Purchasing a home for the first time is an exciting yet confusing, overwhelming and can be an intensive process. So where do you start? Well, you can’t purchase without funds, correct? The first place to start is searching for a lender. There are so many outlets to look at online that at some point it becomes too much. As you start your research, gather all the information, start a list with questions you have. Then start searching for a lender.
Remember, you need to look beyond the interest rate. As a first time home buyer you need guidance, education and support throughout the process. You need to start with at least knowing your credit score (FICO) and having some money in the bank. You may find programs that will offer low credit scores and/or no money down. BEWARE! Please keep in mind that if it sounds too good to be true, then it probably is. Now, that being said yes there are programs available for lower credit scores and programs with down payment assistance; if those are items you need to search for then you need to look for lenders who can provide. Those should be the first questions you ask the lender prior to completing a loan application and running your credit.
You should also know the key differences between FHA & Conventional. Just because you don’t have 20% down doesn’t necessarily mean you can’t do a Conventional loan. You can put 3% down on a Conventional loan, it’s just knowing if that option is available to you BUT is it the best option for you. This is where an experienced lender can show you the difference in the two and how each affect the monthly mortgage payment and purchase price.
If you know you are wanting to look for a home in a more rural area then you need to find out information on a USDA loan. You will need to ask the lender if they are experienced and can offer USDA loans. Again, you will want to check with the lender prior to completing a loan application and running your credit.
Are you thinking about purchasing a home that might need a little TLC? Or maybe you’re thinking it might be a better option to find a bank owned home (foreclosure). If so then you should consider a rehab loan. There is an FHA 203k and Conventional rehab loan option. This is where you add the renovation costs into your mortgage. If this is even the slightest bit of interest to you then you need to make sure to ask your lender if they can provide these types of loans.
In conclusion, while you are doing your research make a list of what you are thinking you would be interested in, call lenders, ask questions and then when you feel comfortable make an appointment and meet them. The next step is getting pre-approved. Make sure you know the difference between pre-approved and pre-qualified. *Don’t make an offer on a home if a lender has not looked at your financials!
For more information and if you have any questions please contact us. If you would like to set up a consultation, give us a call.
I receive several calls daily inquiring about our services. Many are first-time home buyers and they always start off by asking if there are any first-time home buyer programs available. Then the next question is “what are your rates right now and what are your fees?”
This is such an ambiguous question. Seriously. A mortgage rate varies depending on loan program (FHA, VA, Conventional, USDA, Jumbo), terms (30 yr. fixed, 15 yr. fixed, ARM, etc.), FICO score, amount of down payment, etc. Do you even know if you should be looking for an FHA or Conventional loan? Do you know the difference between the two? Plus there are other factors, such as do you need down payment assistance (DPA) or are you purchasing in a rural area? These can greatly affect loan programs and ultimately are going to affect the rate and even fees. A better question for a lender is “do you offer multiple loan programs?” And “are you experienced with multiple loan programs?”
The main point I’m trying to get across is that don’t be so quick to be asking about rates and fees without knowing what you're really looking for in a lender. Rates and fees are going to be fairly competitive and should not vary significantly (plus or minus) and if they do that should be a red flag. You need to be aware that not necessarily the lowest rate and/or fees in a lender will equate to the best service or quality of service. My question to you would be “what are you looking for in a lender?”
The importance should be trying to find a lender you feel comfortable with, one that you can talk with and understand, someone who will help guide and educate you, especially if you're a first-time homebuyer. You will want someone who is versed and experienced in multiple loan programs. Don’t let a lender discourage you away from a specific loan program unless they have definitive reasons. You don’t want to be steered away from a specific loan program just because they can’t provide the loan program or because they are not familiar with or uncomfortable with the loan program. Inexperience or feeling a loan program it too complicated is no reason to not offer a program.
Do your research, make calls and ask questions. But be mindful when you ask what are your rates and fees. If you don’t provide needed information and many times financials, don’t expect the rate that is quoted over the phone to be the exact rate you will receive once you go through the pre-approval process. If you’re rate shopping you doesn’t do a service to yourself.
If you have any questions please give us a call.
As you may have already noticed, purchasing a home can be overwhelming, especially if you're a first-time home buyer. There is so much information to absorb and process along with the overwhelming cost and knowing exactly what is expected from you as a buyer. I have had many conversations with first-time home buyers whom have made the comment that they are not working with nor planning to work with a Real Estate agent. My response is always “may I ask why you are not wanting to hire a Real Estate agent to help you?” The answer is usually “because I don’t want to pay or I can’t afford to pay their commission”.
Buyers paying their agents commission seems to be a very common misconception among first-time home buyers. A buyer's Real Estate agents commission is not paid by the buyer, it is paid by the seller. All Real Estate commissions to both the listing agent and the seller's agent are paid by the Seller. Now technically the buyer is paying the commission because the commission agreement is in the sale of the property and the properties listing price includes the Real Estate Commission fees. I know that was a little confusing so stay with me. So, yes again, technicality you as the buyer are already paying for an agent. If you are already paying for a service wouldn’t you want to use the service?
A Real Estate Agent is for your protection, they are educated, trained and licensed to assist you with your purchase contract. They are there to help negotiate your purchase and are looking out for your better interest. There is no reason NOT to hire a Real Estate agent when purchasing a property. Again, you are not paying their commission directly out of your pocket at the time of service, the cost of the home and the closing of the properties proceeds is what pays for the RE agents commission. An no this is NOT part of your closing costs, remember this is priced in the sale of the property, the purchase price. A good source to read more about Realtors and their commissions is www.Realtors.com .
If you have any questions on what it looks like to purchase a home and to see if you would qualify, please give us a call.
Where do I begin when looking to purchase a home? This is the most common comment I hear when I receive calls inquiring about wanting to purchase a home. Whether you are a first time home buyer or someone who has purchased previously but it's been over 2-3 years since you last purchased, this seems to be a common feeling. Purchasing a home can feel very daunting, scary and overwhelming, as it should be. It is one of the largest purchases you will make in your lifetime and should not be taken lightly.
I want to help by noting the main areas I talk to potential clients about when starting the process. These are the key areas of where to start and I hope it helps guide you in the right direction if you are looking to purchase a home and don’t know where to begin.
First, you need to know your credit score (FICO), I’ve written about this previously, it is really important, your credit score reflects your credit worthiness. You need to know if your report is accurate. Review your balances on your credit cards, are they high (close to limit or maxed)? Do you have any late payments? If you know you have credit issues then those need to be addressed. You may have heard that medical collections don’t need to be paid. Main thing is if you have collections of over $2000 they will be required to be paid (always contact a lender if unsure what is acceptable). If your credit score is low you will want to remove collections because they will negatively reflect and affect your FICO score. Make sure to get letters from the collection agency when you satisfy the collection. If you have judgements, they will need to be paid and released. You will need to get the release of judgement from the county in which the judgment was placed (you have to pay for a copy of the release). You are unable to qualify for a mortgage if you have unsettled judgments, no exception. Last item to be aware of on your credit is keeping your credit card balances no higher than 30% of your max available credit limit. If they are higher they will report negatively. Also make note that all your credit liabilities (credit cards, student loans, car loans, etc) on your credit report is what is used to figure your debt-to-income ratios. You want good revolving credit that can help outweigh the negative as well as keeping your monthly expenses in line with your income.
Second, you need to have some money in the bank. Whether you are looking for down payment assistance (DPA) or have gift funds to assist you with a home purchase, you still need to have some assets. DPA does not assist with the closing costs, earnest money (which will get applied towards your closing costs), appraisal fee and inspection. These funds need to be readily available when getting ready to purchase. Besides even if you were able to have minimal costs to purchase, would you really want to go into homeownership with no money in the bank? What if your water heater breaks the first month and you have no money in the bank and credit cards are maxed out? What would you do? It is always advisable to have some reserves.
Last but not least, look for a lender. Don’t contact a realtor until you have spoken to a lender in order to know if you are pre-approved and for what purchase price. Make a list of what you need, even if you are unsure of exactly what you need and looking for, a good lender will help guide and educate you. Remember no question is considered “stupid”. If you know you need down payment assistance, make that known right away. If you have had a bankruptcy or foreclosure, make sure to be upfront even if it has been longer than 4 years ago. Have an idea of what you can afford monthly for a mortgage payment. If you don’t know where to begin, no worries, a good lender will guide you!
If you have any questions and/or feel you are ready to get started, give us a call.
We are very happy when we get a call from a qualified veteran looking to purchase or refinance their home using their VA benefits. First off, thank you for all those who have served. Being a fellow veteran helping other qualified veterans learn the benefits of a VA loan and providing them with the best mortgage available gives me great gratification.
Purchasing a home is an exciting and rewarding time but it can also be stressful and confusing. Many of us have difficultly in saving a down payment and coming up with 20% feels like an impossible feat, more less even 5%. The benefit of VA loans allows for a no down payment and at times no closing costs as well as no mortgage insurance. Yes, there is a VA funding fee (which some veterans may be exempt) but this fee can be rolled into your loan and is what goes towards a "pool" of funds which is what allows VA to keep rates low and assist with your fellow veterans to take advantage of the same VA benefit you are acquiring. Your lender will need a certificate of eligibility (COE), here is a link that can assist you in obtaining a copy of your certificate of eligibility. Your lender can also request your COE but this can take some time and if you are needing to get pre-approved quickly it helps your lender tremendously if you can have your COE ahead of time.
Again, VA loans are the best loans out there, if you would like to learn more about them and are a qualified veteran please give us a call. *Please know that if you are in need of a Jumbo loan you can still use your VA benefits, make sure to ask us how.
You may be asking yourself “am I ready to purchase a home?” If you are like the many of us who have just received a notice from your landlord informing you that your rent is going to raise, and not just by a little but a few hundred dollars. What do you do and why are the rents rising? The rise is due to Denver’s growing economy and more people moving to Colorado. This puts landlords in a prime position. If their current tenant can’t pay the increased rent they will have another tenant waiting in the wings who can. They also know that the Real Estate market is tight and those who are looking to purchase are in a very competitive market and if they can’t find a property to purchase they will be looking for a rental.
What are your options? You have two choices, keep renting or look to purchase. If you choose to purchase you need to make sure you are in a position to get pre-approved. You may be asking, “what do I need to do to get in a position to get pre-approved”?
First step is to know your credit score, more specifically your FICO score! This is not the number you get from CreditKarma or possibly even your credit card. You need to check in with www.myfico.com or go directly to the bureaus, www.experian.com, www.transunion.com, www.equifax.com and retrieve your FICO score. If you are not wanting to pay for your FICO score than at the very least pull your credit report and review what is reporting. Is it accurate? Do you have any collections that you were not aware of? Judgements? Late payments? Etc. These items are critical to your score and for a pre-approval. Do you have active, current, good revolving credit? If you are not aware of any of these you need to get familiar and check on your reports. Most lenders are unable to provide a pre-approval with a FICO score under 620.
Second step is having some money in savings. There are down payment assistance programs available BUT these funds do not cover all the costs involved in purchasing a home. You will need to have funds readily available for earnest money, appraisal, inspection and the remaining closing costs. Most of the down payment assistance programs require that you have $1000 or 1% of purchase price (whichever is greater) in the transaction. You can not nor should not be purchasing a home with no money in the bank.
Third step is if you have step #1 & #2 complete then the next step is finding a qualified lender. You want to find someone who can help, guide and educate you in what options are available to you. If you know you need down payment assistance then this should be one of the first questions you ask. Not every lender is qualified and approved to work with many of the down payment assistance programs. Are you looking for a VA loan? Make sure to ask if they are an experienced lender with VA loans. These are very important questions. You don’t want to find yourself completing loan applications, running your credit and submitting financials only to find out that they don’t have the services or loan programs you are needing. Make sure you also check their credentials. Ask for past clients that you can reach out to, or check for online reviews with Google, Yelp, FaceBook pages and Better Business Bureau.
If you are new to purchasing a home you should take the homebuyer education courses that are free and available to you, click here for more information. If you have any questions and would like to start the process of getting pre-approved please contact us.
I received a call today inquiring about our services and the possibility of transferring their existing loan to us. That’s good news right? Well, yes and no, bad news is that they were supposed to be closing on their home purchase today! They received a call last night from their existing lender, one of which claims to have the highest ratings per J.D. Powers & Assoc and that they can “quicken” the process, informed the buyer that they will be unable to close on their loan tomorrow. They stated that there are additional loan conditions that need to be met, one of which would be bringing more money to the closing. This would bring the buyer whom originally was putting 3.5% down would now be required to put 8.5%.
I wish I could say this was the only call I've ever received with this situation but unfortunately this is not the case, we have been seeing an increasing number of calls with similar situations and the majority coming from the same mortgage company.
As first time home buyers you may not feel comfortable and/or are uncertain as to where to begin your home buying process so many times we may be directed by very popular home buying websites. Whether it be websites that are credit score companies that monitor your credit, properties for sale, home values (bankrate.com, realtor.com, zillow.com, creditKarma) etc. they will have a link and/or notifications of rates and mortgage companies. What may be of surprise to you is that these links are paid advertisements. These larger mortgage companies have a vast budget for advertising and are able to place their company on multiple websites. Because many of us feel they are trusted sources we also also feel that they wouldn't be on their page if they weren't recommended, right? Again, unfortunately that is not the case, these companies pay to be recognized on these popular websites.
I wish there was a way that when we click on a referred or recommended company and a “caution” signal flashed or “alarm” sounded when to notify you that this is a paid advertisement AND take it a step further had a signal for “beware” low customer service ratings per Google/Yelp/Bing. Unfortunately we don’t have such a service so it is our responsibility to take that extra time and do our due diligence.
I always recommend researching a mortgage company AND the loan originator before ever completing a loan application, running your credit and/or sending in your financial documents. When researching a loan originator they are required to list their NMLS number and are required supply the link to their license registration. Remember in finding a good lender it goes beyond looking for the lowest rate!
If you have any questions or would like to inquire about our services please contact us.
A rehab loan which is also referred to as an FHA 203k is a loan, is a mortgage that includes the costs of rehab/remodeling needed to a home. Why would purchasing with a 203k be beneficial? In a tight market like this it is always great to have options. For many of you who are out there in the market and having a tough time finding a home or having a chance to even put in an offer. Here is some food for thought, is there a specific style that you are drawn to but are noticing that in your price range they move quickly? Here is an option, how about looking in a lower price range, same and/or similar model of your favorite home,put on your " see potential" glasses and then look at a property. Would just a little TLC (new flooring, paint, appliances, kitchen cabinets, etc.) make the home more appealing? This is where a rehab loan such as a FHA 203k loan or Conventional Rehab loan would make sense.
The rate on a FHA 203k is a lower interest rate than getting a new credit card, adding a home equity line of credit or financing through a personal loan. Plus you only have one mortgage payment!
There is only one appraisal done, you get an "as-is" value and the appraiser gets a copy of the contractors bid and will take into account what work is being done on the home and will give you an "as completed value". You will see what amount of value you are adding into the property and most likely could be walking into the property with build-in equity.
So if that is not enough of a reason to look into a rehab loan, here are 3 reasons you should consider:
If you would like to discuss or see if you qualify, give us a call.
We get a fair amount of calls on daily basis inquiring about a 203k loan. So I wanted to put a few main components together to help aid in learning about a 203k loan. A 203k loan is a home mortgage that includes the costs of remodeling/rehabilitation for a home. It is an FHA loan. It can be used on a purchase or you can refinance into a FHA 203k. This type of loan is extremely beneficial whether it is for minor rehab or a major renovation to a home.
There are two types of the FHA 203k, one is the streamline and the other is the standard. The streamline FHA 203k is for renovation/rebab work that is up to $35,000 and does not include structural or landscaping. The Standard or aka Full FHA 203k is for $35,000 and greater (on up to FHA loan limits), which can include structural and landscaping. When doing a Full 203k it is required to also hire a HUD consultant. Do not let this be a discouraging factor, we like to think of them as the "big brother" on the project. They are there for your protection and will also help facilitate the project and communications with your contractor and lender.
You will need to hire a licensed and insured contractor, with a the streamline you are able to facilitate as a general contractor (GC) but we highly suggest hiring no more than 3 contractors. For a full you are required to hire a GC, which we even suggest for a streamline.
In order to know what amount you qualify for with a 203k loan you will need to meet with a lender to get pre-approved. You need to keep in mind that the approximate amount needed to rehab the home will be added to your mortgage. If you were pre-approved for a purchase price of $200,000 and the home you are looking to purchase is $200,000 and needs rehab work added, then you are exceeding your loan limitations for approval. The important thing is to check with your lender if you know you would like to purchase with a 203k so they can help guide in what your max purchase ability would be using a rehab loan.
If you even have the slightest thought that you would be interested in this type of loan I highly suggest that you talk with your lender and discuss. Not all lenders can do FHA 203k loans so you need to know ahead of time before you get too far into the pre-approval process and then start looking at homes because the last thing you will want is to find out that you need a FHA 203k and your lender can't provide, then you are stuck with needing to find a new lender and don't have much time to be going through the process again! This is a FHA 203k in a nutshell, f you would like to learn more please contact us. Please note that there is also a Conventional rehab loan available, make sure to ask us about it!