Thoughts on buying a house

DH and I are going to start looking for houses in a few weeks. Our lease is up in July but we're probably going to renew for another year but we're interested to see what our money will realistically get us.

Can someone tell me about the extra loan you have to take out when you put less then 20% down? And did anyone use any grant housing programs?

Thanks.

Re: Thoughts on buying a house

Given some of the posts on here, I'd try REALLY hard to have at least a 20% downpayment or more..There are people out there offering OVER the seller's asking price, paying 100% for a home with CASH, and of course, buyers who are already pre-approved for a mortgage and ready to close within 30 days.

For now, checking out a buyer's agent or talking to some mortgage brokers may be a good start in the process. But definitely take your time because home buying is a long term investment requiring a lot of time, effort and research...but its all worth it!

Re: Thoughts on buying a house

It's not an extra loan, but if you get a conventional mortgage with less than 20% down, you have to pay private mortgage insurance (pmi). I don't know the exact calculation of what that adds to your monthly payment, so it's definitely a good idea to consult with a mortgage professional.

Also, if you get a conventional loan with a smaller down payment, you won't get the lowest interest rates available.

You can also get an FHA loan (government backed loan) with as little as 3.5% down and get a very good interest rate. But there are more fees involved with an FHA loan and you always have to pay mortgage insurance, even if putting down 20%. But the criteria to qualify for an FHA loan (credit score, etc.) tends to be a bit more lenient than conventional. FHA loans are very common now, so it's not a strike against you. Most sellers don't care what type of mortgage you are getting, as long as you can get one!

Again, a mortgage lender or broker would be a good starting point, because they know the ins and outs of all of the loan products available, and the pros and cons of each (and it depends on your circumstances).

Feel free to FM me if you need some recommendations.

Re: Thoughts on buying a house

If you are thinking of looking to buy next year just keep in mind what you may get now vs. what you can get in a year can be very different. The market is crazy these days!!

Good Luck!