Who's bought a house recently? Looking for info

I have not talked to any lenders or anything, figured I'd do some preliminary research before going in completely blind. All the reading in the world doesn't truly prepare you without hearing some other perspectives from real folks, and you guys/gals are a great source for info.

Is 3.5% still the lowest possible down payment? I have checked the FHA site and I think I read this correctly.

Anyone have any tips for buying?

TheMan said:

I have not talked to any lenders or anything, figured I'd do some preliminary research before going in completely blind. All the reading in the world doesn't truly prepare you without hearing some other perspectives from real folks, and you guys/gals are a great source for info.

Is 3.5% still the lowest possible down payment? I have checked the FHA site and I think I read this correctly.

Anyone have any tips for buying?

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This kind of stuff varies significantly by region. I can't speak to Illinois, but I do have experience in nearby Minnesota and Wisconsin. It may or may not be a similar situation. I personally bought a house a few years back in NYC, but the situation here is probably very different.

3.5% mortgages are legal, but they're quite hard to come by in my experience. Typically, you'll need mortgage insurance (BPMI) if you put down less than 20% these days. That's certainly plausible, but it ends up jacking your rate significantly. Interest is ridiculously low right now, but it would be worth playing with an amortization calculator to see how much of a difference a couple of points can make. Just off the top of my head a 30-year $300k mortgage goes from $1400/month to $1600/month with an extra 1% for mortgage insurance.

Make sure you check out the cost of property taxes in your area, too. Those are often a surprise for people thinking of buying. Good luck! It's a good feeling to have if you can make the financials work out.

I bought another house 3 week ago, and as MalFet said, it does vary a lot by region. There are still 0% down loans where I live, but the criteria for those is very tight.

I ended up getting a 30yr fixed at 3.875% with a 3.5% down on my new house. Which is a 50year record low for interest rates.


Biggest/best piece of advice is to just find a reputable loan broker and see what's available. I would suggest someone local to your area that you can meet face to face.

IXVolt said:

I bought another house 3 week ago, and as MalFet said, it does vary a lot by region. There are still 0% down loans where I live, but the criteria for those is very tight.

I ended up getting a 30yr fixed at 3.875% with a 3.5% down on my new house. Which is a 50year record low for interest rates.


Biggest/best piece of advice is to just find a reputable loan broker and see what's available. I would suggest someone local to your area that you can meet face to face.

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Crazy, man. My sister and her husband are buying a house in Oregon right now, and they can't find anyone who will give them an uninsured loan for less than 20% down. They've both got great credit and little debt. Plus, they're doctors, so their job security and income prospects are solid. Then again, they're in Portlandia, so maybe it is all different there.

I have bought two houses in my life thus far. Both are FHA loans. I've never had a down payment and my closing cost were always minimal.

I am currently involved in a refinancing FHA streamlined. Looking down the barrel at 3.75% and no fees. Only have to bring some escrow payment and payoff demand to the table to close.

If you don't want to meet someone face to face just yet, call GMAC or one of the big lenders and see what your credit score and income allow you to afford.

I have read similar to what you guys are saying. My credit is through the roof and I have zero debt, so if it's possible to get a lower down payment I would think I'd be a candidate. Nothing is guaranteed though.

What are your typical closing costs and everything else associated with the purchase? I realize it is region specific, but like I said in OP, real life experience speaks for itself when you're comparing to reading.

MalFet said:

Crazy, man. My sister and her husband are buying a house in Oregon right now, and they can't find anyone who will give them an uninsured loan for less than 20% down. They've both got great credit and little debt. Plus, they're doctors, so their job security and income prospects are solid. Then again, they're in Portlandia, so maybe it is all different there.

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The zoning makes a big difference in the loan structure type. I could have qualified for the 0% down, but my income pushed me out of that category.

I'm just outside of the city limits which makes a BIG difference.

I've bought 4 houses to date, and the low prices of housing coupled with the insane interest rates makes for terrific opportunities. However the loan process is SUCH a PITA now, it's absurd!

TheMan said:

I have read similar to what you guys are saying. My credit is through the roof and I have zero debt, so if it's possible to get a lower down payment I would think I'd be a candidate. Nothing is guaranteed though.

What are your typical closing costs and everything else associated with the purchase? I realize it is region specific, but like I said in OP, real life experience speaks for itself when you're comparing to reading.

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I have the seller pay for 100% of the closing costs, so I don't have to come up with it out of pocket.

So lets say the closing will cost around 5k. If you are buying the house at 200k, you can agree to pay 205 for the house and seller covering the closing costs. Essentially wrapping the closing costs into your loan.

But in this market I would low-ball and require seller to pay for all closing costs.

IXVolt said:

But in this market I would low-ball and require seller to pay for all closing costs.

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Considering most families are cash-strapped, this worked against our favor during the purchase last year. Cash in pocket is king in negotiations! Offered to cover all closing costs for a $10k reduction in asking price AND seller payed for a 4 year home warranty since we knew the seller was in a tight spot and didn't have much cash on hand.

If you can get a 4% rate without putting 30%+ down, be happy.

TheMan said:

Anyone have any tips for buying?

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Be patient, have your budget in mind, and go shopping every weekend or every other weekend.

Don't be afraid to pass on a house due to price, condition, or location. It's easy to get your emotions involved when putting an offer in but if the seller won't play, just walk away. I think SWMBO 'fell in love' with 3-4 houses over 6 months. You'd think she was gonna die if she didn't get the house but after losing those homes, we're incredibly happy with our final purchase. She looks back and is grateful we didn't get them.

Inspection inspection inspection! Home inspectors have about a ba-jillion 'excluded items' in their report: mold, sewer lines, etc. Our big regret was not having the sewer lines inspected. Three months into the home and the sewer line backs up, flooding part of the house. Turns out the sewer line needed to be completely replaced ($4k+) which we could have used in negotiating the price of the home. Turns out, the inspection does not cover sewer lines. A $100 inspection from a plumber would have saved us 4-5 grand.

Also, the kitchen cabinets were overgrown with mold and were not salvageable. Ended up spending cash out of our pockets to replace them, and again, it could have been a negotiating point and the seller should have covered the cost of new cabinets. And yet again, mold is not in the scope of a home inspection.....

So overall, I feel like we could have gotten the home for about $8k cheaper just based on the sewer line and the kitchen cabinets.

Wow, these are all great tidbits! I hadn't thought of or read about a lot of these ideas.

And I'll be sure to pony up the little bit extra for small inspections that aren't covered.

TheMan said:

Wow, these are all great tidbits! I hadn't thought of or read about a lot of these ideas.

And I'll be sure to pony up the little bit extra for small inspections that aren't covered.

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Be careful with the mold guys. They will want to 'decontaminate' the house which will cost $10k+ and take several weeks but that is overkill unless it's a toxic mold. Use the free inspection to find mold spots, then tell them to take a hike. Cleanup the mold yourself with bleach, water, and mold inhibitor if they find anything.

Here's two of my favorite resources:
Karls Mortgage Calc: http://www.drcalculator.com/mortgage/
Zillow property value est: http://www.zillow.com/

IMHO getting home warranty is a must. I always have those included in the purchase, they have saved me so much money! As a matter of fact, I'm going to call my warranty today and file for a new dishwasher and HVAC blower (the bearings are going out)

Take a good look at the things you can't change about the house, like the location and neighbors. Are there 30+ cars in the backyard of the neighbors? Registered sex offenders in the area? etc.

I just bought a house in Illinois...had a fantastic realtor, home inspector, and attorney.

Not sure where you are located but I would be happy to pass info along. Inspector saved us about 40k just in what he found on a house that a different inspector passed with flying colors.

General advice, hit up a book store...some great basic info books well worth the cost.

rifraf said:

I just bought a house in Illinois...had a fantastic realtor

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+1 for this. Realtors look at this stuff all day, every day...so they know good deals, can spot issues, help you through the lending process, etc.

And the best part is, as a buyer, they are "free" because the seller pays commission.

OP - What general area are you located?

Carol Stream. Not far from you Ty. I'd be looking in the vicinity of Glen Ellyn, Wheaton, Batavia, Geneva , and any of the immediate surrounding areas.

TheMan said:

Carol Stream. Not far from you Ty. I'd be looking in the vicinity of Glen Ellyn, Wheaton, Batavia, Geneva , and any of the immediate surrounding areas.

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Damn. In 2004 I had an apartment in Carol Stream just off Schmale. I grew up on the corner of Franklin and Main in Wheaton.

No way! My wife grew up on Franklin Street in Wheaton. Small world.

Don't forget that the realtor is in it to make money. A buyers agent can be a huge help, but they have THEIR best interests in mind. It is in the agent's best intrest to keep the price of the house high. It means more commission and helps to keep the market higher.

Don't let them tell you that an offer that you want to make is too low or an insult. There is no such thing as too low of an offer, especially in the current market. The worst that can happen is you get turned down withoug a counter. The best? The seller takes your offer.

TyTanium said:

No way! My wife grew up on Franklin Street in Wheaton. Small world.

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Ha! If she's your age she probably went to school with my brother and sister (probably not me, my folks sent me off to Wheaton Academy, for all the good that did). Ask her if she knew/knew of the Berners growing up.

Back on topic, I was able to get an FHA loan with 3.5% down in mid-late 2010. Not sure if that has changed since then.

bernerbrau said:

Ha! If she's your age she probably went to school with my brother and sister (probably not me, my folks sent me off to Wheaton Academy, for all the good that did). Ask her if she knew/knew of the Berners growing up.

Back on topic, I was able to get an FHA loan with 3.5% down in mid-late 2010. Not sure if that has changed since then.

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As of the FHA site, this appears to still be legit. I am sure they have cracked down on the potential suitors for such a low down payment loan, but it sounds possible.

Will close next month on a fha loan. 3.5% down and I got locked in a 4% apr.

We purchased a house last year. It was a fixer and we tried to get a FHA fixer loan. Total waste of time. The appraiser put the repaired value at $186K vs a purchase price of $150K. They wanted 30% equity after repairs. I got the money from a private source, made the repairs, and the place appraised at $225K last month.

But, as mentioned, this is Porklandia. On the rare occasions anything gets done here, it gets done differently.

Seller's hate FHA fixer upper loans. I had to sell a deceased relatives one last November and it was in a bad location and still sported 1950s decor, appliances, electricity, and exterior. Every realtor told us that if we entertained a full price FHA offer, the bank appraisals would not match the asking price. We got lucky and took a much lower cash offer to move the house before winter and to avoid the crazy nj taxes. We did the math and found that taking the low ball offer put us farther ahead when what we would have got if we made the needed FHA repairs and paid expenses and taxes on the property during repairs. And who knows if, in this market, after the repairs we would have had a decent appraisal? So cash offers really are king today.

There are other options if you don't have 20% down payment. I bought my house 5 years ago and got an 80-15-5 loan also called a piggyback loan. I was able to bring 5% to the table then got a secondary loan to make up the 20% and didn't have to pay PMI. We recently refinanced and lumped everything together at 4%.