about have your withholdings adjusted so that you see more per pay period and then set up an automatic payment to strictly principle each month. if you've got some projects you want to do to the place the same practice can be put in place w/a separate bank account dedicated to it so you've got a fund that's building up little by little (we try to do one big project per year-sometimes it's cosmetic like finally swapping out the nasty low grade carpet our place came with, and sometimes it's 'rural practical'-as in getting yards and yards of gravel to redo the driveway).

very excited for you (and also your mom-she must be thrilled).

thank you! Yes, mom is very excited as well. We're all looking forward to being able to stay in the same area.

We are definitely planning to do some cosmetic work before we move in, so we've already started saving for that! Someone on the Debt Dumpers thread was saying even when they can only apply a little bit extra each month to their principal, it's still really added up and made a difference. So what I'd like to do is just round off our payment to an even number each month so we can get that paid down some more. Now if only my student loans would let me pay on the principal!

 

[mks18412]

When we bought our home we paid for the PMI upfront. The fee was a few thousand dollars and well worth it.

 

[DisneyMandC]

Hello all! Asking for some good thoughts for us this week please! Inspection is happening as I write this, and appraisal should be sometime soon! I'm not as anxious about the inspection because we already know some of the issues that will need to be fixed based on my brother's inspection of it (roof needs to be fixed over the porch, nothing crazy). But I am super anxious about the appraisal! The house itself doesn't have a lot of value, which is fine for us because we're not really "house" people; the real value for us is in the land itself. So please keep us in your thoughts that we get a high value per acre for the appraisal!!