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Q: How much money will I need to buy a home?
A: This will vary based on a number of factors. The interest rate, home prices in your area, property taxes, your credit and job history. There are many low and zero down payment loan programs available in all areas and assistance can be found to help with closing costs. The best way to find the answer to this question is to sit down with one of our loan officers or e-mail us a purchase scenario. We will then be able to give you an accurate estimate of what your new home purchase will cost.
Q: I just graduated from college, I have a great job, but I've only been with the company for a couple of months. How long do I have to wait before a lender will consider granting me a mortgage?
A: You can apply immediately. It will be important that your credit is in good shape. You will need to prove that you are not temporary with the company. It will also help to show a college transcript as proof that you were a student prior to your new job.
Q: I have never established credit. I don't have any credit cards and have always paid for things in cash. I have a great job with a good income. What should I do?
A: The problem with not having credit is that it makes many lenders uncomfortable, when lending money for the purchase of your new home. If you have a poor payment history the bank can make an adjustment in term, rate or size of down payment. With no credit history it is difficult to assess loan risk. Here's how we solve this problem. Even without a traditional credit history, you do pay some bills. There is your rental history. You can provide the lender with 12 months of cancelled checks showing on time rental payments. If you are renting you are paying the utility and cable bills. A printout from these utilities will show your credit history with them. Any other payments that you make to people and companies that provide you with services will be helpful. This is called alternative credit.
Q: A friend told me I could save thousands of dollars by looking for foreclosed homes. Can I really save thousands of dollars buying one of these?
A: We hear this strategy often. It is possible to save a lot of money by buying a foreclosure, but you need to know what you are doing. Many foreclosed home have major system problems and damage from previous occupants. You will still want to take the time to research what the problems are since they are usually sold as-is. Once you make an offer on a foreclosed home you have a short period of time to get your financing in order. Remember, if you get a $90,000 house for $45,000, and it needs $40,000 of work, you are really getting a $90,000 house for $85,000 plus all of you hours of work. Remember, in real estate you rarely get something for nothing.
Q: Fannie Mae, Freddie Mac, HUD, FHA, VA. Who are all these people?
A. These are government and non-government agencies that buy and sell or insure home loans. See the glossary on our web site for more details.
Q: How do I get started?
A: We recommend that you assemble your last two years tax returns and W-2's, three months bank statements, and one month of pay-stubs. Make a plan with your family that you will own a new home. Meet with your loan officer and discuss what options are available to you. Determine how much of a mortgage payment you qualify for and decide how much of a monthly payment you will be comfortable making. Find out how much the closing costs will be and spend time reviewing your credit report. These factors will tell you how close you are to buying a home.
Q: What is the least amount of money I can put down?
A: Many programs offer a variety of low down payments. Some offer 0% down, some 3% and others will even allow you to finance some of the closing costs. Different lenders offer different programs and you will have to see which programs you qualify for.
Q: I heard that the seller is allowed pay some of the closing costs. Is that true?
A: Absolutely. The amount the seller can pay will vary based on the loan program and the down payment you make. For FHA the seller can pay up to 6% of the purchase price towards closing costs. With conventional loan programs the following percentages can be paid based on the down payment.
3% Down 2% seller concession
5% Down 3% seller concession
10% Down 6% seller concession
Some programs will allow the seller to pay all of the closing costs.
Q: My parents would like to help me with the purchase of my new home but they can't afford to co-sign the loan. How can they help?
A: They can give you money toward the down payment or the closing costs. This is called a gift. Parents can give up to $10,000 per parent to each child without incurring an IRS gift tax. You will have to obtain a gift letter from your lender and have them complete and notarize it. They will have to provide proof that they have the money to give (usually a bank statement) and you will have to show you received it (deposit slip and copy of their check). This is the most common way parents help children purchase a new home.
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