[///WORK-F36]

Originally Posted by BMW F22

Good to know. Thanks for the info guys!

Never knew that you don't necessarily have to pay for PMI with less than 20%. I'm curious if it's as secured to go with a smaller bank than the big guys. Sorry for thread hijack OP. Just thought that these questions are pertinent.

Regardless of what bank does the loan, 99% of conventional loans are secured by Fannie Mae or Freddie Mac, so it's all the same. The main difference in lender is the rate and costs you'll pay to get the loan. Most of the small guys end up selling the loan to the big banks after closign anyways.

[///WORK-F36]

Originally Posted by dzvero

If I go to shop around will it hurt my credit score as they will check them every time

It's not supposed to, but to be safe you should have on lender pull a Tri-Merge credit report, and then just give these 3 scores to any other lender you speak to.

[BMW F22]

Originally Posted by ///WORK-F36

Regardless of what bank does the loan, 99% of conventional loans are secured by Fannie Mae or Freddie Mac, so it's all the same. The main difference in lender is the rate and costs you'll pay to get the loan. Most of the small guys end up selling the loan to the big banks after closign anyways.

How does one qualify for the best interest rate? Is it only on credit or a combination of credit and down payment?

[///WORK-F36]

Originally Posted by BMW F22

How does one qualify for the best interest rate? Is it only on credit or a combination of credit and down payment?

Lenders look at 3 things for approval....credit, income, and value of the home in relation to what you're borrowing.

The rates are determined by risk, which is a combination of the credit score and the loan-to-value percentage (loan amount divided by value of home). The higher the credit, and lower loan-to-value, the less risky it is, which equates to a better rate.

[ilikebmxbikes]

Originally Posted by ///WORK-F36

Lenders look at 3 things for approval....credit, income, and value of the home in relation to what you're borrowing.

The rates are determined by risk, which is a combination of the credit score and the loan-to-value percentage (loan amount divided by value of home). The higher the credit, and lower loan-to-value, the less risky it is, which equates to a better rate.

Pretty much. Those are the big ones, they also take into consideration the type of employment. I was largely freelance (1099) which actually made it more difficult to qualify as I didn't have a steady salary (w2).

My biggest advice for buying a house in SF, is be prepared to move fast and have everything ready because it is extremely competitive and in many cases houses sell for $100-150 over asking.

[///WORK-F36]

Originally Posted by ilikebmxbikes

Pretty much. Those are the big ones, they also take into consideration the type of employment. I was largely freelance (1099) which actually made it more difficult to qualify as I didn't have a steady salary (w2).

My biggest advice for buying a house in SF, is be prepared to move fast and have everything ready because it is extremely competitive and in many cases houses sell for $100-150 over asking.

Income has zero effect on your interest rate. The ability to verify the income is factored into the approval, but how much you make or what type of work you do will not effect the interest rate at all.

[ilikebmxbikes]

Originally Posted by ///WORK-F36

Income has zero effect on your interest rate. The ability to verify the income is factored into the approval, but how much you make or what type of work you do will not effect the interest rate at all.

basically, they said my employment type was high risk as it on paper appears to be unstable. They had to use the average of two years of taxes to evaluate my income numbers which was used toward generating my total amount i qualified to borrow.

[///WORK-F36]

Originally Posted by ilikebmxbikes

basically, they said my employment type was high risk as it on paper appears to be unstable. They had to use the average of two years of taxes to evaluate my income numbers which was used toward generating my total amount i qualified to borrow.

A 2 year average of tax returns is the standard for what they consider self employed borrowers to determine income, but if they stuck you with a higher rate because of this, they were being very shady

[Pheonix]

Originally Posted by dzvero

If I go to shop around will it hurt my credit score as they will check them every time

Yes, your credit will take a hit everytime they check your credit. Pick a reputable broker and let them do the shopping for you.
So many misleading information on this thread.
FHA isn't what it used to be. You will be hit with 2 PMI; the 1st one is 1.75% of the cost of the loan to be paid up front (or roll into the loan). The second is the anual PMI; which will stop once you reached 20% equity of the original deal.
You will pay PMI regardless of lender if you dont have at least 20% down. Some people have 2nd mortgage to avoid this but the rate is usually pretty high.
Talk to a local broker and do some researches online (ton of information).
Btw, we live in the Peninsula (Foster City). We started to look and having a hard time finding something we like with the budget of $1.3Mil (and about 30% down).

[ilikebmxbikes]

Originally Posted by ///WORK-F36

A 2 year average of tax returns is the standard for what they consider self employed borrowers to determine income, but if they stuck you with a higher rate because of this, they were being very shady

rate was unaffected

[///WORK-F36]

Originally Posted by Pheonix

Yes, your credit will take a hit everytime they check your credit. Pick a reputable broker and let them do the shopping for you.
So many misleading information on this thread.
FHA isn't what it used to be. You will be hit with 2 PMI; the 1st one is 1.75% of the cost of the loan to be paid up front (or roll into the loan). The second is the anual PMI; which will stop once you reached 20% equity of the original deal.
You will pay PMI regardless of lender if you dont have at least 20% down. Some people have 2nd mortgage to avoid this but the rate is usually pretty high.
Talk to a local broker and do some researches online (ton of information).
Btw, we live in the Peninsula (Foster City). We started to look and having a hard time finding something we like with the budget of $1.3Mil (and about 30% down).

Sorry, but some of your info is incorrect. You do not always pay PMI with less than 20% down, they do have lender paid PMI programs.

Also, FHA PMI does not automatically fall off when you reach 20% equity, it is on there from 11 years to the life of the loan depending on your down payment amount.

Lastly, a broker is going to shop your loan and have the credit ran multiple times by every lender he looks at since he is just the middle man. It is better to have a tri merge pulled by one lender, and then just give these scores to whoever else you talk to

[Pheonix]

Originally Posted by ///WORK-F36

Sorry, but some of your info is incorrect. You do not always pay PMI with less than 20% down, they do have lender paid PMI programs.

Also, FHA PMI does not automatically fall off when you reach 20% equity, it is on there from 11 years to the life of the loan depending on your down payment amount.

Lastly, a broker is going to shop your loan and have the credit ran multiple times by every lender he looks at since he is just the middle man. It is better to have a tri merge pulled by one lender, and then just give these scores to whoever else you talk to

Lender paid PMI program is just the upfont PMI roll into the loan.
I was just giving the cliffnote version of PMI. You are correct, FHA is a bit more strict with their PMI but typically the PMI will be eliminated once you reached 78%-80% of the deal plus certain amount of payments (typically 60 months).
Look for a reputable broker that only pull your credit ONCE!

[///WORK-F36]

Originally Posted by Pheonix

Lender paid PMI program is just the upfont PMI roll into the loan.
I was just giving the cliffnote version of PMI. You are correct, FHA is a bit more strict with their PMI but typically the PMI will be eliminated once you reached 78%-80% of the deal plus certain amount of payments (typically 60 months).
Look for a reputable broker that only pull your credit ONCE!

No, that is not correct. LPMI programs do not have higher fees. You have the option to roll the PMI into the loan if you want on a PMI loan, but you can also do true LPMI programs where it just equates to a rate of usually around .125% higher

The FHA rules you are referring to changed a few years back. It is not 5 years plus 80% LTV, it is now 11 years to the life of the loan....either way an expensive loan, unless it is your only option.

[Pheonix]

Originally Posted by ///WORK-F36

No, that is not correct. LPMI programs do not have higher fees. You have the option to roll the PMI into the loan if you want on a PMI loan, but you can also do true LPMI programs where it just equates to a rate of usually around .125% higher

The FHA rules you are referring to changed a few years back. It is not 5 years plus 80% LTV, it is now 11 years to the life of the loan....either way an expensive loan, unless it is your only option.

Again, Lender Paid PMI is just another buzzword for let us %#&@^ you slowly with the "slightly higher" rate.
Obviously, you work in Mortgage lending so you have lot more knowledge than me (as things have gotten more complex since the last meltdown.
Btw, the OP is in Santa Clara country and the limit for FHA conforming is around $625k or so. Therefore i dont think that will be the option for the OP based on where is is thinking of buying.

[mikex25]

The housing market here is insane and it won't go down anytime soon. I agree, the market is extremely competitive and it boils down to a bidding war. I just purchased a new town house in south San Jose but I first had to get pre-approved and was on their wait list for almost a year.

[dzvero]

Sorry, I was busy lately. What wait list you are talking about ?

[dzvero]

Originally Posted by Pheonix

Again, Lender Paid PMI is just another buzzword for let us %#&@^ you slowly with the "slightly higher" rate.
Obviously, you work in Mortgage lending so you have lot more knowledge than me (as things have gotten more complex since the last meltdown.
Btw, the OP is in Santa Clara country and the limit for FHA conforming is around $625k or so. Therefore i dont think that will be the option for the OP based on where is is thinking of buying.

Everything in america is SCAM

[jgoens]

[QUOTE=Pheonix;19998360

Btw, we live in the Peninsula (Foster City). We started to look and having a hard time finding something we like with the budget of $1.3Mil (and about 30% down).[/QUOTE]

$1.3 Mil is a pretty good chunk of change but you will probably have to sacrifice something if you want to get in. In Foster city, other than townhouses pretty tough. Are you looking in San Mateo at all? I've lived in this area for 20 years now and can you give insight to some of the neighborhoods if you are new here.

[BMW F22]

So basically if you don't put 20% down you would end up paying way more due to higher interest/PMI/etc. Almost seems better to just wait and save for down payment.

[csu87]

Originally Posted by BMW F22

So basically if you don't put 20% down you would end up paying way more due to higher interest/PMI/etc. Almost seems better to just wait and save for down payment.

not necessarily. PMI can be fairly cheap if you have good scores, good income/debt ratio and are putting down a decent downpayment.

[Alfisti]

Christ your banking system is a mess. With all due respect it's such a dog's breakfast, we have 5 banks here and 4 banks back home. Done. All secure, all huge and regulated with an iron fist.

Before you scream "that's communism" and a lack of competition, i am on 1.8% right now for our mortgage and 3.2% for a LOC, so they go at it pretty hard.

[///WORK-F36]

Originally Posted by BMW F22

So basically if you don't put 20% down you would end up paying way more due to higher interest/PMI/etc. Almost seems better to just wait and save for down payment.

Not at all....a .125% difference in rate is not that big of a change in payment at all.