Just put in my first application on a Mortgage

quote:

---

You need to save more money for a down payment. Rethink your approach

---

Ok so I was approved up to $200,000. I’m strongly considering buying a 120,000 townhome and rent a room or two out to friends

You should probably be happy with that percentage with how loans are starting to go up and a issue with your credit

quote:

---

Same here, went to a local lender and they tried giving 5.25%, went to chase and got 4.75 and substantially less closing costs.

---

Good to know. Will look into Chase

I have a 808 credit score and am putting 20% down and just got two 4.625% rates. I think your 5.25% is low based upon your numbers

Look into first time home owners programs from the government. I put $0 down and received grant money for closing cost when I bought my first house. Rates were below 5%. But this was 2005.

My monthly note was less than the rent I was paying on a town home.

quote:

---

I was thinking interest rates were going somewhere in the mid 4s these days

---

Actually, when the FED increases interest rates, people borrowing money pay more and savers earn more. With that in mind a FICO score of anything below 700 and a down payment of only 5% (shoot for 20%), rates below 5% will be difficult; however, not impossible. "Shopping around" is always a must. In my opinion, you may be able to achieve a 4.7% with a little bit of luck. I know you didn't ask but if I were you, I would not rush into a mortgage. I would wait 2 years, improve my credit and save 20% down ( not taken out of your 3-6 month Emergency fund). If you achieved this, lenders would crawl to you with very favorable rates. If your income does not allow you to save 20% in two years, or 15% in your case, then maybe just save another 5%. It really will make a world of difference.

quote:

---

And to give a little perspective I am late twenties single male and make about 65k a year. My only other debts are about 6k in student loans in which I pay $110/month and a car note that is $190/month with about 14 months left on

---

No reason to rush into a bad rate in your situation. Save more money, keep your emergency fund 3-6 months and wait until your car is payed off (14 months). After 14 months, you will have a whole lot better of a deal.

quote:

---

Fasb

---

I really appreciate all of your input it definitely helped put things into perspective for me. I believe part of it has to do with projected interest rates in the next couple years like the jack arse who posted after you alluded to.

My concern is that if I don’t take the mortgage out now with my very average loan offer and wait two years to build better credit and more down payment it may end up hurting me in the long run if interest rates get up 6-7% like projected

You can find better than 5.25% with an FHA right now. Should be getting betweeen 4.75-4.875 with a good lender today. I would not put Citi in that category. 5% down instead of 3.5% percent down will get you a slightly better FHA mortgage insurance rate too if you are able to put that extra 1.5% down.

I think some posters are overthinking this situation. The town-home sounds like an excellent option if you're serious about renting out some rooms. You will likely be living rent free or damn near it. Fractional differences of the rate on a note that size won't make or break the fundamentals of your plan. Start the house hack and you will be in a much better position in 5 years.

Make sure your friends are the type to respect your house.