In this guide, we will cover mortgage loans for first-time homebuyers. Mortgage Lenders For Bad Credit are experts assisting first-time homebuyers on First-Time Homebuyers Mortgage Loans And Programs. A rough estimate shows about half of our clients are first-time homebuyers. Wendy Lahn, the Chief Legal Counsel for Mortgage Lenders For Bad Credit explains the definition of first-time homebuyers as follow:
The home-buying process can be incredibly confusing. This blog will go over examples of questions we receive from our first-time homebuyers. Many of our clients are not aware that you are once again considered a first-time home buyer if you have not owned a home in the previous 36 months (3 years).
Many of our clients purchased homes prior to the real estate crash of 2008, where the mortgage guidelines were very different if you could even call them guidelines. Since then, the federal government has created very standard and incredibly confusing mortgage guidelines. This is where Mortgage Lenders For Bad Credit will step in and clarify any questions. In this article, we will discuss and cover First-Time Homebuyers Mortgage Loans And Programs.
Understanding First-Time Homebuyers Mortgage Loans And Programs
Our team is assembled like a highly efficient assembly line. The process’s first step is to review your qualifications with a licensed loan officer. Our skilled loan officers are here to assist at your pace and answer all questions you may have surrounding the home-buying process. It is our goal to make sure you are educated throughout the entire mortgage process. We will now spend some time going over typical questions that first-time homebuyers ask.
Many first-time homebuyers will want to know if the time is right to buy a home. Recently, I heard a response that caught my ear to this exact question. A realtor in the Denver area made a joke saying the best time to buy a home was “yesterday”.
If you have been paying attention to the news, you will know that home value appreciation has been going up at historic rates. Meaning after you purchase a home, you could see gains in value in a short period. If you are renting, you know you are helping your landlord build equity in their property as well as an income stream. It’s time to start paying rent and building home equity.
The Importance Of Credit On First-Time Homebuyers Mortgage Loans And Programs
Next, we hear if my credit good enough to qualify. Mortgage Lenders For Bad Credit is a unique mortgage lender that does not have lender overlays to overcomplicate mortgage qualifications. Many banks will have extra strict lending requirements on their Conventional, FHA, and VA mortgage loans. Many banks require a 640 or 660 credit score to qualify for a mortgage loan.
The team at MortgageLenders For Bad Credit specializes in programs for individuals with less-than-perfect credit. That being said, Mortgage Lenders For Bad Credit require a 580 credit score for a low 3.5% down payment on an FHA mortgage. We even have programs that allow credit scores down to 500. If you require a conventional loan, you will need a minimum credit score of 620.
Should a real estate agent and attorney be involved? While it is not our department to tell you to use a real estate agent or an attorney, we can point you in the right direction. Most times, it does make sense to utilize a real estate agent so you can make sure you are getting the most competitive offer accepted. However, there are times when you may buy a house from a family member when it does not make sense to utilize a real estate agent. You want to check local and state requirements to know if an attorney should be involved or not.
Types Of First-Time Homebuyers Mortgage Loans And Programs
What programs are available for first-time homebuyers? This question can vary depending on the state and municipality you want to purchase a home. Many local programs may offer down payment assistance. While nothing is free, down payment assistance can help you get into a property as a first-time home buyer. Most of the time, you will pay a slightly higher interest rate to get help with the down payment. Keep in mind there are extra credit and income requirements to utilize most down payment assistance programs.
Fees And Costs For First-Time Homebuyers
Are there hidden costs I should be aware of? Just like any investment, there are things to keep in mind. When renting a home, you rely on your landlord for maintenance and emergencies. When you own your home, you want money set aside for repairs, utilities, insurance, yard maintenance, and a potential increase in insurance and property tax costs (which will raise your monthly payment). As property taxes rise, rent costs do as well. Something to keep in mind if you are weighing your rent versus your options.
How much are closing costs? This is a very common question, and the easiest answer is the closing cost can range anywhere from 2% to 6% of the loan amount, but this will vary dramatically. Some factors that can change closing costs are the type of loan, loan amount, local tax rate, local title fees, and third-party charges. To better understand fees in your area, reach out to our team. We will get you an estimate from a licensed loan officer.
Closing Costs On Home Purchase Transactions
Are there programs to help pay closing costs? As stated above, many first-time homebuyers are able to take advantage of the down payment assistance programs. However, the seller can also help pay all or a portion of your closing cost if this is negotiated in your purchase contract. It is not uncommon for a first-time home buyer to ask for seller credit to help absorb the closing costs. Having extra money for moving costs is a plus. This is when a real estate agent can come in handy. They can negotiate with the sellers to pay all or a portion of your closing costs to help you with future homeownership expenses.
How Much Homes Can I Qualify?
How much loan can I qualify for? This is a very loaded question, as each individual will have different mortgage qualifications. First-time homebuyers need to be aware of three main pillars of qualifications. The pillars are credit, assets, and income. Your credit profile and monthly obligations will affect how much of a mortgage payment you qualify for. Assets for down payment and closing costs will also increase your buying power. And income will determine your overall debt-to-income ratio and let you know your qualifications.
Getting Qualified And Pre-Approved
Once pre-approved, how long does the mortgage process take? Once you are preapproved, you and your realtor can find a home and get under contract. Once you are under contract, Mortgage Lenders For Bad Credit come back into the equation. Typically, we ask for a 30-day timeframe to close your mortgage transaction. However, it is not uncommon for a seller to ask for 45 or more days before closing the transaction.
Down Payment Required To Purchase A Home
Do I need a 20% down payment? Not. Needing a 20% down payment is a common misconception in the mortgage industry. There are low-down payment assistance options available.
An FHA mortgage loan only requires a 3.5% down payment (with a 580 credit score or higher), and if you served any time in the military, typically, no down payment is required. If you can put down 20%, you will eliminate the need for private mortgage insurance. I’ve had derogatory credit in the past. Can I qualify for a mortgage loan? The short answer is yes. We will need more information on the type of derogatory account and how long the account was delinquent.
For more information on private mortgage insurance, please contact Mortgage Lenders For Bad Credit at 262-627-1965 or email gcho@gustancho.com. We can even help families inside a Chapter 13 bankruptcy obtain mortgage financing. We specialize in lower credit score mortgage lending because we do not have overlays. Each derogatory event will have different waiting periods before you qualify, so reach out to our team today to review your specific credit events.
Do I Need To Hire A Credit Repair Company If I Have Bad Credit To Qualify For A Mortgage?
An experience loan officer will give first-time homebuyers mortgage programs advice never to hire a credit repair company to qualify for a home loan.
Hiring credit repair companies can often backfire on borrowers
Borrowers do not have to pay outstanding collections and charged-off accounts to qualify for a mortgage
Deleting older collections and charged-off accounts does not impact credit scores
Before you go out and spend hundreds of dollars, please consult with a loan officer prior to planning on hiring a credit repair company
Credit repair can do more damage then good
There are ways of boosting up your credit without going through credit repair
First-Time Homebuyers Mortgage Programs Advice is to Educate Yourself With Housing and Mortgage Markets
One of the most important first-time homebuyers mortgage programs advice is to educate oneself in the housing and mortgage markets.
As mentioned earlier, a home is most people’s largest investment
The mortgage process can be complex and confusing
Not all lenders have the same lending guidelines
Finding out which loan program is best for you is very important
If you are a veteran with a certificate of eligibility (COE), you should explore going with a VA loan and not FHA nor conventional loan
Borrowers with lower credit may want to increase their credit scores before applying for a mortgage
Lower credit scores mean higher mortgage rates
Also, look into the type of property you may want to buy
Condominium?
Single-Family Home?
Townhouse?
2 to 4 multi-family unit?
Today, the housing market is strong
Housing prices have gone up for the past 3 years with no signs of a housing correction
Another key first-time homebuyers mortgage programs advice is how much can you afford versus how much do I qualify?
You do not want to buy too much house
Mortgage companies will not count your personal expenses such as childcare, utilities, maintenance, and other expenses when qualify your debt to income ratios
I’m so glad you asked! I’ve put together 10 tips for first-time home buyers as they tackle the home-buying process. Put these into practice today so your first home is a blessing, not a burden.
First-Time Homebuyers Mortgage Programs Advice With Finances
Chances are you will need a mortgage on your home purchase.
Most mortgages are 30 year fixed-rate loans
This is a long commitment
Remember that it is how much you can afford versus how much you qualify that is important
Make sure to try to pay off as much debt as possible
Create a reserve in the event something goes bad
Save for a down payment and closing costs
Down payments and closing costs can be gifted by a family member
Before doing anything with your credit, consult with a loan officer
Make sure you have a solid pre-approval by a lender before entering into a real estate purchase contract
Research the area
Interview lenders and realtors
Make sure you check their online reviews and meet with them in person
Make sure that it is within comfortable driving distance to work, schools, and shopping. Attend as many open houses as possible and ask a lot of questions.
Cost of Homeownership
As a homeowner, you will be responsible for all maintenance and repairs.
When things break down, you need to fix it and cover the expenses
You do not have the luxury of contacting the landlord for a leaky faucet, or HVAC system
First-Time Homebuyers Mortgage Programs Advice is to have reserves in case of an emergency
Appliance breakdowns can cost several hundred to thousands of dollars
Eventually, the roof, windows, and HVAC systems can break down
Landscaping and plowing is the responsibility of the homeowner
The pros of homeownership is freedom, appreciation, and pride
However, there are costs that come with the benefits
Your new mortgage payment can be the same and/or cheaper than a rent payment. However, there are costs associated with homeownership.
Finding The Right Lender for First-Time Homebuyers Mortgage Programs
Any borrower with great credit, income, and down payment can qualify with any lender.
However, many borrowers may not fall into this category
There are two types of lending guidelines
Agency mortgage guidelines and lender overlays
All borrowers need to meet the minimum agency guidelines by HUD, VA, USDA, Fannie Mae and/or Freddie Mac
However, mortgage companies can have additional lending guidelines called lender overlays
Lender overlays are additional mortgage guidelines above and beyond the minimum agency guidelines
This is why not all lenders have the same lending requirements on FHA, VA, USDA, and Conventional loans
One lender may say no while another lender may say yes
Choosing The Right Realtor After You Get Pre-Approved on First-Time Homebuyers Mortgage Programs
Homebuyers need to get along with their real estate agent.
Many homebuyers get referred by their realtor through their family, friends, loan officer, or business associates
Make sure you and your spouse interview the realtor
Check out their online reviews
Meet with them more than once
Are they experienced?
Are they familiar with the area?
Do they return phone calls, texts, and/or emails timely?
Understanding The Home Buying And Mortgage Process
First-time home buyers should get familiar with the overall home purchase and mortgage process. There are many moving parts to the home buying process. A home purchase is most people’s financial decision they make in their lifetime. Homebuyer and mortgage process should not be stressful.
Most of our clients at GCA Forums do not stress during the mortgage process. The home buying process should be a memorable positive experience for first-time home buyers. Educating oneself on first-time homebuyers mortgage programs is not difficult and may be fun.
Getting Familiar With The Mortgage Process
Most borrowers who take time out to educate themselves in first-time homebuyers mortgage programs often do not stress during the mortgage process. First-time home buyers may want to know the options they have with down payment assistance. They may want to understand the difference between the Loan Estimate and Closing Disclosure is.
There are endless questions first-time homebuyers mortgage programs may have. Shopping for a home and entering into a real estate purchase contract is the fun part of the buying process. The mortgage process is the boring part.
The mortgage process does not have to be dreadful or bored. Just think about the potential money you can save by being a homeowner. You no longer have to waste your money on rent.
How Much Down Payment Is Required On First-Time Homebuyers Mortgage Programs
The number one question by first-time homebuyers mortgage programs is how money down payment do I need to purchase a home? It depends on the loan program. Here are the basic down payment required by home buyers:
HUD requires 3.5% down payment on FHA loans.
Fannie Mae and Freddie Mac require a 3% down payment for first-time homebuyers and a 5% down payment for seasoned home buyers
VA and USDA does not require any down payment and offers 100% financing
NON-QM Loans require a 10% to 20% down payment
GCA Forumshas investors that will qualify 5% down payment Jumbo NON-QM Loans
Bank statement loans for self-employed borrowers require a 20% down payment
Down payments can be gifted. Using 401k for home purchase down payment is allowed.
How Much Are Closing Costs on Home Purchase
All mortgage transactions come with closing costs. Closing costs vary. It depends on many factors, especially location and loan programs. Closing costs are any costs and fees with the transfer and closing of a home loan. This includes origination fees and third-party charges.
Most of our clients at GCA Forums Mortgage Group do not have to worry about closing costs. They just need to come up with the down payment. Closing costs are normally covered through sellers’ concessions and/or lender credit.
Typical Closing Costs
Here are typical common examples of closing costs:
Origination charges
Discount Points
Processing/Underwriting Fees
Credit Report fees
Title Charges
Title Insurance
Recording Fees
Transfer stamps
Attorney’s fees
Appraisal fees
Surveys if applicable
Pre-paid (Escrows)
Inspection Fees
Any other third-party costs and fees
Seller Concessions and Lender Credit For Closing Costs
Lender credit and sellers concessions can be used for closing costs only. Cannot be used for the down payment. Property tax proration credits can be used for down payments. Overage seller’s concessions cannot be kicked back to borrowers. It needs to go back to sellers. In most cases with seller concession overages, loan officers use it to buy down the rate with discount points. Here are seller concessions mortgage guidelines:
FHA and USDA allows up to 6% of sellers concessions
VA allows up to 4% sellers concessions
Fannie Mae and Freddie Mac allow 3% sellers concessions on primary homes and up to 2% investment homes on conventional loans
NON-QM and Jumbo Loans allows sellers concessions but is dependent on the investor
Importance of Mortgage Pre-Approval By Loan Officers
The pre-approval process of the overall mortgage process is the most important step. One of the biggest reasons for a last-minute mortgage denial and/or stress during the mortgage process is because loan officers did not properly qualify borrowers. A loan officer needs to thoroughly review borrowers’ income, assets, credit, credit scores, public records, tax returns, and liabilities. The file should go through the automated underwriting system.
The loan officer should also thoroughly check with their company’s overlay guidelines and make sure the borrower fully qualifies. Over 80% of our clients are borrowers who got denied a mortgage by a lender or are going through stress during the mortgage process due to not being properly qualified. Due your due diligence and choose a loan officer who is experienced and a lender with no overlays.
How Much Can I Afford Versus How Much Can I Qualify on First-Time Homebuyers Mortgage Programs
The borrower is the only person that can answer how much house can I afford. Lenders will qualify borrowers on the maximum they qualify for. Mortgage underwriters do not factor the following when calculating borrowers debt to income ratios:
Personal expenses such as dining out, vacations, hobby expenses, and other personal expenses
Utility expenses such as water, scavenger, telephone, gas, electric, cable, internet, cell phone
Child care expense
Elderly care
Children extracurricular activities and quarterly trips
Medical and life insurance
Maintenance
College tuition
Other expenses not reporting to credit bureaus
Lenders only qualify borrowers on debt that report on credit bureaus. Homeowners do not want to get stuck with too much home they cannot afford. Make sure to consider overall housing expenses and not just principal and interest. Overall housing expenses are Principal and Interest, Homeowners Insurance, Mortgage Insurance, and HOA if applicable.
Do Not Add New Debt And Do Not Get New Car
Do not purchase and/or trade-in your car during the mortgage process. The average car payment is $400 per month. That is equivalent to an $80,000 mortgage. Do not apply for new credit during the mortgage process. Lenders will do periodic credit checks until the date of closing. Do not load up any credit cards and/or revolving accounts. Do not make any irregular deposits and/or withdrawals. Any irregular deposits need to be verified by mortgage underwriters. Do not change jobs during the mortgage process. Do not tell HR that you will be retiring or give notice that you will be quitting soon. All lenders will do a verification of employment. One of the questions asked on a VOE is will the worker’s job stability be secured for the next three years? If you quit or plan on retiring, HR will tell your lender that you will not be employed with them in the next three years.
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Getting Approved For First-Time Homebuyers Mortgage Loans
If you are a first-time or repeat home buyer and have additional mortgage questions, you can contact us qt Mortgage Lenders For Bad Credit seven days a week. Feel free to call us at 262-627-1965 with any mortgage-related questions. You may also email us at gcho@gustancho.com. Our team is ready to assist you and your family in buying your first home. There are very few situations we have not encountered, and we would love the opportunity to help you and your family. Even if a different lender has turned you down, we encourage you to get a second opinion today. If we cannot assist you, we will set you up with a custom financial plan to qualify immediately.We look forward to assisting you with your mortgage needs.
Our team is assembled like a highly efficient assembly line. The process’s first step is to review your qualifications with a licensed loan officer. Our skilled loan officers are here to assist at your pace and answer all questions you may have surrounding the home-buying process. It is our goal to make sure you are educated throughout the entire mortgage process. We will now spend some time going over typical questions that first-time homebuyers ask.
Are there hidden costs I should be aware of? Just like any investment, there are things to keep in mind. When renting a home, you rely on your landlord for maintenance and emergencies. When you own your home, you want money set aside for repairs, utilities, insurance, yard maintenance, and a potential increase in insurance and property tax costs (which will raise your monthly payment). As property taxes rise, rent costs do as well. Something to keep in mind if you are weighing your rent versus your options.
How much are closing costs? This is a very common question, and the easiest answer is the closing cost can range anywhere from 2% to 6% of the loan amount, but this will vary dramatically. Some factors that can change closing costs are the type of loan, loan amount, local tax rate, local title fees, and third-party charges. To better understand fees in your area, reach out to our team. We will get you an estimate from a licensed loan officer.
Once pre-approved, how long does the mortgage process take? Once you are preapproved, you and your realtor can find a home and get under contract. Once you are under contract, Mortgage Lenders For Bad Credit come back into the equation. Typically, we ask for a 30-day timeframe to close your mortgage transaction. However, it is not uncommon for a seller to ask for 45 or more days before closing the transaction.
