FHA and Convential loans

Discussion in 'Random Ramblings' started by EweSheep, Jan 24, 2010.

  1. EweSheep

    EweSheep Flock Mistress

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    Land of Lincoln
    Which is better?

    Our real estate agent told me it would be better if we go FHA because of lower down payment than convential. Sure we love to pay the 3% down pay but it is really a good idea? I tried looking at Clark Howard's site for some information and it didn't say much.

    So which is the difference?

    Our house is on a convential loan for 30 years, been living in it for almost six years. I found a nice half acre house outside of town that we want to move in but we have not put our house up on the market yet. I have to get a pre approval loan from the bank tomorrow and see if we can really afford it.

    Despite of the news that most people should not relocate when th ehousing market is bad. There has not been any change in my disablility payments and hubby's salary is not losing that much more despite of the hours increase or decrease weekly but it comes out pretty much even. Our mortage rates were 6.5 on our house and right now our bank offering 5.375% interest rates.

    How much lower can the seller go? This house we found was on the market for $59,900 and it is 880 sq ft house, yes it is twice smaller than our house but very good location and very good schools for DD and can have my chickens there even the neighbors are in close approximately but plenty of trees out back and front yard is the park of a little over 2000 acres.

    As for our house, we would need at least $10,000 for closing costs, taxes, agent fees, etc. If we can pay off what we owe, I think we can come out ahead but the problem is the down payment and additional fees needed to complete the close date. We both are not first time home buyers so any "first home buyers" grants we will not qualify. However we would like to have some "assistance" in down pay or some type of grant that you must live in the home for five years or we must pay it back if we move out before the fifth year is up.

    Your inputs please!
     
  2. chuckzoo

    chuckzoo Chillin' With My Peeps

    Apr 20, 2009
    Tuscaloosa, Alabama
    Go to your mortage lender and ask them to a mock up of both loans - FHA and Conventional, its called a good Faith Estimate (GFE)

    If you have been living in your house for 6 years you may qualify for a $6,500 tax credit when purchasing another property, this does not have to be paid back like in 2008. You have to have owned your home for at least three years to qualify, also there are income limits. To see if you qualify do a search for TAX CREDITS and go to the gov site for accurate information.

    Why do you not ask the seller to pay part of the closing costs?

    What agent fees? The only ones you should have to pay is if you list your house.

    First contact your lender and see if you can affaord the house.

    Then get a realtor and tell them you are interested in selling your house and buying another and on that basis would like to negiotate their commission, since they would be getting both, commission from you and from the seller, assuming he has an agent.

    I'm a Realtor in Alabama - you need to get a local realtor who knows your market.[​IMG]
     
  3. EweSheep

    EweSheep Flock Mistress

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    I can ask them to do a mock up of both loans and see which one would be feastible for both of us. The good thing about the house is that it does not need any major repairs like our present house needs (we bit off more than we can chew and it is just too much work for us).

    We have a realtor that is a long time friend of my family which she does a good job in town of Decatur and she would give us a rough $$$$ in what we are expected to pay. We owe the bank $39,800 and with the closing costs we paid out of pocket was $1200 and got the "first time home buyer" grant frm the bank for $5,000 which in contract we must stay in the house for five years. We fufilled that five year obligation and we renovated the kitchen and bathroom four and five years ago. Walls needed to be painted, ceilings needs to be patched up (trying to find the leak and it was the dormers and gutterings) put on a new roof four years ago. Needs a new furnance to be effiecent and new water heater to be effiecent but both work very well for their ages. Every year for our income tax returns, we spent money renovating the house and this time, enough is enough. It is a money pit and it is up to someone else to finish the work. Realtor told me we can sell the house "as is" because foreclosure houses are selling right now in the $40-50,000 range in our area. I know we will have to go down somewhat but I do not want to pay out more than we need to. We bought the house $48,000 and it needed to be updated and modernized. Now with new plumbing and electrical, we have come a long ways. Realtor wanted to put the house on the market for $49,900......what is the deal with those 9's??????? It was a rental house for YEARS.

    Too much house, too much work needed, I am ready to sell it as is. Lovely house it has potential to the right buyer.
     
  4. EweSheep

    EweSheep Flock Mistress

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    Seller is paying the closing costs. And the seller does have an agent....we have different agents.

    Realtor only get her fees when she sells the house. Her fee would be around $3,000.

    If I was to sell the house, I would be expected to pay for the selling costs, probably somewhere between 1200 to 1500.
     
  5. chuckzoo

    chuckzoo Chillin' With My Peeps

    Apr 20, 2009
    Tuscaloosa, Alabama
    There is not much of a difference between your selling costs and what you would pay a realtor to do it for you, ~1500. I would definately go with a realtor not because I am one, but because it makes the most sense. Your realtor will put your property in their multiple listing service which opens it up for all the realtors in your town to sell, a great benefit to you. When a realtor does this and another realtor sells the property they have to pay the other realty co a commision, usually half on the total commision, even though they bear the cost of marketing and advertising your home.

    If the home needs repairs as you say and you have had enough of repairs your only other option is to sell "as is", however you will get less for your property and it may take a bit longer to sell. Many buyers simply do not have the time and the means to do repairs. Do speak to your realtor or morgage lender to see if there is any way to be able to get repairs added into the contract and thus get them financed for the new buyer.

    If your market is depressed and there are a lot of foreclosures in the market the seller may take less for his property, once again your realtor should know. Always write your offer for less without insulting the seller (going too low), and the seller can counter your offer, unless it is a hot property and there are multiple offers on the table.
     
  6. Livinzoo

    Livinzoo Chillin' With My Peeps

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    Also look into a Rural development loan. It is 0% down and a good interest rate. It is what we are trying to get. If our broker will ever get off her arse and send the loan to underwriting. She has had the final contract for 3 weeks already and might have just sent it [​IMG]
     
  7. sfw2

    sfw2 Global Menace

    Good advice from chuckzoo. It's very important that you work with a real estate agent who is familiar with your neighborhood.

    I work in the mortgage business. I'm not a loan officer, but I've worked in most phases of the process over the past 20+ years. I agree that you need to go into a deal knowing EXACTLY how much mortgage you're qualified for. If you already have loan approval, it's going to make your offer much more attractive to the property seller, and you'll have a better upfront idea of the actual cost to you.

    Feel free to PM me if you have mortgage questions. Good luck!
     
  8. EweSheep

    EweSheep Flock Mistress

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    Land of Lincoln
    I thought the FHA was much more stricter, they would really do their job of inspecting the property. We are aware the house would be on the market for a little bit longer if we decided to go "as is" sale. We can do some fresh paints on walls, patch up the ceilings, make the main floor more presentable and it would not look as bad as the rest of the house. The upstairs do not need anything except for the trim on the dormer and the walls repaired when we had to find the source of leaks. So it is not that big of a job but it takes time and money to get it up and going. As the realtor said, it is a beautiful house but someone needs to finish it where we have started. she did tell me I need to do it soon because spring is not very far off and people are going out and start looking for houses.

    And some of the junk that we have not used, we will take it to Freecycle and Salvation Army. Same for our clothes LOL! Making the closets less cluttered and looks like a lot of room in it. I just cleaned out my DD's closet and realized wow, all those clothes I kept thinking she would need it and now she can not fit in them.

    Here is the house for sale:
    [​IMG]
    The kitchen:
    [​IMG]

    Have to download more pics once I do find the plug to camera.
     
  9. chuckzoo

    chuckzoo Chillin' With My Peeps

    Apr 20, 2009
    Tuscaloosa, Alabama
    Quote:Yes good advice - also called a USDA -US dept agriculture loan. It should only take 2 weeks from the time of receipt of a formal contract to get the title work, appraisal etc done for you to have a closing date. Have you had a home inspection and wood infestation report done? These are two things that you could use as bargaining tools to drive the price down if they find anything of concern.
     
  10. chuckzoo

    chuckzoo Chillin' With My Peeps

    Apr 20, 2009
    Tuscaloosa, Alabama
    Cute as a botton!

    Remove everything from your counter tops - Have a basket for what you need, use it then put it back! Take down all personal pictures - these are a distraction to buyers.

    Do not have any personal effects in your bathroom - buyers want to picture themselves in your home and looking at your tooth brush will not do that for them.

    Clean out closets, extra furniture etc. this is a time to purge and start a fresh in your new home.

    Plant some flowers at your front door, replace the door mat, put down a veneer of fresh mulch.

    You have exactly 30 seconds from the time propective buyers see your house to make a good impression - then they will come inside!

    About the 900s question is is a pshycological response to numbers, well researched, we respond better to 39,900 that we do to 40,000!
     

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