I have the 20% downpayment and good credit. This will be my first home purchase. What banks would you all recommend for getting the best rates? Does it make sense to take a 401k loan when I can manage the downpayment through other sources? Thanks! Update: after shopping around with 4-5 banks, 7/1 - 2.85-3.25%, 10/1 - 3-3.4%, fixed -3.4-3.8%. All 30 year term with 0 points. Some have credits towards closing.
How much money are you looking to borrow and what part of the country are you looking to buy a home? Weird thing about the market right now is that some larger loans are getting better rates than smaller ones. I can explain more with the other questions answered.
I am looking for a 700-800k mortgage in CA. Thanks!
Got it. The best rates I’ve seen have been from BofA. You don’t get any better rates after you reach 15% equity. But the loan needs to be non-conforming, so over $760K to qualify for the lowest rates, around 3.8% for 30 year fixed. Conforming loans go through Freddie and Fannie and end up closer to 4.1% since banks have to sell those loans back to the gov’t. Banks will write big loans to generate the income as well as sell you ancillary services (checking, saving, etc).
Check out Zillow mortgage and bankrate. They do the comparisons for you. If you have the down payment don't take 401k loan because of the double taxation on the interest that you're paying.
Keep in mind, even after 20% down, you need to show cash reserves for at least 6-9 months (bank/vested stocks/401k, shouldn’t be gifted from family or friends)
401k loan won’t count as debt which helps you get a higher mortgage/lower down payment. Only downside is if your plan’s documents state that you have to pay back within 60 days of leaving the company. Many big tech companies have plans that let you pay back to term after you leave the company giving it virtually no downside .. hope this helps bud
Double taxation
.. of the interest. Big deal.
Credit unions will usually have the best rates.
All of the above. Also find out if you qualify for any first time home buyer credits
How do you that?
Ask
Thank you all!
Update: after shopping around with 4-5 banks, 7/1 - 2.85-3.25%, 10/1 - 3-3.4%, fixed -3.4-3.8%. All 30 year term with 0 points. Some have credits towards closing.
What's ur credit score like? Which bank is it. Sounds like a really good deal. I got 10/1 3.875 6 months ago
Mortgage rates have dropped in the last 3-4 months
newbie here what is 7/1 and 10/1? and what is 0 points? what's the downside/upside of not going fixed rate?
5/1 7/1 10/1 are ARM -adjustable rate mortgages - look it up. They will offer lower interest rates for the first 5/7/10 years and interest is determined based on market rate every year after that. This will be lower than fixed rate. You can refinance to fixed if you feel interest rates have tanked. There maybe refinancing fees that you need to consider before refinancing.
thank you! this is helpful
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You can call banks and ask what their current rates are and compare that way. You can also seek out a mortgage broker that can shop around and help guide you through the process. I wouldn't touch your 401k if possible, as that is long term earnings that you will be missing out on. You'll also either need to pay that back quickly or take a tax hit if you opt not to.