Mortgage Confusion (PMI, loan, fixed rate, interest)

[bodeca30]

We are trying to purchase our first home. We would like to close once school is out in about 2 months the earliest but before September. Our price range is low as well as our down. Some have suggested a FHA loan because we would be eligible for down/closing cost programs along with the lower interest. IS this a good idea?
Also if it is, should we still apply for preapproval at several institutions?

Finally considering our time frame, when would be the best time to apply?

[gotpancit]

Good luck being a first time homebuyer in this market with the current loan tightening. I too am a first time homebuyer, and actually found that BofA had a really good program with 5% down and no closing costs and PMI. It might not be available in all states, but in CA it still is. Other than that, your best bet is probably FHA with its 3% down. If you are looking to do nehemehiah for the 3% assistance you need to get a good realtor that understands what it is.

I think the best advice I can give you is to save save save, and don't make any late credit cards payments to bring your FICO scores up.

I don't know if there is a best time to apply. In your situation I can only think of those two loans that could possibley work for you. The BofA program is said to be going away soon, but FHA is going to be here for awhile. If FHA is your best bet, the rates don't stray too far from 6% so you don't have to rush to get into that loan.

Obviously housing continues to decline, but to me it seems like it's easing up a bit. Definately count on your downpayment going down the drain if you plan to sell your house this year.

anyways, good luck and whatever you do don't get an adjustable rate mortgage.

[Bette]

90 days prior

[bodeca30]

Okay 90 days, can I lock it in for longer if necessary?
I surely don't plan to sell wouldnt buy if I was going to sell the same year. If nothing else but hate moving.
Credit scores are in the low 700. My concern is the mortgage process. I had a family member end up royally screwed because the changed everything at closing. Her fault for signing but she felt pressured. I dont want that., Any suggestions on where to research programs available in certain states, specifically PA. One realtors website stated first time buyers program with a 4.9 fixed rate. No way I believe that but just an example of what is showing up. So confusing!

[renriq02]

if your rate is lower than 5.5% for 90-120 day lock rate...then lock it!

otherwise it's not worth it. You will pay either discount points or with a higher rate.

[bodeca30]

Okay we went through and approval was good. Definitly going FHA. Next question I know FHA down payment is a standard 2.25% But am I correct that each company can charge whatever for closing costs? In other words should we still shop around for a FHA to compare costs?

[renriq02]

to compare costs AND to compare rates.

be careful with lenders that charge discount points with an origination fee.

Originally Posted by bodeca30

Okay we went through and approval was good. Definitly going FHA. Next question I know FHA down payment is a standard 2.25% But am I correct that each company can charge whatever for closing costs? In other words should we still shop around for a FHA to compare costs?

[IntoTheMystic]

Ask the lender if they do USDA backed mortgages. I'm going through the paperwork now, and it's not money down and no pmi.

[renriq02]

USDA is for rural...and the home will need to be in a USDA designated area.

[EdatGenesis]

FHA is an excellent choice but BE CAREFUL when choosing a mortgage broker

Although FHA guidelines cap the "front end" origination charge, a broker is still free to up sell your interest rate & make alot of money on the "back end" in yield spread premium .. Make sure you ask about YSP, how much it is, and how much higher of an interest you're being "sold" to put more cash in the brokers pocket!!

Banks DO NOT have to disclose YSP on a Good Faith Estimate but any legitimate, honest mortgage lender will tell you the truth .. If you see the YSP listed on the GFE as 0-4% without any actual dollar amount listed to the right of it, STOP - DO NOT SIGN UNTIL THE MORTGAGE BROKER DISCLOSE'S THE ACTUAL DOLLAR AMOUNT! Shady brokers will try to say that it's been disclosed when it fact, it has not been! The DOLLAR amount MUST BE there to be in full RESPA compliance!!

FHA is a great way to go for your situation BUT,,, Caveat Emptor still applies

Get it?