Refinance Mortgage

Be prepared for the buyer’s costs to be more than what you were originally told. It will make things less painful at signing.

There are just simply costs associated with moving into your own home that realtors don’t cover. Deposits to utilitiy companies, optional neighborhood fees and little things in the new house like light bulbs, extension cords, etc. These things may be little, but they can add up quick in those first few weeks.

Do not buy a home at your top qualifying amount. The realtor may tell you that you will be getting the most for your money. But guaranteed your insurance and taxes will go up, and within 2 yrs, your mortgage payment may grow by $200+ Find a home that fits your needs, has potential over time and you can committ financially to for at least 3 yrs. Don’t get your head filled with illusions of marble countertops, patios and breakfast nooks. Step back and look at your checklist.
Good luck and communicate with your realtor…

I am buying my first home with an FHA loan. The mortgage company I am using doesn’t do a 203K loan and I would like to use money to improve the house. I was approved for $40,000 more than purchase price and only want $20K max. My credit is not perfect… I’m trying to find out the chances of being able to get a home equity loan with a first mortgage. The house is valued $277K and the loan will be for $229000. Any help would be great!

A $229,000 mortgage on a $277,000 property is an 82% loan-to-value (LTV) ratio. So, you have some wiggle room in obtaining a second (these usually max out at 90% LTV).

My first question would be where is the other $48,000 coming from for the purchase? If it’s cash, then you will have no problem getting a home equity loan for about $20,000 with your remaining equity (up to the 90% LTV). If you came up with the $48,000 with a second mortgage, you’re already at 100% LTV and, particularly with blemished credit, I doubt you’ll be able to get the additional funds.

The fact that you were approved for $40K over the purchase price means nothing. A bank is only going to lend up to the value of the house and, in today’s mortgage industry situation, I would be surprised if anyone were willing to go over 90% LTV.