Secure Advantage Loan?
Answers:
I work at Quicken Loans, so I thought I should answer your question.
First of all, you'll need to confirm this with a mortgage banker, but I doubt you'll be able to qualify for anything close to $170,000 mortgage on a salary of $1,300 a month or less. My guess is that you are paying around $450 a month in rent and when you saw or heard an ad for the Secure Advantage loan, you figured it might be affordable. But you have to understand that determining what you can qualify for with a mortgage is very different than what you can afford to pay for rent.
The Secure Advantage is a loan that offers payment options. The lowest option is what's called a "deferred-interest" payment. What that means is that the payment doesn't cover any of the principal of the loan and only a partial amount of the interest due. The difference is then added to your principal. And the option to pay only the minimum lasts for 10 years or until the principal owed grows to 115% of the original amount borrowed.
But you can't qualify for a Secure Advantage based on the minimum payment only. You have to be able to afford more than the minimum payment. In fact, I tell people I know that they should only get a Secure Advantage if they can afford any of the payments and choose (for various reasons) to make the minimum payment every so often. Salespeople on commission are a good example. They may have a bad month and only pay the minimum amount, but then have a great month and make a full payment (with principal and interest).
Remember, having an option to pay the minimum amount is much different than only being able to afford the minimum. And because of that, you most likely wouldn't be able to qualify for a Secure Advantage Loan for $170k.
I recommend getting in touch with a mortgage professional and have them go over your credit, income, debts, and they'll tell you what you qualify for. It's probably going to be a lot less than $170k, but you won't know until you talk to a professional.
So finally, I guess I have to say I do recommend you wait to get a mortgage if you are looking in the $150k and up range. Whether you get a fixed-rate loan or opt for another type is up to you, but you need to make sure you can afford a home. You may have to wait until you graduate and make more income.
I've included a link the Secure Advantage page on the Quicken Loans site.
Take care and let me know if you have any questions.
That loan is what's called a neg am loan. You are going to owe more than what you borrowed when you go to refinance, so if you pay too much for the house or the market drops, you could have some serious problems.
Those loans are not for everyone. In fact, they shouldn't be for almost anyone.
The real rate on those loans is always higher than a comparable 5 year ARM. And more than a 30 year fixed.
Every month you pay $450, you'll actually add $470 to your loan balance. After the first year, you'll owe $5600 more than you did when you took the loan out.
Homes aren't appreciating much if at all in most markets right now. How are you planning to afford a refinance (which costs about $5K on a $170K loan), when you won't have any equity since you spent your equity to make tiny monthly payments instead.
Also, these don't do 100% financing.
I'd look elsewhere. There's many better products available, and if you can't afford to repay the loan over 30 years, like on a 30 fixed mortgage, you probably shouldn't buy it in the first place.
Plus, they will qualify you on at least the interest-only payment of $920, plus taxes and insurance. That'll put you at around 80-90% of your gross monthly income towards housing alone. Meaning you won't qualify anyway.
The Secured Loan information post by website user , LoanSecuredLoan.com not guarantee correctness.