Buying A Home

Although the Internet is a great way to collect some basic information, please don’t make the biggest purchase decision of your life without consulting a licensed mortgage professional.

Every individual is unique and there are many factors that go into computing your quoted interest rate:

  • Debt to Income Ratio
  • Loan to Value Ratio
  • Credit Score

Additional factors you need to take into consideration:

  • How much house can I afford?
  • Are rates improving or ready to turn for the worse?
  • How is the current economic climate affecting interest rates and what are the risks and benefits of locking vs. floating?
  • How do I balance my long term plans with my short term needs?

Call one of our mortgage professionals today and let us help you find a program that is personalized for YOU!

To view our loan programs, click here.

 

 

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FHA and VA Loans for First Time Buyers:

First time homebuyers often experience the most difficulty coming up with a significant down payment - but everyone should have the opportunity to buy a home. For this reason, the Federal government has developed two loan programs to assist homebuyers that have a little or no down payment. These programs are called the Federal Housing Administration (FHA) and the Veteran's Administration (VA).

These programs are not solely intended for first time home buyers; your home loan advisor will be able to determine if you qualify and if so which program is acceptable for your needs. FHA and VA loans can be especially advantageous when combined with a Housing Finance Agency program or Mortgage Credit Certificates first time homebuyer program.

Who is Eligible for a First Time Buyer Loan?

First time home buyer programs are designed to help borrowers who may not have enough money to pay the full cost of the down payment or the closing costs on a mortgage. These programs make obtaining a mortgage more cost effective. There are even programs specifically for residents of each state. First time home buyer programs are available to those who have not owned a home for the past three years.

Fixed Rate Mortgage (FRM):

One of the many types of home loans offered to borrowers is called a fixed rate mortgage. Unlike an adjustable rate mortgage the monthly payments for a fixed rate mortgage remain “fixed” throughout the life of the loan and It's the best security against rising mortgage rates and higher payments. If you don't plan on moving in the next 7 years or so, the fixed-rate mortgage may be your best choice.

Adjustable Rate Mortgage (ARM):

Adjustable rate mortgages allow the interest rate on your home loan to fluctuate during its life. When financial markets are unstable, adjustable rate mortgages can be risky for home owners because the rate can increase with little notice. On the other hand, this type of mortgage may allow you to purchase a more expensive home.

ARMS may be a good option for home buyers looking for a low rate and low monthly payments; however, if you are planning on staying in your home for more than 7 years, you may want to look into securing a fixed-rate mortgage to protect yourself against rising interest rates.

Credit Score:

Your credit score, also called a FICO score, is a number that’s based on your credit report. FICO is the acronym for the Fair Isaac Corporation, the private corporation that created the most-known and widely used credit score model in the United States. The scoring has become widely accepted by lenders as a reliable means of credit evaluation.

A credit score attempts to condense a borrower’s credit history into a single number—the numbers range from the lowest at 300 (a poor credit score) to the highest score of 850 (an excellent credit score). The better your financial track record, the higher your score: a poor financial history will result in a lower number. In essence, the score tells lenders how likely you are to pay your bills.

Closing Costs:

Mortgage closing costs, also known as settlement costs, are fees charged for services that must be performed to process and close your loan application. Examples of mortgage closing costs include title fees, recording fees, appraisal fee, credit report fee, pest inspection, attorney's fees, taxes, and surveying fees. Lenders are required by law to disclose in writing, known as a Good Faith Estimate, your estimated mortgage closing costs and fees as a buyer.

Community Home Buyer Programs:

Community homebuyer programs reduce the down payment the borrower must pay to 3%, which must be the borrower's own funds. The closing costs can be gift funds, a grant, or seller assistance up to 3% of sale price. This type of home loan requires the home buyer to take a class on home ownership in their state. Upon completion of the class, the homebuyer will receive a certificate that reduces the cash requirement and expands the qualification ratios. Community homebuyer programs have been making it possible for many people to have the opportunity to buy a home.

What is Escrow?

Escrow is a deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of an event. In simpler terms, escrow is where the transaction changes hands and prevents the seller from not receiving the money from the sale and prevents the buyer from not receiving the home that was purchased. Escrow is important to both buyers and sellers during the mortgage process.

Annual Percentage Rate (APR)

The Annual Percentage Rate (APR) and the Annual Interest Rate are the two interest rates applied to your loan. The Actual Rate is the annual interest rate you pay on your loan (sometimes referred to as the "note rate"), and is the rate used to calculate your monthly payments. The amount of interest you pay, as determined by your Actual Rate, is only one of the costs associated with your loan; there may be others.

The APR includes both your interest and any additional costs or prepaid finance charges you might pay, such as prepaid interest, private mortgage insurance, closing fees, points, etc. Your APR represents the total cost of credit on a yearly basis after all charges are taken into consideration. It will usually be slightly higher than your Actual Rate because it includes these additional items and assumes you will keep the loan to maturity.  Because all lenders apply the same rules in calculating the annual percentage rate, it provides consumers with a good basis for comparing the cost of loans.

Mortgage Credit Certificates:

A Mortgage Credit Certificate, or MCC, is a certificate awarded by your local government agency authorizing the home loan borrower to take certain federal income tax credits. The credits awarded help to free up funds and make the monthly home loan payments more affordable for the homeowner. First time home buyers are typically the candidates eligible for an MCC, but in special cases this requirement may be waived.  Discuss this with your home loan advisor to see if this is an option for you.   Purchase price requirements also vary state to state and should be covered in conversations with your home loan representative.

Credit

Understanding Mortgage Credit. Every mortgage company determines the credit worthiness of a borrower in a slightly differently manner. In many cases, mortgage lenders use several different measures to determine a borrower's eligibility for a home loan. Some of the aspects of your credit that will be considered include payment history, amount of debt payments, bankruptcies, equity position, and credit scores. Your mortgage lender will help you further understand your credit rating and the impact it will have on your ability to obtain a home loan.

Credit Report Access.

Due to the Fair Credit Reporting Act, only you and those businesses that have a "legitimate business need and a permissible purpose" can view your credit profile. Unless you have given written consent ,individuals such as family members, neighbors, and co-workers are not allowed access to your credit profile. The businesses that generally have access to your credit information are credit grantors, collection agencies, employers, and insurance companies. Any company that receives a copy of your credit profile will be listed under the "Inquiry" section of your report.

Credit Profile.

Your credit profile provides mortgage brokers with information that will assist them in determining if you are eligible for a home loan. While this profile provides lenders with plenty of valuable information, it is important to know that your race, religion, health records, criminal records, and political preferences are not included in this report. Your credit profile provides information only about your employment history, credit information, public record information, and other inquires that have been made in the past.

What is a FICO Score?

All home loan lenders evaluate the risk associated with loaning a borrower funds and many factors will determine a borrower's risk. One important factor is an individual's FICO score. Your FICO score is a numeric representation of your financial responsibility and this number is based on your credit history. A scale is used to measure FICO scores and the number can be anywhere between 300 and 850. The higher the number the less risk associated with extending credit to that borrower. FICO scores are provided to mortgage lenders by the three major credit reporting agencies: Equifax, Experian, and TransUnion. The scores from these agencies are used when evaluating your home loan application.

Down Payment

Down Payment Support Programs.

Purchasing a home is a goal shared by many people but it can be difficult for some to collect the funds needed for a down payment. Fortunately, there are many programs to assist those who need help with down payments. There are national assistance programs and programs specifically for residents of your state. The precise requirements of the individual programs will need to be discussed with your mortgage broker but many assistance programs do not require repayment of the gift and do not place caps on the borrower's income to qualify for assistance. One such program is called Neighborhood Gold. This down payment assistance corporation provides free grant money to borrowers with no down payment. The qualifications for the Neighborhood Gold program are relatively simple to meet and your mortgage lenders are knowledgeable of the requirements.

Down Payments.

Gifts, Loans, and Your 401K Loans and gifts from family, friends, and other organizations can help you put together a down payment sufficient for your home loan needs. The percentage of the loan or gift that is available for use as a down payment can vary depending on the type of home loan you qualify for. It is important to discuss any loans or gifts you plan to use as a down payment with your mortgage lender. Many companies also offer programs to their employees to make the home buying experience easier. 401K plans are often used for this purpose and employees are permitted to withdraw from their 401K plans without penalty to provide a down payment on a home loan. Making use of your 401K program can be useful and beneficial but there can be drawbacks that must be examined.

Low Down Payment Qualifications.

Many factors are considered when applying for a low down payment home loan. These factors include a good credit background, sufficient appraisal value, and adequate income to pay the monthly mortgage payment. While these factors are important other considerations are also taken into account.

Your home loan professional will be able to discuss your qualifications with you on an individual basis. At this time other factors including your ability to pay the closing costs will be discussed. Closing costs are typically 2% to 3% of the price of the house. Your home loan officer will also discuss with you certain formulas that are used to determine your long term ability to pay for the home loan. Housing Authorities.

Housing authorities are agencies in states around the nation that handle housing issues in their designated areas. Many housing authorities strive to provide stable and affordable housing for low and moderate income persons and create living environments that help residents learn to live independently.

Calculator

Let these calculators guide you through your planning process. With access to hundreds of programs, you can get a general understanding of how much you can afford and what program might be right for you.

However, as we’ve said before, there are many factors that go into your calculated interest rate. Please call one of our mortgage professionals today and ensure you ‘re getting the best rate that’s right for you.

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Interest Only Mortgage Calculator

Use this calculator to generate an amortization schedule for an interest only mortgage. Quickly see how much interest you will pay and your principal balances. You can even determine the impact of any principal prepayments!

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Should you rent or should you buy your home? It takes more than looking at your mortgage payment to answer this question. This calculator helps you weed through the fees, taxes, and monthly payments to help you make a good financial decision.

Mortgage Tax Savings Calculator

Interest paid on a mortgage is tax deductible if you itemize on your tax return, so are points that are paid to lower your interest rate. Use this calculator to determine how much you could save in income taxes.