NBR: Home Loan Question

[northshore]

For you home buyers, brokers, etc...I'm "trying" to position myself to by a home. I'm at the point of no credit card debt, no car payments, virtually no debt except for my school loan from several years ago. My next question, I have the desire to return for my Master's degree (possible change in career) and I am curious if pulling out an additional loan for grad school would seriously hurt my chances qualifying for a loan? Should I wait until I buy or go back to school now?

[BrewMaster]

I say do school first and then worry about buying a home. Your income should increase once you finish your masters and put you in a good place to buy a home.

BTW, one of the most important things to buying a home is saving up for the down payment. If you don't have 20% cash to put down, it's not likely you can get a loan right now. It's also not wise IMO to buy a house without 20% down.

[SheDevil]

Brewmaster is correct....you should concern yourself more with your down payment. Sounds like your credit is on the right track. The way you are qualified is in brackets.... like 680 plus....or 700 plus or 720 plus. Consider it more like this...you will qualify(assuming everything else is in order) with the school debt, but....do you have the down and can you make the payment, is what you need to consider. People with crap credit can even go in and buy down the rate via points...(ie pay thousands extra up front for a lower interest rate).

There is 100% financing(1st time buyers etc)...but consider it this way...you're now paying interest on what you didn't save up!
= bigger payment!!

[northshore]

Originally Posted by SheDevil

Brewmaster is correct....you should concern yourself more with your down payment. Sounds like your credit is on the right track. The way you are qualified is in brackets.... like 680 plus....or 700 plus or 720 plus. Consider it more like this...you will qualify(assuming everything else is in order) with the school debt, but....do you have the down and can you make the payment, is what you need to consider. People with crap credit can even go in and buy down the rate via points...(ie pay thousands extra up front for a lower interest rate).

There is 100% financing(1st time buyers etc)...but consider it this way...you're now paying interest on what you didn't save up!
= bigger payment!!

No where near 20%. More like 6-7% at the moment. If I do achieve 20% will I take a hit on my credit/home loan chances taking out an additional loan for a Master's degree? What looks worse for a bank? 40K in debt on a school loan or 40K in debt on say a car?

[foofighter]

my first condo i did had a 1st and a 2nd because i only had 10%...so i had to payments but after the first year or so i was able to refi and get it all into one loan...i doubt it'll be that easy with the current market but that's what i did...

[destroyer]

Originally Posted by BrewMaster

BTW, one of the most important things to buying a home is saving up for the down payment. If you don't have 20% cash to put down, it's not likely you can get a loan right now. It's also not wise IMO to buy a house without 20% down.

I've never owned a home, but I've been saving for a down payment for what seems to be forever. Would it be worth it to try to buy a house with say 10% or 15% down? Or would I be better off waiting to try to get to 20%?

[BrewMaster]

Typically if you have less than 20% equity in a home you must purchase/pay for PMI (private mortgage insurance) in order to qualify for the mortgage. PMI can be expensive depending on your home value and equity level but if you can afford PMI plus your monthly payment, it works for some people. Once you pay off enough of your mortgage principal amount to reach 20% equity, the PMI goes away. The problem is that most mortgages are front loaded with interest so it takes a while to build up significant equity through your regular mortgage payment.

Another unconventional option is to take out 2 loans, one to get you to 20% "equity" and another for the 80% mortgage. I don't know if this is still happening, but I know a few people who did this in 2001 and have since paid off the first loan and only have their main mortgage.

[SheDevil]

Originally Posted by northshore

No where near 20%. More like 6-7% at the moment. If I do achieve 20% will I take a hit on my credit/home loan chances taking out an additional loan for a Master's degree? What looks worse for a bank? 40K in debt on a school loan or 40K in debt on say a car?

My advice...since I am out of the biz currently....is to call say Wells Fargo (since they are the most commonly used/sold to) and talk to a loan rep. 1-877-937-9357 You don't have to apply to ask questions. The reason I say this is because how "they" (any lender) view details, changes daily. I will make an assumption and say someone with a 700 plus FICO and a loan for their Masters will still be considered a slam dunk, as you're the kind of person most likely to be a non-risk. Ask them the best way to maneuver thru it...

Sorry I am not still in the biz...but I hope I helped.






Another unconventional option is to take out 2 loans, one to get you to 20% "equity" and another for the 80% mortgage. I don't know if this is still happening, but I know a few people who did this in 2001 and have since paid off the first loan and only have their main mortgage


Except thats an adjustable...and bad news. That was big in the investment world for a while...and we know how those deals are going

[BrewMaster]

Originally Posted by SheDevil

Except thats an adjustable...and bad news. That was big in the investment world for a while...and we know how those deals are going

Agreed. It's an option that I would never use myself, but some people have been successful going that route.

[surlygal]

Originally Posted by SheDevil

My advice...since I am out of the biz currently....is to call say Wells Fargo (since they are the most commonly used/sold to) and talk to a loan rep. 1-877-937-9357 You don't have to apply to ask questions. The reason I say this is because how "they" (any lender) view details, changes daily. I will make an assumption and say someone with a 700 plus FICO and a loan for their Masters will still be considered a slam dunk, as you're the kind of person most likely to be a non-risk. Ask them the best way to maneuver thru it...

Sorry I am not still in the biz...but I hope I helped.

You could always contact Lynn (sheclimbs) she's in the business too! As are a few others on this board.

[katonk]

I think it's tough to get a loan right now, but if you can swing it, now's the time to buy. Most likely you'll lose some money in the first 1 or 2 years. After the market rebounds (and it always does) you'll be in pretty good shape. At that point you can just sit and laugh at all the suckers with sky-high monthly's or you can sell and use the equity to get the house you really want. The tax right off for the first few years is pretty nice as well.

If I didn't already own my home, I'd be looking to buy.

[BrewMaster]

katonk makes a good point. if you buy now and house values rise in the long run, you could always get a home equity line of credit to use in paying for school. in my experience home equity lines of credit usually have better interest rates than unsubsidized student loans.

if you can get subsidized loans for school, do it, but if not, a home equity line of credit is a much better deal than an unsubsidized student loan.

[Shannon]

I couldn't imagine tackling to those to lofty goals at once. More power to you if you can. Bruce is getting his masters degree right now. It's a full time job in itself so needless to say he's not working. We're on a super tight budget these days. However, when he graduates, the additional school/ degree is going to provide him with even more opportunities and $$$. If you have the chance to go back and get your masters and wait a bit to buy a house... I'd go get the degree.