Question: After years of living in various aptartments, relative’s houses and : even a trailer, my husband and I are ready to buy our first real : house.
: I would like to know everyone’s opinion on what kind of loan to get, : where to get it and stuff like that.
: My husband was thinking of getting an FHA loan. Does anyone have any : experience with those, good or bad?
: Thanks a lot.
Answer: An FHA loan might save you around a 0.5% interest. Is it worth it to you to spend the next 15 or 30 years on welfare? I am confident that with some shopping for a loan and a house, you can find something that works for you within the private sector.
Generally, shop for the loan before you shop for the house. Get prequalified and lock in a specific interest rate for up to x dollars. Expect to pay between 8-9%. Get savvy about closing costs, some of which are unavoidable, others are hidden ways to bump up the real cost of the loan. You might get a better rate with a 15 or 20 year rather than 30 year loan, which is a more frugal option anyway, depending on your estimate of the time value of money. Start with your own bank, but also shop around. Talk to loan brokers, but be aware that thier fees may more than make up for the lower rate they offer you.. be sure you are comparing apples with apples. Once you have what seems to be your best deal, get them to put it in writing and make sure it covers everything. Then, you can go back to the second and third best deals and negotiate. Everything is negotiable. Consider getting a buyer’s agent to help you buy the house at the best price. Practice house shopping by making some ridiculously low bids on houses you find acceptable.. one of these could be accepted. Make purchase contracts contingent on a professional inspection and appraisal.
Oh, a final word about FHA (and VA): while i don’t recommend getting an FHA loan, there are some pretty good deals available on FHA and VA repos, as long as you find one that hasnt been too trashed. Again a buyer’s agent can be very helpful here.
Robbin Stewart, the frugal attorney
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