[JMT]

Quote:

Originally Posted by Edwood Sounds like a good idea. My fiance and I have zero debt. No student loans, credit cards are paid off every month with no continuing balance, and no car loans.

I would check out your credit report through myfico.com. You will have to pay a fee, but you will know what your FICO score is.
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Is searching online for lenders a good idea, or old fashioned calling the banks up better? Any recommendations?

Do both. Again, you want to find out what the fees will be. The APR will give you the opportunity to compare apples to apples when it comes to a mortgage. One lender may offer you a 5.75% 30 year fixed with 2.5 points, while another may offer you 6.25 with a half a point. It really depends on what is more important to you. Lower monthly payments, or lower closing costs (points will be a major portion of your closing costs due at the close of escrow).

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He mentioned something about an "interest only" loan, where you don't pay down the principle? Wouldn't that make it impossible to actually own the property eventually?

Typically "interest only" loans have a stipulation regarding principle reduction within a certain timeframe. The idea is that the loan will be refinanced or the property sold prior to when the principle reduction period begins. My personal opinion for a first time homebuyer is to stay with something more conventional than an interest only product.

 

[Edwood]

How much would I expect to pay up front for "closing costs" on properties ranging from $200K - $250K ?
How do I minimize closing costs, if at all possible, and is it a good idea to minimize them?

-Ed

 

[JMT]

Quote:

Originally Posted by Edwood How much would I expect to pay up front for "closing costs" on properties ranging from $200K - $250K ?

Closing costs generally range from 2% to 3% of your loan amount. Closing costs can be divided into three main categories:

1. Lender fees. Fees can include origination, application, credit report, and appraisal.
2. Third-party fees. These fees vary by state and the company you select to close your loan. They can include fees for closing, title exam, title insurance and recording.
3. Pre-paid items. These are items collected at the time of closing but are not really considered costs (for example, interest, taxes, and hazard insurance).

Keep in mind that your closing costs are going vary widely depending on what mortgage you end up with and whether or not you will be paying points.
Quote:

How do I minimize closing costs, if at all possible, and is it a good idea to minimize them?

Again, the major influence that you will have to your closing costs will be the points. If you decide to go with a higher monthly rate, then you can lower your closing costs by not paying points, maybe even getting a loan with negative points (called a Lender's Credit) that will reduce your up front costs. However keep in mind that your monthly payments will be higher reflecting the higher interest rate.

It really depends on what is more important to you: Lower monthly payments or lower closing costs. You cannot have both though.

 

[Edwood]

Would you recommend Suzie Orman's kit on MyFico.com?

I tried to get a "free" one from freecreditreport.com (a part of Experian I believe). And it didn't give the credit score. Only the report. Which was handy to see that I didn't have anything negative listed. (no late, missed payments, etc.) It's pretty shady that they advertise a "free" credit report by signing up for an introductory service that you can cancel with no obligations, but they clearly show a credit score in their advertisements, but try to charge you $5 after you sign up. Hopefully, it won't be too much of a pain to cancel.

Well, I did notive that they have the wrong employer listed. A really old employer is listed. I guess I should have that changed. Suzie Orman's Kit has an "EZ" Correct" feature. I guess it would be worth it to correct that info at least?
*EDIT* I read the fine print. The so-called "EZ Correct" looks like it only flags off potential errors, but does not actually submit corrections to the credit reporting agencies. That is to be done one at a time by personally calling/writing each agency. Ugh.....

-Ed

 

[Edwood]

What about the FICO Saver for Homebuyers Kit?

"The FICO Saver for Homebuyers can help save you money and time by giving you inside information that mortgage industry professionals use. First, the Mortgage Coach will show you how a mortgage lender will see your personal finances - then you can print a financial certificate to share with lenders. You'll get your FICO score, and see ways to improve your score to get better terms from lenders. You'll also receive a detailed property report for the home you're considering. All of these features are available for 30 days from purchase as you decide on your new home."

Is that printable "financial certificate" any good to use with lenders?

-Ed

 

[JMT]

Quote:

Originally Posted by Edwood What about the FICO Saver for Homebuyers Kit?

That may be beneficial for the consumer, but lenders simply will integrate the FICO score into their own custom scoring system. It may be beneficial to make the investment simply to see where your personal score stands. Derogs only make up a portion of the overall score.
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Is that printable "financial certificate" any good to use with lenders?

Not as far as I know.

 

[Edwood]

Heheh, a friend of mine recommended myfico.com too.

What's the best way to find a lender?

Is online ones like lending tree, etc. a good place to look? Any recommendations?

Also a friend recommended looking for forclosure property auctions, by finding the County Seat Office. I have no idea where/who that is.
Although the thought of benefitting through someone else's misfortune troubles me, but if it'll put a roof over my head without breaking my finances, so be it.

-Ed

 

[acs236]

Foreclosure are tough these days. So many people are trying to buy them. I almost wouldn't waste your time. You rarely know much about the property.

As for a lender, I would find a local credit union and join it. They are generally one of the better options for lenders.

 

[Edwood]

How are credit unions different from banks, out of curiosity?

-Ed

 

[acs236]

To put it simply, which is the best I can do (

), credit unions are non-profit banks. They are organizations of consumers who pool their resources to provide bank-like functions. Checking and savings accounts, CDs, loans, etc. Typically, they might not offer the whiz bang of a large commerical bank, but they typically don't hit you with the outrageous fees either. There should be a lot of information about credit unions online.

If you give me your R10s, I'll tell you more!

 

[JMT]

Quote:

Originally Posted by acs236 To put it simply, which is the best I can do ( ), credit unions are non-profit banks. They are organizations of consumers who pool their resources to provide bank-like functions. Checking and savings accounts, CDs, loans, etc. Typically, they might not offer the whiz bang of a large commerical bank, but they typically don't hit you with the outrageous fees either. There should be a lot of information about credit unions online. If you give me your R10s, I'll tell you more!

In theory that is true, however in reality credit unions seek profit just like a commerical bank does. In California, the allure of belonging to a credit union was the fact that they were "not for profit" and that you had to belong to a certain group ie: state employee (Golden One Credit Union), a city or county employee (S.A.F.E. Credit Union), a Pacific Bell employee (PATELCO), and so on. Credit Unions are looking to make a profit, however typically the profit is distributed amongst it's members by way of stable or reduced fees, after a certain portion of earnings are retained for growth.

In my experience (I have worked in the banking industry for 25 years) the competitive advantage that being a credit union member used to offer is no longer as apparent. Deregulation as allowed commercial banks to become as price competitive as credit unions, unless the commercial bank does not want to be in the market. Auto loans are a good example. You can typically get better rates with dealer (GMAC, Chrysler Credit, NMAC, etc) or credit union financing simply because the large commercial banks find them not cost effective due to risk. They offer them, but price them in the upper end of the market.

Anyway, that was probably too much information....sorry.

 

[Edwood]

Quote:

Originally Posted by JMT In theory that is true, however in reality credit unions seek profit just like a commerical bank does. ........They offer them, but price them in the upper end of the market. Anyway, that was probably too much information....sorry.

IMO, there is no such thing as too much information.

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Unless it's Tuberoller describing his lack or wardrobe......

-Ed

 

[Edwood]

Argh! MyFico.com won't give me my 3 Credit Bureau and FICO report. It tells me it can't verify me? Ugh. I guess I have to call them now.

So is there a great place to find a loan?

-Ed

 

[JMT]

Quote:

Originally Posted by Edwood So is there a great place to find a loan? -Ed

The best place to start is where you maintain your checking and savings. A relationship does carry a bit of pricing and qualifications weight...not much, but a bit. The challenge is that without running a bureau, it is difficult for any lender to get you accurate pricing, as risk and pricing go hand in hand. In order to run your bureau, most lenders require that you apply, which may require the payment of an application fee. The best thing to do is shop APR's to get an apples to apples pricing comparison. Posted APR's are usually based on what is considered "average" credit (at least at the bank I worked for) so actual pricing can be higher or lower. But it will at least give you a place to start.

Another option is to contact a mortgage broker. They can work with a variety of different lenders to find you the best loan for your situation. Generally speaking, they will not be the least expensive as they oftentimes cater to those with "issues" on their credit reports.

 

[Edwood]

Yeah!

I just got my FICO score and 3 credit reports.

I got an 810!

Now I can charge up my credit cards buying all the headphone gear I've been eyeing!

Oh, wait. I'm shopping for a home.

Equifax has the wrong address listed for me, but I'll straighten that up.

Interestingly enough, I went to the source and got my FICO and credit reports through equifax.com. But I had to call them as I kept getting authentication rejections.
Apparently almost all these credit check places are affiliates. MyFico.com is an affiliate of Equifax. Go figure.

-Ed