1st time buyer not liking monthly paymt estim8 from lenders?

Maisondetre · Joined: 07 Jun 2007 Posts: 18 Location: PA

Hi Everyone - complete newbie at this, and this is officially my 2nd post :oops:

I am not sure if I am missing/overlooking particular lenders or key words that would help in me getting a better loan or more competitive rate or what have you. My present lease ends July 31 and the impetus for my decision to buy a home is trifold; 1 - Rent is effectively a waste of my paycheck I get nothing in return, 2 - Rent isn't stable (they raise rates periodically), 3 - Nomadic lifestyle is becoming taxing, would like a place I can call home.

Financially;

Annual Gross Income = 50k + 10k bonus this year
No Debt
Expenses = Car payment + Rent, former is 300/mo
Score (ave) = 640
Seeking Single family home or duplex (basically something that isnt a condo or HOA fee-requiring thing) with at least 2 bathrooms. I'd be occupying.

I had initially been looking at a loan amt range of 250k, however the homes that actually appealed go to 370K.

Am entertaining a ceiling loan amt of 400K, and would like to get an idea from unbiased professionals (such as all of you!) as to how low I can expect the monthly payment to be based on the above numbers.

I'd be putting down at least 10%.

Do let me know! I've been getting some seemingly ridiculous numbers given what I have seen advertised, so your opinions would be very much appreciated - and a quantifiable estimate more so as this would enable verification and an ounce of additional trust !!!

Many thanks in advance :)

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Well, the 10k bonus won't count for your income unless you have been receiving it for 2 years or more.

I'm uncertain how you have no debt, but then you list a car payment. Are you saying you don't have any revolving debt?

As far as the terms you've seen advertised, don't get fooled by online lenders suggesting they can save you hundreds on your mortgage payments. Wonder why there are so many foreclosures on the market these days? People got suckered into a loan that they thought they could afford, then found out that there was something that they A) weren't told or B) were told in a way that made a black mark sound like a golden nugget.

Based on a shorter term ARM, on a 300k loan you're still looking at around 1800ish, give or take a small bit. Then you've got taxes, insurance, and potentially PMI (Depending on how your loan is structured.) At 50k in income, that puts you just a touch over 4000/mo, which means that your house payment would be more than 50% of your income. Add in your car payment, and you're begging to have the bank kick you out on the street.

What area of the country are you in? Some of the government bond programs available for first time buyers offer some better rates than are currently out there, they can just be a pain in the neck to qualify for sometimes. (Have to have the money available from the gov't, your income can't be too high, sometimes you have to buy in a specific neighborhood, etc.)

Is there anyone else that could be added to the loan with you to support your income? Overall, it just sounds to me like doing it by yourself would put you in a *very* tight spot.

Maisondetre · Joined: 07 Jun 2007 Posts: 18 Location: PA

Hi Travis - thanks for the very prompt reply.

By no debt I mean no credit cards etc. Completely debt free ito of that measure. Basically my monthly payments are rent/car/insurance and that's it.

I am in PA...suburban philadelphia

I just happened to read another post that someone put up which says using something like lending tree effectively flushes your credit score since they sell it to others and your credit can be pulled up to 40times/week - is this true? I mean I know we have a 15 day grace period but...it really took a lot for me to work up the courage to even think about borrowing, and now this?!

I wouldn't have a cosigner or anything of the sort. We do have family funds offshore that could be used if need be since they're just sitting.
From what you mention above, you're saying a 2K monthly payment is in the fair range and I cannot/should not expect it to fall far below?

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

You could go with something interest only, but at 300k that's only going to save you about $300, again these are rough figures off the top of my head.

So even if you were at $1500, add in your taxes and insurance and you're still above that 50% mark. Ideally you want to stay around 1/3 or so. (Your income scale may vary, depending on how much you spend on non-credit sources. Your insurance for example.)

Lending tree does indeed wreak havoc on your credit score. Not because of the immediate inquiries (still not sure why they have the ok to pull credit but whatever) but the fact that they continue to contact you at least 6 months after your initial request. I know this for a fact as I was there as my friend continued receiving calls.

The 14 day grace period has slightly changed, but it depends on the reporting, so it may or may not still be using the 14 day version.

Maisondetre · Joined: 07 Jun 2007 Posts: 18 Location: PA

RE:You could go with something interest only, but at 300k that's only going to save you about $300, again these are rough figures off the top of my head.

Interest only as opposed to what, exactly? Sorry, not terribly familiar with what else is out there. Just FYI I was considering a fixed rate mort for 30 yrs.

RE:Lending tree does indeed wreak havoc on your credit score. Not because of the immediate inquiries (still not sure why they have the ok to pull credit but whatever) but the fact that they continue to contact you at least 6 months after your initial request. I know this for a fact as I was there as my friend continued receiving calls.

:( Is there anyway that I can somehow prevent the residual inquiries? Somehow block the checks? Or otherwise, if I get a loan/close within 30 or 60 days of initiation, wouldn't this preclude those latent inquiries?

Additionally, if the answer to this is no, and I am faced with a lowered score as a result of LT, wouldn't timely payments of the mortgage offset and hopefully ensure that I don't go below my ave of 640?

I can't believe that I stayed away from everything credit-related for so long, and now thinking I was doing the right thing I might just have jeopardized my future scores simply by trying to shop for loans :(

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Interest only means you're not making any principle payment; your entire payment simply goes to paying what you owe the lender each month. What you were looking at would have included principle.

You can contact lending tree, but I'm not sure how much that'll do.

You can always contact some people now, while you're still in your grace period, and just have it all done now. If you have a property, you're probably going to want to do that anyway.

The inquiries will fall off eventually (I believe it's an annual cycle, but it's been a while since I have looked at that) and overall in many loan situations it shouldn't affect you TOO heavily, especially if you're putting 10% down.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Think I'm goin to bed for now ;) Talk to ya in the morning!

Maisondetre · Joined: 07 Jun 2007 Posts: 18 Location: PA

Thank you Travis! Have a good night! 5 hrs till sun up... :shock:

harisrealty · Joined: 01 Jul 2007 Posts: 10 Location: Florida

i think the google search opt out credit will pull you out from other lenders and associations legally pulling your credit if you opt out. there is a letter you can mail that will remove you from these lists! At times it can boost your cerdit score up a few points as well! TOo late to ppost this but maybe someone will read and benefit from it..

MPutnam · Joined: 05 Jul 2007 Posts: 6 Location: Huntsville, AL

harisrealty wrote: i think the google search opt out credit will pull you out from other lenders and associations legally pulling your credit if you opt out. there is a letter you can mail that will remove you from these lists! At times it can boost your cerdit score up a few points as well! TOo late to ppost this but maybe someone will read and benefit from it..

When any business pulls your credit for marketing purposes, it does not affect your credit score. When a business pulls you credit for lending purposes, your score might drop 5 pts after about 6 credit inquiries. So opting out, while it may cut down on the amount of junk mail you receive, it does nothing to help, or hurt, your credit score.

And yes, inquiries typically drop after 12 months. The only inquiries that can affect your score are those inquiries specifically authorized by you. Marketing inquiries listed on your credit report are for informational purposes only. You can verify this through any of the 3 major credit bureaus.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

The amount an inquiry affects you is directly related to the amount of credit you have. If you have 30 years of credit history, with 30-40 various credit accounts over the years that show, a single inquiry won't affect you nearly as much as if you have 2 trade lines that you've had open for 12 months. I have seen inquiries drop scores by as little as 2 points, or as many as 50 points.

Also, a large potential "authorized pull" problem would come from a lending tree or another online lead generator that sends your information to a variety of companies that then pull your credit under the assumption that you authorize them to do so (after all, you applied right?) This can massively reduce your score over a 6 month period.

MPutnam · Joined: 05 Jul 2007 Posts: 6 Location: Huntsville, AL

Haplo wrote: The amount an inquiry affects you is directly related to the amount of credit you have. If you have 30 years of credit history, with 30-40 various credit accounts over the years that show, a single inquiry won't affect you nearly as much as if you have 2 trade lines that you've had open for 12 months. I have seen inquiries drop scores by as little as 2 points, or as many as 50 points.

Also, a large potential "authorized pull" problem would come from a lending tree or another online lead generator that sends your information to a variety of companies that then pull your credit under the assumption that you authorize them to do so (after all, you applied right?) This can massively reduce your score over a 6 month period.

The lousiest part about how they determine credit scores is...we're both right. There are a lot of inconsistencies with how credit scores are determined. I've seen borrowers with no more than 2 revolving tradelines with high credit of $500, both seasoned less than 2 years (or even 12 months!) with credit scores of 700+. Then you have borrowers with mortgage, installment, open, and revolving trades with all accounts PAID and PAYING AS AGREED, nothing late, great credit, and have less than 650 credit scores.... Go figure.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Usually the problem in those cases is because they have high percentage balances on revolving accounts.

Maisondetre · Joined: 07 Jun 2007 Posts: 18 Location: PA

Haplo wrote: The amount an inquiry affects you is directly related to the amount of credit you have. If you have 30 years of credit history, with 30-40 various credit accounts over the years that show, a single inquiry won't affect you nearly as much as if you have 2 trade lines that you've had open for 12 months. I have seen inquiries drop scores by as little as 2 points, or as many as 50 points.

Also, a large potential "authorized pull" problem would come from a lending tree or another online lead generator that sends your information to a variety of companies that then pull your credit under the assumption that you authorize them to do so (after all, you applied right?) This can massively reduce your score over a 6 month period.

Unfortunately, Im 27 and hardly have over 10 years of credit history. So this most likely would have had an extremely adverse effect...

Oh well, moving on...
Haplo do you know any specific people I could speak with in Pa? I am back in the market again and at this stage don't know where to start since I took the lending tree route last time. I did get an IM from someone here and am not sure if that's allowed. They sounded nice, but just wanted to run taht by you as well...let me know! ::)

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Becca is in PA, m2c is in OH, not sure if he does PA or not, and I've done a few in the PA area of the country recently. That's a short list of who I *know*.

Not sure who you got your message from of course because it's private. There's nothing wrong with someone contacting you :) Just make sure you know a bit about them first, if it's just some random person, that's not really any different than walking down the street and having someone say "hey, I'll help you buy your house..."