First time loan recommendations? - Nashville, TN

4 Replies

Hey there! I need help!

I'm a first time buyer (Nashville, TN) looking at financing and wanted to get some unbiased input! I've got about 12k in reserves, good credit, and a steady job. I'm getting ready to do my first deal and I was hoping someone could recommend some good numbers to look for in a first time loan? (please excuse any ignorance :)) I'm hoping to do an FHA (3.5% down) possibly with a 203k if it needs repairs. I will be living in the property at least for the first year.

These are the rough numbers I am expecting right now :

Loan amount: 180k

Down payment: 3.5%

Interest rate: 3.734%

type: 30 year fixed

PMI: 1,702/year ( .9%)

Some questions I have: 

- Is this a good loan for a first time investment property?

- What do I do if my lender comes back and says the best they can do is a much higher interest rate? 

- Will it hurt me (credit, reputation) to "shop" different banks and lenders?

- Is there anything I can do to not be "tied" to the PMI?

- Should I let the lender provide the Home Owners Insurance, or should I seek out a policy myself, or does it not matter?

I don't want to be impossible with my expectations but I also don't want to sign onto a bad loan. Sometimes I feel like loan officers can't really offer truly "unbiased" advice. hmmm . I'm going to be doing a couple of meetings soon and just wanted to come prepared:)

Any input is appreciated SO much!

Many thanks,

Sam

That loan looks good. Sometimes you can buy out the PMI so its not there forever.

It will not hurt your credit to shop around. You should definitely shop with at least 3 different mortgages people.  2 mortgage brokers and local bank. 

Seek out your own homeowners insurance and review it every year. 

Peter MacKercher, Real Estate Agent in MO (#2010004223)
(314) 210-4414

So, there's a lot of info there, but there's also a lot missing. First of all, unless I'm mistaken, you can't use an FHA loan for an investment property unless you're planning to owner-occupy. Secondly, FHA loans don't have conventional PMI; they have instead MIP, which is paid in some combination of upfront points and potentially some extra monthly expenses.

You can do a lot of reading about the different loan types, advantages, and disadvantages here and elsewhere. I just read a good summary of them in Brandon's book on investing with low or no money down (available here on the site). 

If you're planning to owner-occupy, FHA is probably a good way to go, but realize that not all properties qualify for an FHA loan, so you're limiting yourself. You can also go 5% down on a conventional loan if you owner-occupy, and you'll have ten times more properties to choose from (this is what I did on the place I closed on two weeks ago).

If you're  NOT planning to owner-occupy, you're gonna want to get really creative, because you don't have the reserves to buy anything but a 40k house (in good condition). So you'll need a partner, seller-financing, or something unconventional.

Lenders will definitely quote you different rates: it's worth shopping around. They should be able to tell you what rate you'd qualify for if you know your credit scores and 1099/W2 income (which means they won't have to pull your credit to tell you, which means it shouldn't hurt you). Some lenders loan their own money and some sell the loans to giant companies like Chase, which somewhat limits what they're able to tweak on the loan. I've used Movement Mortgage in Nashville recently, and they were excellent. PM me and I'll give you the contact info for the guy over there I used. He knew his stuff, closed quickly, and saved me some cash on the mortgage payment and on closing.

Insurance: call a few brokers and tell them what you're doing and get them to give you a quote. I have a great State Farm agent in Nashville, but on this latest property Safeco quoted half what he did for the same coverage, so I went with them.

Originally posted by @Peter MacKercher :

That loan looks good. Sometimes you can buy out the PMI so its not there forever.

It will not hurt your credit to shop around. You should definitely shop with at least 3 different mortgages people.  2 mortgage brokers and local bank. 

Seek out your own homeowners insurance and review it every year. 

 Thanks Peter! I'll probably be doing a little more shopping then.  Appreciate the input

-Sam

@JT Spangler  

Thanks! You're right. There is a lot missing and I guess it may be one of those things where speculating is only going to get me so far.. I'm sure my views will change once I start sitting down with brokers and look at the numbers. I knew there were going to be some limitations on the FHA, but didn't really know how much. I also did not know about the MIP. From the sound of it, it may be better just to save a little more and go for the 5% down, owner occupied scenario. Glad to hear you've found a good lender here in Nashville. I will be checking them out. Thanks for the info !

-Sam

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