New Member...mortgage loan question.

MrEous · Joined: 26 Jul 2005 Posts: 3 Location: Dallas, TX

I really hope I am not sounding redundant but I am in need of help and have questions regarding a 1st time mortgage loan.

I am an AF vet...and plan on possibly using VA Loan assistance.

We haven't looked at houses yet but know we are looking to buy a house in our area for around $150k. (new houses are fairly cheap in Dallas)

We have $10k down which we intend to use on the principal of the loan to bring our payments down.

Now...
I called and got preapproved with a mortgage company for anything up to $200k. My credit score is a little less than desirable (608). The loan officer I spoke with asked if I was sure about using the VA Loan instead of going for a Conventional Loan. I advised I would look up the information in the meantime as I would need to speak with my fiance before we went any further with the loan process.

The loan officer also said we qualified for 100% product (full coverage of the loan) at a 7-ish% rate and then also said there is an option of "80/20" and explained 80% of the loan would be at a rate of around 5.75% and the 20% would be a rate of almost 9%.

My question is, well, what do you think? I have come to the understanding that not taking advantage of using the VA Loan benefits might not be a smart move. We have $10k that we want to use as a down and the option of the "80/20" didn't sound appealing to me, but my initial impression could be wrong pending possible advice someone could give me (outside of the mortgage company I spoke to...lol)

Thank you...anyone...for any possible help on this. I just don't want to get stuck in a long term committment without verifying the information with someone that knows.

-Jeff

P.S. I have a realtor friend with 15+years experience in real estate I was going to speak with as well.

capnmorgan5555 · Joined: 29 Jan 2005 Posts: 29

A score like that shouldn't keep you from getting a VA loan. A VA loan is going to be better than any 80/20 program I know of. You can get a 6% or lower fixed rate and finance 100% if you like. The lender you are talking to may not offer VA loans so they are trying to convince you otherwise.

Another thought, if you can swing the payment on the full $150k comfortably then I would suggest you keep as much of that $10,000 in your pocket as possible. You will more than likely end up needing new items for the house when you move in and unless you have a lot more money saved somewhere else I would rather see you take on longer, lower fixed rate tax preferred debt than to end up charging up your credit cards to buy the items you end up needing/wanting to buy for your new home.

I don't care how good your stuff is now, for some reason when you buy a new home (this is not meant to be a slam on women) that furniture set no longer looks good in the house etc. You said we, so I assume your significant other is involved, if you are male & your significant other is female she will be the one that says things no longer look good in the new house. If you are female then you will be the one saying that. This is not a scientific fact, but pretty close, my wife did it to me and a majority of my clients have told me a similar tale after they bought their homes. ;)

It is very difficult for any conventional product to be better than a VA loan especially when you are putting little to no money down. I know that there is a VA funding fee that can be financed into the loan but when you compare it to any other 100% program be it a 100% one loan or an 80/20 you will be hard pressed to beat it, especially with a 608 middle score.

Best wishes.

pamortgageman · Joined: 21 Jul 2005 Posts: 31 Location: Pennsylvania

For what it's worth I would agree with Capnmorgan. If you had a higher credit score, I may suggest going the conventional route, but with a 608 score I would have to recommend going with VA. I would also agree with his suggestion of keeping as much of the 10k as you can in your pocket, you never know what may come up within the next 12 months, and it's always a good idea to have a financial cushion. Good luck and best wishes in your purchase of a home.

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

On the funding fee if you receive a disability check you should also be able to have that fee waived, making the VA loan a very good option for you.

I agree with the above that it sounds like they're trying to steer you away from the VA, but from what I've heard here there's no reason for you to do that at all. And as said above, it would be a good idea to make sure you 've got that fund for the misc. items.

MrEous · Joined: 26 Jul 2005 Posts: 3 Location: Dallas, TX

Thank you all for your advice. I will go over the information and think about what you wrote.

I was certain of using the VA loan already, just wanted to verify what I was told.

Thank you again,
Jeff

P.S. If you didn't get my PM, Travis, I'll call you later today.

capnmorgan5555 wrote: I don't care how good your stuff is now, for some reason when you buy a new home (this is not meant to be a slam on women) that furniture set no longer looks good in the house etc. You said we, so I assume your significant other is involved, if you are male & your significant other is female she will be the one that says things no longer look good in the new house. If you are female then you will be the one saying that. This is not a scientific fact, but pretty close, my wife did it to me and a majority of my clients have told me a similar tale after they bought their homes. ;)
This is very true, she has already mentioned new furniture. Too funny.

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

Got it and responded. You're it!

chow · Posted: Wed Jul 27, 2005 8:41 pm Post subject:

Oh, oh, oh, and If you're a disabled vet. My state doesn't even tax your real estate. Everyone remember that.....Check to see what Vet's get for tax breaks!

Without getting too political....They served our country. We need to make sure they have affordable housing, at a good price, with good advice.

And any broker who is already signed up with VA or wants to, can get Prior Approval lender status with VA, and have VA underwrite the loan for an extra $100.00 a year.

VA Prior Approved Lenders send the loans to VA for UW, then can sell it off to many a major lender-even on broker terms. If the loan makes sense: VA will UW it.

This is a good selling tool, and the Vet's know that the actual VA UW it, if they are a little rough around the edges.

And thanks for your service to our county.

MrEous · Joined: 26 Jul 2005 Posts: 3 Location: Dallas, TX

Thank you again...

...I spoke to Travis and he laid a lot of things out to me in RE: to my original post. I will be going with the VA Loan after all. I am not a disabled vet so I won't worry about that aspect.

-Jeff

P.S. This site has been an immense help already. Thank you from the bottom of my 1st-time buyer heart.
lol

chow · Posted: Thu Jul 28, 2005 2:52 pm Post subject:

That's what we are here for! Send Candy! Make it the suger free virtual stuff! (a picture of candy will do!)

Haplo is a good Loan Officer. I will let him do my next loan. But that will be a reverse mortgage. I hope he has fun with it. :lol:

Please tell your disabled vet contacts to make sure to check into the Real Estate tax break with the local assessor's office.

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

Holy cow, you do realize you have a few years yet before that Reverse right Chow?

chow · Posted: Thu Jul 28, 2005 6:43 pm Post subject:

Haplo wrote: Holy cow, you do realize you have a few years yet before that Reverse right Chow?

yes, but you're younger than I am. You'll still be around! :lol:

My aim to is to "mortgage free" in a couple of years!

I just love equity in Real Estate. I sleep well at night! It's money that grows-if you do the right thing.

editing issues:

I think I need to go back and sniff some more pollen-pick up sticks- while I wait on these appraisers to spend my cell time....Wooooohooooo!

this is a good commercial loan month for me!!!