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Xenosaga, Say What?, Huh?

*blinkieblink*

I... uhm. I got a call from Dan Crittenden, the mortgage guy, this morning.

I got approved.

First-stage only, there's still more to go through, but I got approved for a $450,000 mortgage. I have to put down $20,000, but that's way better than the $90,000 that Mike and Keith have been pushing for, and the payments are still lower, and I'm allowed to declare the $20,000 a gift -- meaning I can beg it off of mom from her inheritance, and it won't affect the approval. And the interest is 6.5% fixed.

I got approved.

...are these people INSANE?! o.O;

Comments

As everyone else has said, don't rush. First-time buyers can get approved for mortgages with as little as 3% down. $20k is about 4.5% of $450k, so you'd actually be doing better than the minimum first time buyer.

However... the less you put down, the more likely the bank will make you take 'default insurance' on the mortgage. That's because they figure with such a large debt outstanding, the odds that someone will not be able to handle the payments later are higher - and that insurance is an additional monthly fee. If possible, it's better to make a larger down payment (even if you buy a less expensive house) and then that money goes towards paying off the mortgage, not a hedge against default.

Finally, now is a good time to get that fixed rate while the rates are low, but interest rate isn't everything. Find out what your options for faster repayment are - some banks have a cap on how fast you can pay off the mortgage (double payments plus 10% per year, for example). If you think your ship will come in a few years down the road, pay attention to those terms.

Again, don't rush. Find what you're happy with, and please avoid overcommitting - ultimately the decision about what you can afford is one you have to make, not the bank.
What sie said.

Also, if they want you to get mortgage insurance, just say no. If you've got good credit (and it certainly sounds like you do), you can get around the mortgage insurance by getting two mortgages at once. That's what we did five years ago, and it should still be possible today. The second one will have a higher interest rate, but unlike mortgage insurance, when it's no longer necessary, it'll go away automatically.

$450k sounds like an awful lot of money, especially for a house you're not thrilled at the possibility of owning.
What sie said.

Also, if they want you to get mortgage insurance, just say no. If you've got good credit (and it certainly sounds like you do), you can get around the mortgage insurance by getting two mortgages at once. That's what we did five years ago, and it should still be possible today. The second one will have a higher interest rate, but unlike mortgage insurance, when it's no longer necessary, it'll go away automatically.

$450k sounds like an awful lot of money, especially for a house you're not thrilled at the possibility of owning.