Here's something pretty ironic

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MemberSince99
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Here's something pretty ironic

Postby MemberSince99 » Sat Jan 11, 2014 6:21 pm

I was looking at books on mortgages and home buying on Amazon to get on my Kindle. And in the list of other books was stuff about credit. I'm thinking there really is no magic to this stuff that's legal - you either do it right or you don't.


Anyway, one of the books was written by a debt collector, who ironically had bad credit himself. I thought isn't that ironic he's calling people hounding them to pay their debts and probably has other bill collectors doing the same thing to him? I just can't get my head around that one but it seems fairly common.


JoDa
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Postby JoDa » Sun Jan 12, 2014 2:51 am

"Debt collector" doesn't strike me as a particularly high-paying job. I think my being nicer than them (despite often dealing with irate "customers") is that I get paid well for what I do.

I've been lucky to only deal with them a few times, and always on mistakes (I paid a bill but something got screwed in the system). Man are they the most miserable people. They've always been practically screaming at me as I try to find out the creditor and amount, so I can figure out who to contact with proof of payment. And once I finally get that info out of them and say "okay, I'll send my proof of payment to that company" they almost always call right back and insist I didn't pay the bill and need to pay them NOW.

Good luck on buying a home. Expect to file LOTS of paperwork. Pack your patience. I've done 3 mortgages over the last 4 years (2 purchases and one refi) and the paperwork just keeps getting more onerous. Be sure to shop around *quickly* but extensively. Even with excellent credit and the ability to qualify for a conventional loan on my refi, offers and fees varied WILDLY. On the same loan terms, rates varied as much as a point and fees ranged from a few hundred dollars into the thousands. Making a spreadsheet will help you keep everything straight. Do the math on higher fees/lower rates. If you can pay off the extra fee quickly in interest savings, it works out, but keep your down payment in mind since you're buying. The fee vs. rate for me was a payoff of the extra fee in only 10 months of interest savings. WORTH IT.

There are essentially 4 groups of buyers:
*FHA: Less than 10% down, though possible for up to 19% down. Keep in mind it's hard (nigh impossible) to get out of the insurance premium without paying for a refinance. YOU CANNOT APPRAISE OUT OF AN FHA PREMIUM WITHOUT REFIING TO CONVENTIONAL, you have to pay it until your principal is less than 78% of the original purchase price. We're seeing the lowest interest rates in history right now which may make refinancing unattractive a few years down the road. ONE BONUS OF AN FHA, ESPECIALLY IF YOU PLAN TO SELL AGAIN WITHIN A FEW YEARS: you can transfer the loan to the new owner, terms intact. So, if rates go up to 8%, they can get the loan for however much you owe at 4.5%. Might be attractive as a selling point in this environment.
*Low down payment: At least 10%, but less than 20%, down. You may be able to do a conventional or piggy back with PMI for a loan like that. BONUS: the PMI goes away as soon as you hit 80% LTV. You can possibly do that on just an appraisal if your home value goes up. Just ask the banks. NEGATIVES: PMI is often more than FHA, they aren't keen on giving these loans to first-time buyers, the loan is generally not transferrable. If I was doing this, I'd do a piggy back with PMI only on the second loan, and make extra payments on the second loan to eliminate it ASAP.
*Conventional: 20-24% down. You'll get excellent rates and terms and you won't have to pay PMI. You pretty much run the show if this is you.
*Super-conventional: 25%+ down. You'll actually get even better rates for being at or below 75% LTV. Banks will fight over you. Since this was me on refi, expect your phone to ring off the hook and treat every potential lender as a used car salesman...skeezy, conniving, and selling you a bill of goods that you can always improve on.

There's also VA, which is a great option if you're a vet and, if you are, put 0% down and bask in your fee-free glory. If not, you're SOL on that little gem.

Looking at your sig, I'd try to do anything I could to get all those scores above 760. You'll still get excellent offers with what you've got, but if you can squeak just those few extra points, that will really put you in the driver's seat. Also, don't let the bank tell you what you can afford. I *just* spoke to a friend the other day who was pre-approved for a $450K mortgage on only a $75K annual income, with a 10% down payment (PMI involved). I asked her if she had any idea what kind of payment that would entail, and she said "well, the bank says I can afford it." B-F'IN-S. She'd be begging for mercy within 6 months. Use a mortgage calculator to figure out what PITI you're comfortable with AND DON'T BUY MORE THAN THAT. Don't forget condo fees if you're buying a condo (and if you buy in a new condo building, remember that the fee advertised is a "teaser" fee from the developer, and your fee will go up 50-100% within 5 years), and REMEMBER, no matter who tells you otherwise, you WILL spend about 1% of your home's value on repairs and improvements a year. Maybe you won't one year, but the next year, you will need new appliances or something will spring a leak and suddenly you've spent more than you banked on.

I'm pro-Realtor, especially for first-time buyers, but not everyone is. Theoretically, you can buy a property just using a low-flat-fee real estate attorney. This highly depends on your market and your comfort level. Here in DC, I'd use a Realtor unless I was buying from a friend. But, here, properties sell for at or above list in DAYS and bidding wars are common (for example, a house just around the corner from me was under contract for above list before I even saw the listing just last month...*4* days officially on the market!). I ain't got time to be constantly filing new offers or searching databases and setting up showings every. single. day. (possibly multiple times a day), and I don't have access to the official MLS to see listings as soon as they hit the bricks, so I'd prefer to pay someone to do it (technically, the seller pays them, just in case you didn't know that...they get a flat percent of the sale price). But in a softer market I'd consider giving it a go alone. If you decide to go Realtor, shop around and grill them. My Realtor does not require an exclusivity contract until I put an offer in on a property, and even then, it's only for *that* property. As such, I'm wary of Realtors that want exclusivity up front. WHATEVER YOU DO, do NOT just use the selling Realtor. They're NOT primarily concerned with your well-being.
CSP $19K
BOA $4K
UMP $11.5K
Target Visa $1.5K

MemberSince99
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Postby MemberSince99 » Sun Jan 12, 2014 6:09 am

Thanks for the info JoDa it's very helpful.


And those scores are old, the most current is at the bottom. I haven't wanted to give MyFICO more money. But I would bet a decent amount of money they are all well above 760 since Barclays says my current TU FICO is 799.

JoDa
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Postby JoDa » Mon Jan 13, 2014 3:34 am

I feel like I should explain the "don't use the selling Realtor" bit. Remember where I said the agent gets a percentage of the sale price? Yeah, so if the Realtor is repping both the buyer and the seller, the seller is the one paying them, and both the seller and the agent want the highest price possible. Plus they're going to have a harder time negotiating repairs, improvements, and concessions throughout the closing process. Personally, I think it should be illegal for even the same brokerage to represent both the buyer and seller (in some places it is illegal for the same *agent*), but the RE lobby is pretty powerful just about everywhere, and I suppose that could cause issues in small towns without many available brokerages. Some buyer's agents aren't much better on bargaining, again, because they get a percentage, but a good one will want to earn your business long-term. Heck, my agent isn't technically DOING general RE anymore (she's working as a seller's agent for a single large developer...one that has, like, 10 projects going on in the Metro, so she's not going to be out of a job there anytime soon), but has told me and a few other long-term clients that as long as we'll have her, she'll do any sales or purchases we want. And I'll use her because she's always bargained hard on my behalf and made my life as easy as possible, through some fairly onerous sales (we had to wait a bit for full FHA approval on my personal property because not enough units had gone under contract (in this case, the early bird gets to twiddle her thumbs until a few more offers come in), and my investment is a foreclosure, which are never fun...you'd think the banks didn't *really* want to sell them).
CSP $19K
BOA $4K
UMP $11.5K
Target Visa $1.5K

JoDa
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Postby JoDa » Mon Jan 13, 2014 4:00 am

Also, I'd consider forking over a one-time fee to myFICO about 2 months before you go to get pre-approved (I did say get pre-approved, right?). I, personally, feel it would be $20 well-spent to make sure nothing needs fixed before you make such a major purchase. When I first inquired about my refi, the banks gave me the rates and fees for someone with scores between 740 and 759 (I told them I was above 760, but I felt like they kept those offers super-secret until they knew you qualified), and they were substantially different from the ultimate rates for being above 760. I think I saved about $700 in fees and .25% in interest (nothing to sneeze at on a large amount of money) for crossing the 760 threshold.
CSP $19K
BOA $4K
UMP $11.5K
Target Visa $1.5K

takeshi
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Postby takeshi » Mon Jan 13, 2014 9:07 am

MemberSince99 wrote:I was looking at books on mortgages and home buying on Amazon to get on my Kindle. And in the list of other books was stuff about credit. I'm thinking there really is no magic to this stuff that's legal - you either do it right or you don't.

Books aren't just about "magic" topics. There are a lot of mundane topics that are useful to people who aren't familiar with the subject matter. We all learn one way or another and some prefer relying on books. Just because one topic is obvious to one person doesn't mean that it is to the next person. Credit wasn't obvious to me. I had to learn through trial and error. It wasn't until 2013 that I finally bothered to read up on it myself.

MemberSince99 wrote:I thought isn't that ironic he's calling people hounding them to pay their debts and probably has other bill collectors doing the same thing to him?

Considering the job, I wouldn't find it surprising. It's not like being a financial advisor.

flan
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Postby flan » Mon Jan 13, 2014 10:28 pm

MemberSince99 wrote:Anyway, one of the books was written by a debt collector, who ironically had bad credit himself. I thought isn't that ironic he's calling people hounding them to pay their debts and probably has other bill collectors doing the same thing to him? I just can't get my head around that one but it seems fairly common.


Friend of mine worked for a fairly big debt collecting firm for about a year. Started as a phone agent, became a ranking supervisor pretty quick. They paid crap wages, and got crap employees. They had better than 500% annual turnover. The typical person they hired only passed the drug test because it was a condition of their probation, and 50% failed the second required test (at 30 days, maybe 60). I'm sure lots of them were on the list of people they were supposed to call.

Since the job largely consists of calling people and telling them they're going to hell if they don't pay the debt collector instead of buying groceries, not much in the way of actual qualification is required.



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