Steve Says

As promised here is some advice from the mortgage broker in tonight's story.  Below is HIS advice.  Remember in any large transaction to ask plenty of questions and make sure YOU are comfortable with the details.

First Time Home Buyers and Newlyweds

One of the most important things I tell first time homebuyers, and those getting married, is to plan well in advance of the time period you will want to purchase a home. I suggest sitting down with a mortgage consultant at least 6 months to one year in advance to discuss credit scores, establishing credit lines and the amount of money needed to close the loan. For instance, lenders normally require 4 established lines of credit that show at least a 12 month history. It is important to evaluate what credit lines you currently have and if additional lines of credit are needed you will have the required 12 months to count them in your loan application.

Also, it is important to discuss with your lender the different types of loans and which one may be best for you. As the market place continues to change rapidly we are seeing a return to the long standing FHA loan. This is because many first time homebuyers are finding that they no longer qualify for a conventional loan because of more stringent criteria and the higher credit scores needed.

Another advantage of the FHA loan is that it usually requires a lesser amount for the down payment, and 100% of that money can be gifted from a family member, a governmental agency, or non-profit organization. Additionally, most conventional loans require the borrower to have an amount of up to 6 months payments in liquid assets in reserves AFTER paying the down payment and closing costs, FHA loans require NO reserves. Also keep in mind is that the seller of a property may pay up to 6% of the purchase price toward the buyer’s closing costs, this can help reduce the buyer amount needed to close.

In the past year we have seen Mortgage Insurance, an insurance policy that protects the lender in the event the borrower defaults, going up at an alarming rate. Mortgage Insurance is calculated on the loan balance and can range from .55% to 4.18% on conventional loans, this amount is added to the monthly payment. In comparison FHA charges 0.5% of the loan amount, although they do charge a one time upfront fee of 1.5% at the time the loan is closed, but that amount can be rolled into the loan.

The home buying process can seem complicated, but if you take things step-by-step, you will soon be holding the keys to your own home!

Nine steps to buying a home

1. Figure out how much you can afford

    

2. Know your rights

    

3. Shop for a loan

    

4. Learn about home buying programs

    

5. Shop for a home

    

6. Make an offer

    

7. Get a home inspection

    

8. Shop for homeowners insurance

    

9. Sign papers

    

If you would like more suggestions about preparing to purchase your first home please visit us on the web at www.swfdallas.com

John Collins is a Mortgage Broker and Branch Manager with Southwest Funding located in Dallas, Texas. He currently specializes in FHA and conventional loans, credit consulting and hard money investor loans.