New Digs

Scared shitless is how I would describe the thought of me getting a second property, but that is precisely what I did. The process of buying a home from a seller is a bit of a pain in the ass. My first home is a condo that I bought brand new, while in construction. That process was painless. No negotiating, no waiting, no "highest and best offer". Then again, it was also much, much simpler to get a loan back then.

And that is where I am currently at in the process. My paranoia is running high, as I read articles online describing the difficulty of getting a loan. Because I have a first home, the loan officer calculated my debt to income ration using a full payment, and not having to rent it out. I've been fortunate over the last several years as well as have been without a car payment, so my credit score is high, my debit is low, and I will hopefully have an FHA loan in the next month. But I had to make sure that being self employed + having a second home + the current loan environment wasn't going to harm me and it doesn't seem it will.

Speaking of FHA, it is absolutely awesome that I qualify for it. Obviously this isn't my first home, but unbeknownst to me, my first home was purchased with a conventional loan and not an FHA loan. As a result, I only need to put down a minimum of 3.5%. I want to keep my payment at a manageable amount should I wish to rent it out in the future so I'm putting down 10%. The important part here is that I don't need to put down 20% on a conventional loan! The only thing about the FHA loan is that I have to pay the MIP (mortgage insurance premium) for 5 years, regardless if I only have 78% (the % BOA requires for not having MIP) of the loan value left. Although, I can refinance to a conventional sometime in the next couple years and remove the MIP that way if it ends up monetarily advantageous. Although I find it hard to believe it will be. The interest rates will likely be higher, and the amount saved in MIP will likely be spent, and then some, in the closing costs. In any event, I dabbled in the idea of putting down more, so I asked my loan officer about putting down 15%. Here is what would happen: My loan payment would decrease 20 bucks and my interest rate would stay the same. At a pretty awesome, I think, 4.75%. In other words, why the hell would I put down more? It seems that 10% seems to be a perfect amount to put down for me. Needless to say, I don't envision financing being a problem, but the final word hasn't come down yet, as it usually takes a full 45 days to process an FHA loan, according to bank of america.

So that has been the process up until now. Next step is to find a home inspector, hope that goes well, and then play the waiting game. Ciao for now.