[mike25]

Lately I've been looking into buying a house. I've looked into basic loan requirements etc, but what do the banks really look for when lending? Based off of credit history, loans existing etc etc? Also is there anywhere to read some info on different types of loans- I've looked at q couple lender sites and some of the loans I don't understand. Just curious on opinions/ past experience etc.

[PoorMansCamaro]

You never want a balloon or an ARM. It's also good to have 20% down, but that can be a pretty large sum of money. 10% is ok. 30year fixed mortgage is your standard mortgage that I would aim for.

[mike25]

Originally Posted by PoorMansCamaro

You never want a balloon or an ARM. It's also good to have 20% down, but that can be a pretty large sum of money. 10% is ok. 30year fixed mortgage is your standard mortgage that I would aim for.

Great thank you for the info! What kind of credit history/ score etc do they look for?

[Redemption]

make SURE that the loan also is paying the principal, not JUST interest (Interest only loans=housing crash)

You need great credit, it all depends on the bank.

Ideally 20% (they are starting to allow 10-15% with high 700, 800 credit)

Make sure your income->debt ratio looks ok (not too much debt for the amount of $$ you make)

Good Luck!

J

[CatiaJockey]

Big issue they will look at is income to debit ratio. After the housing bust they now make sure you can actually make the payments. And if you havn't found this site yet, check it out. http://www.hsh.com/

[NavyDood]

I am fortunate being military and did a VA loan. No money down at 4.75% on a 30 year loan. I got my loan through Navy Federal Credit Union. Did the application in the evening and had a preliminary answer the next day. A few phone calls after that to fine tune some $ figures and we were all set.

First off, set some ground rules. How much of a house do you need versus how much of a house do you want? A persons wants will almost always over power their needs. If that is the case then you have to find a common ground. Bigger houses usually have higher expenses. But, a newer bigger house could easily be more efficient than an older smaller house. Is this a house you plan on staying in for ever? 10 years? A few years? You really need to take that into consideration and always have that in the back of your mind. IMO there is absolutely no reason to get more than you need if you are only going to be in it for a short time, especially in todays housing market.

Do the application and see how much you are pre-approved for. If you get pre-approved for more than what you thought you would be approved for then the temptation to go bigger and more expensive is always there. Discipline is the biggest thing you need when buying a house IMO.

[Hemlawk]

Also try several lending companies. One bank might turn you down, the next will give you the loan no problem.

Since the market is low right now, no matter what get a house asap! At this point it really cant get any worst and you'll only make money in the future.

[Iroczlover]

The best thing you need to go do is right now GO talk to YOUR bank,
& tell them you are intresteding in doing a housing loan, for a house.
Tell them right off the bat that you are just seeing how you will rate if you got a loan through them.

Most of the time they will walk you through what it takes to get a housing loan.

if you have state farm go through your agent, have a quiet sit down talk with them.

[NavyDood]

Another thing I forgot to mention. Property taxes. It is different state to state. In TX, there is a huge rate difference whether you are city or county. I am saving $2500 a year in property taxes by being county. TX does have higher property taxes since we don't have state income taxes.

[TOMS1SS]

Originally Posted by mike25

Lately I've been looking into buying a house. I've looked into basic loan requirements etc, but what do the banks really look for when lending? Based off of credit history, loans existing etc etc? Also is there anywhere to read some info on different types of loans- I've looked at q couple lender sites and some of the loans I don't understand. Just curious on opinions/ past experience etc.

Basic rules of thumb from someone who used to do some house flipping:

1. Never get a house that exceeds 4 times your annual income.
2. Be prepared to put 10% to 20% down.
3. If you don't have a credit score in the high 600s or low 700s don't expect a mortgage loan with a decent rate.
4. Always try to get a fixed loan vs an adjustable rate mortgage (ARM). Usually they bait you into an ARM with a lower up front interest rate but it will almost always end up more than a fixed 3 to 5 years in.
5. After your down payment always make sure you have at least 10 to 20k in reserve, you never know what will break in the house.

[mike25]

thank you guys for the info. I hasve a few loans on my name (1 car, few school and 2 small loans) and my score is low 700's last time i checked.. i plan to get the smaller loans etc off my name before i go through with a house.. just kind of testing the waters right now.. i was mainly wondering if someone with my financial stats stands a chance obtaining a mortgage.

[Number 3]

Didn't see it mentioned, but if you don't put 20% down, be prepared to pay PMI. Basically insurance that the bank won't lose if you default.

If you do put 20% down you can handle your own escrow. If you don't, be prepared to give the bank 13 months of your homeowners insurance and property taxes at closing and then also you will have to pay 1 months worth of taxes and homeowners insurance with your monthly mortgage payment AND PMI.

Not sure if this is nationwide, but has always been what they do in Michigan.

So 20% down, IMO, adds a lot of flexability.

[mike25]

i have heard that 20% is a good mark to strive for on a down payment- i will have to keep that in mind.

[PETRA]

Originally Posted by PoorMansCamaro

You never want a balloon or an ARM. It's also good to have 20% down, but that can be a pretty large sum of money. 10% is ok. 30year fixed mortgage is your standard mortgage that I would aim for.

I am in real estate lending and I can tell you its not what it was 2-3 years ago. Back then ANYONE could have a loan, with next to no money down.

These days its a different story. You credit score needs to be at LEAST a 640; 620 in some cases of FHA or VA lending but don't be surprised if the 620 score getting a loan becomes a thing of the past too.

Your interest rate will depend largely on your credit score, the type of loan you get, and the amount of loan you get. There are new rules in place just in the last few months that prevent lenders from making money on jacking you with a bogus interest rate so you do not have that worry anymore. Legally it cannot be done. Its all based soley on YOU now.

The least amount of money down loan you can get these days is either a VA loan if you are or were military; or a USDA loan if you are buying in a rural area. These two loans will do 100% financing.

Your next least money down option is an FHA loan. You will need 3.5% of the purchase price to put down, and if you do not have this money, it can be gifted to you from a family member.

Conventional financing requires a minimum of 5% down and you cannot have it gifted; it must come from your own SEASONED funds.

DTI - or debt to income ratio - is a big factor as well. Based on debt you currently have and the new home payment you are looking to obtain, Freddie Mac and Fannie Mae will cap you at 45% or 50% depending on the loan specifics and if you have strong compensating factors such as money in the bank, a strong employment history (meaning you don't job jump, or work on a 1099 basis, or have mostly commission based or OT based pay.) You can go over these two DTI ratios, but other factors play a strong part in being able to.

Bear in mind I am talking to you about traditional and established bank mortgage lending; not "get a mortgage here quick" type fly by night lender. Also keep in mind that the gov't is working on ridding us of these types of lenders (ie brokers / correspondant lenders) unless they are above board and backed by a traditional bank, so soon you won't have to worry about this.

There are a dozen more things to consider, but this is the main part of what to look at to see if a mortgage is feasible for you.