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Author: RBHouston Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 126963  
Subject: Which loan for my situation? Date: 11/27/2001 4:22 PM
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Hello all... I've been lurking and learning for a while and now would like some suggestions on my first home purchase. Here is a quick rundown on me:

Salary 58,000
Year-end bonus 40-50k (Due next month)
Monthly debt 850
FICO average 645 (But been working on all 3 for several months so it should be going up)
My salary should increase 2-3k per year and bonuses will reach 60-80k.
Will probably stay in house for less than 5 years.

I would like to get the most house for my money but want to keep payments below 1300.00 month. Would also like to make the minimum down payment so I can invest the other. It would also be nice if I did not have to impound for taxes and insurance (if that is possible). I have reduced my learning curve over the past few months but would like some suggestions on which loan you be best for me.

Thanks in advance,
RB

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Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31336 of 126963
Subject: Re: Which loan for my situation? Date: 11/29/2001 11:38 PM
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Hi RB,

I would like to get the most house for my money but want to keep payments below 1300.00 month.

This, above all other factors, is the determinant of what you want to qualify for in loan amount. Subtract out of this $1,300 the appropriate amount for taxes, insurance, and home-owner's dues (if applicable) and the remainder is what you can afford in Principal & Interest payments on your loan.

Would also like to make the minimum down payment so I can invest the other.

Best strategy for you will be an 80-15 combo... with the next best choice an 80-20 combo (thus zero down.) The reason the 80-20 is actually 2nd choice is because the lenders of the 1st loans charge a premium when they know you have nothing at risk.

It would also be nice if I did not have to impound for taxes and insurance (if that is possible).

It may be possible, but if your scores are under 660, you will likely be required to pay a fee to waive impounds. Some folks insist this is discretionary and negotiable... but it's only actually as negotiable as any other fee in regards to the bottom line. If the final lender charges the fee to waive impounds but it is "disappeared" from your GFE, it will just be built in elsewhere.

I have reduced my learning curve over the past few months but would like some suggestions on which loan you be best for me.

If you're under 45 years old I would most strongly recommend the 5/1 ARM for your first mortgage, and a HELOC for your piggy-back 2nd.

All the best,
Dave Donhoff
Foolish Mortgage Broker

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