mortage advice for clueless first time buyer

this is all really so helpful, thank you so much. I have been researching these FHA loans, specifically the 203k. williamsbugguy-are you pointing out that with this type of loan (or any FHA loan) you can expect to have to pay 9% out of pocket as opposed to the traditional 20%? There is a big difference between 3% and 9%-thanks for pointing that out. But it is still significantly less than 20% plus closing costs. What are the other potential drawbacks? Besides the lengthy process and oversight which has already been mentioned in this thread. One thing I have heard people talk about in reference to paying less than 20% down is that then you are carrying mortgage insurace and paying mortgage insurance premiums. Is this always the case with FHA loans?

thanks!

Posted by: ems at November 12, 2008 12:17 PM in response to mortage advice for clueless first time buyer

Thanks. All of this is really helpful feedback.

6:11-our contractor told us the same, that $150 psft was pretty standard and depending on finishes we could expect $150-$300 psft. It is good to have some confirmation that this is conventional wisdom because it seemed surprising to me. (or just not what I wanted to hear considering the place is about 3000sqft).

A 203k had been suggested to me. What happens if you want/need to do repairs that are not allowed under the terms of that loan? Does anyone have experience with this process?

Thanks again for all the advice!

Posted by: ems at November 11, 2008 12:55 PM in response to mortage advice for clueless first time buyer

You would need to pay for those repairs out of pocket.
I would speak with a 203k lender, Prob Wells Fargo. I really don't do them often and they take a long time to process (doesn't make financial sense for me.)
Wells Fargo has a lot of experience in these types of loans. Make sure that the loan officer that you speak with has done them before. Hope that helps.

-AD

Posted by: Adam Dahill at November 11, 2008 1:24 PM in response to mortage advice for clueless first time buyer

FHA loans can also be misleading - 3% down, but you end up with about another 6% in closing costs that you used to be (a lot of times anyway) able to get an appraiser to "work into the appraisal price," but now appraisals are being very VERY closely monitored by the government banking regulators so we are seeing nearly all FHA loans having to actually pay that roughly 6% out of their pockets, plus the 3% down. I guess that's still cheaper than 20% down plus a cheaper closing, but still not exactly the 3% they lead you to believe. One potential benefit in FHA over a conventional loan though is that those closing costs can be in the form of a "gift" from friends or family whereas conventional loans look at your own income and reserves to see if you have enough to close and no gifts are generally allowed.

Posted by: williamsburgguy at November 11, 2008 11:31 PM in response to mortage advice for clueless first time buyer

this is all really so helpful, thank you so much. I have been researching these FHA loans, specifically the 203k. williamsbugguy-are you pointing out that with this type of loan (or any FHA loan) you can expect to have to pay 9% out of pocket as opposed to the traditional 20%? There is a big difference between 3% and 9%-thanks for pointing that out. But it is still significantly less than 20% plus closing costs. What are the other potential drawbacks? Besides the lengthy process and oversight which has already been mentioned in this thread. One thing I have heard people talk about in reference to paying less than 20% down is that then you are carrying mortgage insurace and paying mortgage insurance premiums. Is this always the case with FHA loans?

thanks!

Posted by: ems at November 12, 2008 12:17 PM in response to mortage advice for clueless first time buyer