[roybean]

Traditionally, to get your foot in the door, you'll need a down payment worth 20% of the home price. That means for a $250,000 home, you'll need $50,000 upfront. Sure, there are ways to get around that steep requirement with zero- or low-down loans, but those options will cost you. You may have to pay extra for private mortgage insurance or take out a piggyback loan with a much higher interest rate. With the slowing housing market, having that 20% down payment becomes even more important because you'll start off with some equity in case you have to move earlier than expected. "In the early years, you aren't building any equity with the mortgage payment," says Eisenberg. "If the market changes or your personal circumstances change and you're forced to sell, you could lose money" if you made little or no down payment. The equity in your home can also give you an extra source of cash in an emergency.

I was told 10%.

http://realestate.msn.com/buying/Art...58987&GT1=8588

[Hedwig]

You don't need 20%. In a lot of cases, if you're a first-time homebuyer especially, you don't even need 10%.

Yes, you'll pay PMI, but when the value of the house increases and you have 20% equity you can ask to have it removed. Mine was taken off with no problem. I've never had 20% down.

You can pay a lot of PMI while you would be saving the 20%. In fact, the price would possibly keep going up as well.

Pay the minimum down payment that you can, and keep some cash OUT of the house for unexpected expenses.

Read this article. This guy is one of the top financial planners in the DC area. At 10 AM Eastern on Saturday morning, you can hear him on wmal.com.

[roybean]

All of this assuming that you had good credit when you first purchased, right? I am still in court fixing things on my credit.

[Hedwig]

I didn't have great credit when I got my first house. I think the answer is "it depends." You would probably need to have a good income, no unpaid chargeoffs, probably no lates for the last year or so.

States that have first-time buyer programs often have more lenient standards.

[Gib]

I bought my first house owner financed. Yes, it is hard to find such a beast these days, but it is still possible. I didn't have bad credit then, I just didn't have any credit period.

Second place I bought was a mobile home. The lot was owner financed on that as well. Again, no credit necessary.

[roybean]

Originally Posted by Gib

I bought my first house owner financed. Yes, it is hard to find such a beast these days, but it is still possible. I didn't have bad credit then, I just didn't have any credit period.

Second place I bought was a mobile home. The lot was owner financed on that as well. Again, no credit necessary.

Do you still have it?

[Gib]

No, sold that house 20 years ago, let my son live in the mobile home until he trashed it beyond repair. Sold the lot last year. It was a half acre, paid 9K for it back in '87. Sold it for 57K.

[Hedwig]

Sounds like you did OK with it.

[Gib]

Deals are always out there when you are looking for them. Bought an acre lot last year for 15K in another part of the county. Worth double that easily.

Getting read to sell it, going to put it on the market for 35k and will owner finance it if the buyer can put 20% down.

[Hedwig]

Just make sure that you're charging interest on the mortgage close to what the market rate is, or you may have a problem with the IRS.

[roybean]

In another thread, I posted that I have seen some wonderful mobile homes, but no one seems to promote buying mobile homes. I used to work for a guy who owned a couple of drug stores and he lived in a mobile that was outta sight.

[Gib]

Market rate for whom? Hell, market rates vary from 0% to 19% on car loans depending on the borrower's credit.

[Gib]

Originally Posted by roybean

In another thread, I posted that I have seen some wonderful mobile homes, but no one seems to promote buying mobile homes. I used to work for a guy who owned a couple of drug stores and he lived in a mobile that was outta sight.

All depends on the quality RB. I am seperated, my wife has the house, I bought a '99 Palm Harbor on it's own land. It's very well built. 2x6 exterior walls, sheetrocked interior. I couldn't have touched a site built house the same size for over twice the money.

[Hedwig]

Originally Posted by Gib

Market rate for whom? Hell, market rates vary from 0% to 19% on car loans depending on the borrower's credit.

I don't know how you'd tell for land, exactly. For homes, it's usually around the "average" interest rates for mortgages.

What they don't want is that you charge a rate below what they consider a market rate. I suppose if you sold it for 1 or 2% that would be a little low. Auto loans are that low because they're a promotion.

If it's too low, the IRS can impute what the market rate is and make you pay taxes as if that was the rate you were getting, so you pay tax on income you didn't actually get.

This happens more when the transaction is between family members or friends and they think you're giving them a break because of that. If it's really an arms-lenght transaction, you have a better shot at being considered as charging a fair rate.

One of these days I guess I'm going to have to write some essays on some of this stuff.

[Gib]

Oh well, I thought you meant on the HIGH side. I figure with owner financing I can get a couple percent higher than "A" rated credit. I was thinking along the lines of 9%

[Hedwig]

That sounds in the ballpark.

No, in this case it isn't that you're usury. The IRS NEVER seems to think you make too much money, they think you don't make enough.

[Qtip]

Originally Posted by roybean

Traditionally, to get your foot in the door, you'll need a down payment worth 20% of the home price. That means for a $250,000 home, you'll need $50,000 upfront. Sure, there are ways to get around that steep requirement with zero- or low-down loans, but those options will cost you. You may have to pay extra for private mortgage insurance or take out a piggyback loan with a much higher interest rate. With the slowing housing market, having that 20% down payment becomes even more important because you'll start off with some equity in case you have to move earlier than expected. "In the early years, you aren't building any equity with the mortgage payment," says Eisenberg. "If the market changes or your personal circumstances change and you're forced to sell, you could lose money" if you made little or no down payment. The equity in your home can also give you an extra source of cash in an emergency.

I was told 10%.

http://realestate.msn.com/buying/Art...58987&GT1=8588

Hi Roy, there are ways around the PMI that do not require you put down 20% I think first order of business for you is to find a good mortgage broker. One that is interested on what is best for you and not the mortgage fee.

In my case I worked with a mortgage broker for over a year prior to making a purchase, all the while fixing the credit. So he would tell me different programs available with my current score. If I was not happy, he would then tell me what score I would require for the next better program. For a conventional FHA all you need is over 620 fico and you will get the same rate as someone that has 700. The score playa a big part when you want unconventional loans. For example you want a house but your debt to income will not get you approved, altough you know you can afford the payments. In that scenario a no doc or zero doc loan might be what you need.

Find a good morgage broker, tell them exatly what you want to do and they will make sure you get aproved! In my case I did a 5 percent down, 80 percent loan and a 15 percent line of credit. No PMI! I think then only drawback with my loans is that maybe I cannot deduct the 15 percent loan from taxes? I have to askl a tax advisor not sure.

Originally Posted by roybean

All of this assuming that you had good credit when you first purchased, right? I am still in court fixing things on my credit.

620 fico for COnventional loan. If you want interest only or no doc programs then to get decent rates you must have at least 670. To get the best rate period on a non conventional loan they will want 720. But this is what you can do, 5 percent down, get a good interest rate on the main mortgage and let them rape you on the line of credit. Once you go the foot in the door, then go to a credit union and finance at a lower rate the line of credit. You will be amazed at how easy it is to finance a line of credit with a credit union. Verry little documentation also, my credit union financed the line of credit without asking for any pay stubs or anything other than my fico score!

Originally Posted by Gib

I bought my first house owner financed. Yes, it is hard to find such a beast these days, but it is still possible. I didn't have bad credit then, I just didn't have any credit period.

Second place I bought was a mobile home. The lot was owner financed on that as well. Again, no credit necessary.

Actually, right now is the best time to look for those kind of deals, with interest rates on the rise. MAny people are finding themselvs over extended and ending in bankrupcies and forclosures. You will see more and more people triying to dump houses and when push comes to shove, someone paying your mortgage on a owner financed deal is better than loosing the house and comiting credit suicide.

Originally Posted by roybean

In another thread, I posted that I have seen some wonderful mobile homes, but no one seems to promote buying mobile homes. I used to work for a guy who owned a couple of drug stores and he lived in a mobile that was outta sight.

I seen some exceptional mobile homes, with basemants and everithing. Unfortunatelly a motor home is a motor home, is a motor home. With that said it, as long a s you know that the mobile home is a place you own and live and not an investment then you are ok. Make sure you at least own the lot! As gib said, land apreciation at least will allow you to get some $$ back down the road.

[roybean]

Looks like Ihave much work to do; thx.

[Darren]

Originally Posted by Hedwig

I didn't have great credit when I got my first house. I think the answer is "it depends." You would probably need to have a good income, no unpaid chargeoffs, probably no lates for the last year or so.

States that have first-time buyer programs often have more lenient standards.

In todays society, it really does depend. One reason why there are so many loan programs out there is because people no longer work regular 9 to 5, straight W-2 jobs like they did pre-1960. There are even sub-prime loan programs out there that don't require chargeoffs to be paid if they are over 1 year old and don't affect the title.

My point is that it's like Hedwig said, "It depends". Not every situation is the same.

One thing I suggest is to not just focus on rate. Look at the program and payment structure. You don't pay a rate each month, you pay a payment. Generally, people don't stay in their first home for 30 years. The average first-time homebuyer stays in their home 2-5 years, then they become a "move up" buyer. If you are only staying in the home for 2-5 years, don't get a 30 year fixed. Get an ARM (Adjustable Rate Mortgage) that is fixed for 2-5 years. You will pay less each month in most cases.

Also, if you are offered a 100% loan with no PMI (yes, they are available) at 7.5% versus a 100% loan at 6.25% with PMI, take the 100% loan with NO PMI at a higher rate. Part of that higher interest rate is tax deductible while the PMI is not. You could be spending an extra $150-??? each month in PMI that doesn't benefit you.

There are many things to consider and a good loan officer can explain things to you. Of course, things vary from state to state, but the basics are pretty much the same.

Hope that helps.

[ilovemydogs]