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Originally Posted by SummerChild
What do you guys think of 80/20 setups? I'm scared of interest-only loans so that's not an option. Thinking about the 7/1 ARMs too.
Anyone have any experience with any of these?
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I'm in the process of buying my first house (a townhouse). So here's a bunch of random thoughts:
I am doing an 80/20 loan with seller paying almost all of the closing costs (always keep in mind closing costs- they add up!). I have a good salary, but most of my money has gone towards paying down my higher interest rate student loans. Keep in mind that the 20% of the 80/20 loan is going to be at a higher interest rate. I am going to probably do 6.25% fixed rate on my 80 % and 7.99% fixed on my 20%. I could've gotten a 5.75% 5/1 ARM on the 80%, but in weighing my options it didn't look best for me in the long run and would've required me to pay a point at closing. (My goal is to try to keep closing costs down). But I have an excellent credit score, so your mileage may vary
EDUCATE yourself! Homebuying for Dummies is pretty good and explains all the mortgage options in detail.
First advice is get your credit in line, you mentioned you had caught something.
Get recommendations from friends, family and colleagues regarding mortgage brokers. A broker looks at all kinds of different options for you and shouldn't have a specific loyalty to any one bank. Mine is awesome. I am very happy with my rates compared to another friend who is doing an 80/20 as well through another broker.
You're going to be nickled and dimed on stuff, so make sure you have some cash accessable. You will also likely need to put in carpeting, and you're going to want to paint, decorate, etc. You're also going to want/need furniture. It can be a money pit. But don't go hog wild, take your time.
Make sure your realtor knows what you're looking for, what you like and don't like. Look at several places your first time out. Be willing to walk away from a property. Don't be blinded by the good things- be excessively nitpicky.
Take someone along who knows a lot about home repair (I took my dad) or even just another person to be an extra pair of eyes.
The negotiating process is annoying. Be willing to walk away from any property. There's always another property out there for you, particularly since the market has been turning into a buyer's market, at least in my area.
Since this is your first place, keep in mind resale potential. Buy in a good school district and neighborhood. If you can afford it, buy a bit more than you need. For instance, I'm buying a 3 bedroom 2.5 bath place. I could've gone in a 2 bedroom 1.5 bath but the resale will be better in my area on the 3 bedroom. As will having 2.5 baths as opposed to 1.5.
When it comes time for the home inspection, ask your realtor to recommend someone who is VERY detailed. You want someone who is very detail oriented and will explain everything to you. Do NOT miss your home inspection, some people don't go, but you should. You can learn and ask questions. Mine took 3 1/2 hours and the place isn't that big.
I just had my home inspection this weekend, and that's when it really hit me that this is going to be my home. You think the negotiating is over after you come to the sales agreement. Nope. There's more that goes on after the home inspection. That's what I'm dealing with now- it needs a new furnace and some electrical work.
As you're getting your act together with your finances and credit, spend a lot of time on realtor.com and other homesites and see what things are going for.
If your county has an online property assessment website, check out a sampling of houses in your neighborhood to see what they're assessed at for tax purposes, what they've sold at, etc.
If you have any questions, feel free to PM me. I know this was a rather random post.
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