[–] Le_Squish 0 points 2 points (+2|-0) ago 

Totes gave good advice but I want to emphasize leaving within your means.

Buy a house you can afford. Budget on your worse case income. The bank will fill your head with all sorts of dreams of fancy house and worthless amenities. Ignore it and remain practical.

[–] totes_magotes 1 points 1 points (+2|-1) ago  (edited ago)

They generally want 2 years of tax forms (the ones you get in the mail, W2 I think) and two to four months of check stubs (depending on the bank).

Once you get the credit hit, get as many pre-approvals, etc you can in the next two weeks so you don't keep taking credit hits.

If they play with the numbers and can't offer what you were promised, drop them instantly. There is one form later in the start of the closing process that you will have to sign that the numbers WILL be wrong on. These are best guess numbers and for this form only, signing it means that you are acknowledging having received it, not that you agree with the numbers.

If they don't answer your questions, drop them.

If they want you to sign something without proper numbers (except that one form, I forget which it is), drop them.

If they can't get you the numbers they promised (even going so far as saying that there's something wrong with the computers), drop them.

You WANT a mortgage with an escrow so you don't have to worry about the tax payments, insurance, etc.

If you can, go for an FHA loan because the condition requirements are MUCH higher. The owner will be forced to repair things at their own costs. Additionally, the FHA process allows you to walk away at any point whereas traditional mortgage processes can potentially lock you in with penalties for walking away. The downside is that the FHA PMI never goes away now.

Do not go with the inspector the bank recommends or wants to hire. Hire your own after doing some research. Inspectors will cost $500+ and will many times just look at things that they can see without snooping, flipping switches, etc. That said, if you buy the house and there's a problem that the inspector absolutely should have seen by something as simple as flipping a switch, hold them to the fire for repair costs OR get a refund on your inspection.

When you are in... shit, what's the term for it... due diligence? When you are in that time period, pay for an electrician to check the house, have it inspected for water damage, see if the basement leaks, and so on. If you can walk into that that house and make sure that something is or is not broken, this is the ONLY time you can do this and hold the owner's responsible for lies on the listing. Once you buy it and you haven't found it, it's too late.

Do NOT try to buy a house without $5000 saved in cash from a down payment. $10000 or 10% is better. Anything less and you'll get charged with a Private Mortgage Insurance (PMI) cost. It's just the bank saying "We're a little iffy on you walking in with so little cash and we see that as a risk. Slide us some more money and we'll loan to you. You know, in case you default."

And finally, pro tip: When you move out, do not put a mail forward to your new address. Get a PO box and forward to that. Anyone with your old address can get your new one if you leave a forwarding address. Getting that PO box is a way to eliminate a lot of junk mail, debt collectors (legit or not), stupid catalogs, and throw off people who data mine that shit.

Edit: when they ask for your bank statements, ask them explicitly what needs to be on it. An account number? Date? Bank address? Bank staff signature? Otherwise you'll be sending it two or three times.

Edit edit: the pre-approval amount is what they'll loan to you, not what you can necessarily afford.

[–] daskapitalist 0 points 1 points (+1|-0) ago 

FHA is a bad idea. You effectively have to pay PMI for the life of the loan.

[–] totes_magotes 0 points 0 points (+0|-0) ago 

Once you build enough equity, you can do a refinance. The FHA is designed to get you into the house with the least amount of fuss. It's more expensive in that you have another set of closing costs but if you're in a rush or maybe you're moving into a house with a mortgage cheaper than your rent (or any number of other situations), you can make it work and make financial sense.

[–] mynewaccountagain 1 points 1 points (+2|-1) ago 

PMI is for anything less than 20% and it's not forever...

$5000 saved, hahaha you'll pay that much in closing costs.

[–] totes_magotes 1 points 0 points (+1|-1) ago 

PMI for an FHA no longer goes away.

http://mynorthwest.com/8808/fha-no-longer-will-drop-mortgage-insurance-premiums/?

FHA covers closing costs.

[–] Opieswife 0 points 0 points (+0|-0) ago 

All great advice especially about the difference between the pre approved amount and what you can afford.

[–] ColdSteam 3 points -3 points (+0|-3) ago 

Some mortgage companies will only need 3 months of steady income but most will ask for 6. They will ask for 2 years of tax returns, but don't worry about that.

Also, use a reputable local mortgage broker who is not tied to any single lender, or who represents a company that writes their own paper, then sells the mortgage after escrow closes. The first will shop your loan to several lenders and save you a bunch of hassle (and possibly money). The second will mean only one underwriter instead of a pre-shop process followed by a final selection process - that takes longer to actually close.