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I really don't know yet. I just know it won't cost me a dime to use him for whatever. As another poster mentioned, his costs are covered by the seller. Which might mean he will give that money to me. But I haven't confirmed with him yet.
Not trying to cause grief between you and your uncle, but if he was using this as a sales pitch to you and intends to keep the commission that is a bit shady.
I really don't know yet. I just know it won't cost me a dime to use him for whatever. As another poster mentioned, his costs are covered by the seller. Which might mean he will give that money to me. But I haven't confirmed with him yet.
I doubt he would give you the entire commission (and btw, part of the commission goes to the broker, so he won't be getting the entire half as the buyer's agent, anyway). That commission will be reported as taxable income to him. But ask - he might be willing to part with some of the commission in exchange for your business.
FHA will give you lower rate but higher payment due to something called mortgage insurance, yes it is confusing, but their marketing worked, got you thinking about buying. There in mortgage insurance in conventional loans too but it typically cost less.
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Originally Posted by confusedasusual
Actually, you can pull your own score and it doesn't affect your report. Lenders can pull your score multiple times within 14 days and it only counts as 1 pull-- helpful when you are shopping your rate around.
I meant stop having other people pull your credit report. You said the a credit company is sending you your score which is one pull, if you increase your discover card, that is another pull, if you get a new credit card , that is one pull, if you get a new phone contract for a free phone, that is another pull, if you get new cable tv service ,that is a pull, if then when you apply for a loan, you finally figured out when they kept asking for your social security number. You might have though you were giving them your SSN for identification purposes, but it was to pull your credit report. Basically stop "applying" for stuff.
I wouldn't focus on shopping around for rates too much ask your uncle for a recommendation. Sometimes it might actually save you money. If you don't really care about the property and don't mind losing it , you can be a rate shopping, otherwise, work will someone that will get it done.
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Originally Posted by confusedasusual
Go to Credit Karma's website. Its a free service that has a simulator that will show you what to do to raise your score and how much it may be affected. It will give you an idea of what your credit score it without a hard pull. And it is FREE.
Look into co-ops as well. Sometimes that is a better deal because taxes are often included in the fees. They are misunderstood. Do research before anyone talks you out of them.
I doubt he would give you the entire commission (and btw, part of the commission goes to the broker, so he won't be getting the entire half as the buyer's agent, anyway). That commission will be reported as taxable income to him. But ask - he might be willing to part with some of the commission in exchange for your business.
Oh, good grief. Why should his uncle give him ANY of the commission? It doesn't reduce the cost of the house or how much he has to put down to reach 20%. For the nephew to expect the uncle to gift him with money that the uncle has earned by shepherding a first-time buyer through the process is unreasonable. It's not enough that the uncle is giving up his time and experience to help his nephew purchase a home? He also has to be out-of-pocket, too? Sheesh. The nephew should be grateful that the uncle is helping him, and, in return, he's able to help his uncle, too, with no cost to himself.
The commission is between the SELLER and the listing agent. The listing agent agrees to share X percentage of the commission with a buyer's agent -- NOT with the buyer. It's a possibility, I suppose, that the uncle, in a fit of overwhelming generosity, could say, "Hey, you know, I don't want the commission, let's ask the seller to reduce the price by 3% (or whatever the rate is where you are) and save you some money." That's up to the uncle to offer -- NOT for the nephew to ask for. (We've had agents in our office do that for close family members, such as children or parents.) The uncle is correct that the nephew doesn't have to pay him money -- that is absolutely true -- but to expect the uncle to pay the nephew for the "privilege" of having him as a client? That's unreasonable.
FHA loans tend to have lower rates because a piece of the note is backed by the federal government. Conventional loans tend to be a bit higher but often have reduced upfront fees. If you can do it, a conventional loan with a 5% down payment tends to have similar money going out at closing to an FHA loan with a 3.5% down payment. The difference is a lot of the FHA fees that you'll pay are comparable to the additional 1.5% for the conventional loan.
So you're getting additional equity in lieu of paying fees.
The Realtors I know will pass on some of "Their" commision to a family member... especially a first time buyer.
One of my good friends helped each of her siblings get into their first homes this way.
Just to avoid misunderstandings... make sure the both of you are on the same page when it comes to money matters.
The last home I bought the seller called in a friend of theirs... we had already made the deal and their friend, a broker in town offered to facilitate for a total 1% fee on the deal.
At first I thought why do they need to pay anyone since we had a signed agreement with deposit receipt.
Looking back... I am very glad they did... sellers had some distant family members that said they wanted to buy the place plus a step daughter that was slow in moving out.
The Sellers 1% Realtor made quick work of that and insisted on rent back amount be added if pocession was delayed after closing and it was and they paid it to me...
My experience with professional Realtors is they can be very valuable in getting the deal done and avoiding potential mine fields.
Just remember... you are the one making the deal and the one that has to live with it... so pay attention and understand before you sign.
I think you all are focusing on the Uncle/Nephew relationship a little too much. Its too early in the buying stage for me to have discussed details with him on what is going to happen. If it were normal to do, I would pay my uncle for his help. I just know he offered to do it free of charge to me a couple of months ago when I told him I was thinking about it. If he meant free to me, but a charge to the seller then fine. If he meant he would pay me the money the seller pays him, then thats fine too. I think for him, he was just making the point that it wouldn't cost me anything to use him and that he STRONGLY preferred I use him because it would be in my best interest. He owns a real estate company and I would never choose anyone else besides him anyway. I worked for him for 2.5 years too.
Anyway, I appreciate you all looking out for me on that front. I would just rather focus on the early steps I need to take for preparing myself for a mortgage. There has been some great advice so far, and if anyone has any more to add it would be helpful.
I would say save, save, save. That is first and foremost. My mama always said that if you don't have at least 20% for your down payment, you can't really afford to buy, so keep renting until you have that 20%. Conservative advice, I know, with everyone and their brother getting loans with little to no down payment (VA loans don't require any down payment at all) but look at how the market crashed when all these folks were under water on their loans. Having more up front will make your offer stronger in the eyes of the seller. You will usually float to the top of the pool with a big down payment in a multiple offer situation. In many cases, condos or co-ops will require a higher down payment than a SFH.
Don't stop using your credit cards altogether but don't charge up more than half of your limit. Pay off cards the day before they are due and don't charge anything until the next cycle. This will bump your credit.
Learn the differences in the various types of properties in your market. If there are condos, learn about how many investors are in the building, look at fees, understand what they include, figure out how many of the units are owner occupied vs. rentals. If there are co-ops, pay attention to the docs and rules about renting, look for underlying mortgages, figure out what the fees include. Look at tax rates. Compare the upkeep in the hallways and common areas in the buildings you visit as this is often the key to how healthy the building is. Understand what a special assessment means and what your responsibility might be in that case. Look at resale for a studio vs. a one bedroom. Understand the processes in place for doing any updates to the unit. Determine whether you need something turn key or are willing to do a little work. Track sales in the buildings you like as well as the neighborhood in general. Talk to lenders to see if there are any restrictions about how they will lend on a condo or co-op unit (sometimes there are and you have to choose a certain lender.)
Here are the main questions I have:
1. I believe FHA loans are the best for first time homebuyers, correct? If so what rates could I expect with a 700+ credit score? If I had to guess I would say mine is around 750. BTW, my credit card is pulling and sending my FICO score over in the mail. Haven't gotten it yet.
2. I plan on saving up 10%-20% for a downpayment. If I am able to do 20%, is there a financial incentive for doing so, aside from year costs in interest? Meaning, will I get a better interest rate on the entire loan?
3. Do you think it would help if I called Discover to get my credit card limit increased? Currently its only $8K and I am sure they would increase it if I asked. My credit score is immaculate despite charging around $32K a year on it.
4. Should I apply for another credit card so that I have more lines open to help inflate my FICO score? Wondering if it would help me in the long run, or if it would actually hurt my FICO score.
5. Any of your own tips that I can get a jump start on? I plan on budgeting myself now as if I was paying a $1500 mortgage. Save the money I don't spend and put that towards 10% to 20% down.
1. You can look online and see what interest rates are today. No knows what they will be in 8 months. Right now they're between 4.5 and 5.0% depending on many things. It's not one thing that determines the interest rate.
2. With a 20% downpayment you won't have to pay for PMI. That could be a large monthly savings.
3. Do NOT get any more credit or credit cards! They all count against your income when getting a mortgage. It's a weird twisted game.You need credit to get a mortgage, yet they don't want you to have any.
4. See above.
5. You will need to document every single penny you spend for a few months before you apply for a mortgage. So be sure to keep all of your statements for every account you have. They will request some of the stupid things over and over. Don't argue. Just send it! It's much easier to just do it than question it. the guy asking you for it, doesn't even do anything with it. He's the monkey in the middle. Patience. It takes time and energy to get a mortgage.
If you have any debts, pay them off or as low as you can. Do NOT take on any new debts - no new credit cards, no credit line increases. Banks see that as you have all that money to spend and pay back even if you don't use it.
Look at houses online. It will give you an idea what's out there and for how much. This does NOT replace seeing a place in person. Make sure you thoroughly check out the neighborhood and any HOA documents! READ THEM!! Every HOA is different. Some are just nuts and some are very reasonable. Don't forget that the HOA fee is usually monthly an if you don't pay it, you will lose your home.
Not liking the paint color or carpet is not a reason to not purchase a home. HGTV and the like have made everyone want something that looks like a factory showroom which is completely unrealistic. Spend a little less so you have some money every month to make improvements and changes you want that suit your needs and wants. I mean who doesn't love harvest gold appliances and green shag carpet in the kitchen?
Good luck!
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