A Qualified Mortgage Consultant Can Help Boost Credit Scores
Consumers interested in purchasing or refinancing a home will pay an interest rate based on current market conditions and their ability to pay back the loan. The borrower’s income and debt ratios are taken into consideration by the lender, as well as the predictability factor provided by credit scoring. It’s important to have a mortgage professional in your corner that has a keen eye for solutions to improving credit scores in an effort to get the best interest rate possible.
Interest rates associated with various loan programs are broken down into schedules based on credit score ratings. While each lender has its own guidelines, it’s safe to assume that as the consumer’s credit score goes down, interest rates will go up.
A borrower with an outstanding credit rating will get what is called an A-paper loan. This type of borrower is rewarded with a lower interest rate because they have a proven track record of using credit sensibly and paying their bills on time.
Loans designed for consumers with less-than-perfect credit – sometimes referred to as “sub-prime†– can range anywhere from A-minus, B-paper, C-paper or D-paper loans.
If you have already taken out a mortgage loan with a higher interest rate because your credit score was a little under par, you will really appreciate the value in doing a little work to improve your credit score. Refinancing from a D-paper loan to a B-paper classification can save literally thousands of dollars in financing fees over time, even though the B-paper loan is still considered sub-prime.
A qualified mortgage consultant will guide you through the nuances of the process of improving your credit score to refinance and save money. First and foremost, he or she will want to review the terms of the existing mortgage loan to determine if you have a pre-payment penalty clause written into your contract. In general terms, that means that if you sell the home or try to refinance before the pre-payment penalty expires and you have not already paid off 20 percent of the original loan amount, you will most likely have to pay a 3 percent fee back to the lender to compensate for the high risk and high costs incurred to provide that financing.
Next, you should obtain free copies of your credit reports from www.annualcreditreport.com and start working on improving the credit score six months prior to the expiration date on your existing pre-payment penalty.
There are five factors that make up the credit score and your mortgage consultant can coach you through some basic strategies to improve your credit score. This means very conservative use of credit cards, paying off debt as much as possible and not applying for additional credit cards unless you will benefit from such action. You will want to verify that negative items you have paid off are being removed from your credit report, and that good credit history is being reported to all three bureaus. You’ll also want to dispute any errors that appear on your credit reports and seek to have those removed entirely.
Once your credit score improves, it’s time to refinance at a better interest rate. Your mortgage professional should look for a program that carries no more than a two-year prepayment penalty so you can continue to refinance as your credit score increases. You can repeat this process until you reach A-paper status and secure the best interest rate available.
This is a strategy that also works well for first time home buyers who do not have enough credit history under their belt to get an A-paper loan at the time of purchase. The important thing is to work with a mortgage consultant who can give you a road map to follow and a strategy for success in building personal wealth.
Buy Your First Home
Editors Note: Due to the mortgage and credit crunch, many no down payment or 100% mortgages are no longer be available. If you’re in need of a mortgage for purchase or refinance in Denver, CO contact us to discuss your mortgage options.
Are you interested in buying your first home. Its easier than you might think! Did you know that in 2005, 43% of all first time home buyers used mortgage programs with no down payment?A good mortgage professional can help find a loan program to make your dream a reality.
One thing to consider when purchasing your first home is all the extra expenses. The hidden cost of homeownership. When renting you often don’t have to pay for garbage collection, water etc. These are just some of the hidden costs involved.
You may want to consider Down Payment assistant program to help with down payment or closing costs when purchasing your first home. In addition to this you may ask for seller contribution of 3 – 6% for additional help. Your real estate agent can help you structure the contract.
With the many programs that are available to you as a first time home buyer, you should have no problems finding the right program for your buying needs. Your mortgage professional will be able to go over different options and inform you how to get your home purchase done with no down payment and zero out of pocket expenses.
The payment on your new home has tax advantages. Your payment could be slightly higher the your current rent payment, but, because of tax advantages, you could actually be saving a couple of hundred dollars a month.
Many first time home buyers that do have the additional savings for a down payment and closing cost choose to use 100% financing options and seller contributions so they can save those funds for things like new furniture, remodeling or painting, landscaping, etc. Don’t forget that once you own the home you will want to make it your own with some personal touches.
Many first time homebuyers purchase a home with a first and second mortgage. By doing this you can avoid mortgage insurance and you can purchase a home with no down payment. Your first mortgage will be 80% of the purchase price and the second mortgage will be 20% of the purchase price. The second mortgage will either be done as a home equity line of credit, a HELOC, or a second mortgage.
Other sites: Loan Officer | FSBO | VA | Investor Loans | Selling your home with a real estate agent | Why is my credit bad | MIP| Pay Option Arm Calculator
Can I buy a home with no money down
Editors Note: Due to the mortgage and credit crunch, many no money down loans are no longer be available. If you’re in need of a lender in Denver, CO contact us to discuss your mortgage options.
Many people today are faced with the difficult challenge of trying to save money for retirement, for children’s tuition, for a home, and anything else you can think of. This is why there are now many options for consumers to purchase a home and obtain a mortgage without needing to put any money down. There are many programs out there for first time home buyers that offer true zero down home loans and mortgages for people who are not able to save 5, 10 or 20% for a down payment. You do not even need perfect credit to qualify for a no money down home loan. Contact your mortgage broker today to get pre-qualified immediately.
Mortgage brokers have a wide variety of lending products available to them. You may not need to have outstanding credit to qualify for 100% financing.
Many mortgage brokers have an arsenal of loan programs with “Zero Down” features. One popular such mortgage is the 80/20 piggyback program, in which the entire purchase price of the home is financed with two loans, one in the amount equal to 80% of the home price and a second mortgage making up the remainder 20%. Nowadays “No Money Down” financing is easier to achieve than ever before.
It is very important that you have good credit in order to buy a home with no money down. I did not say perfect credit but good credit. There are some no money down programs for credit scores under 600 but here is the catch. Getting 100 per cent financing with a sub 600 score will usually mean a rather high rate of interest and subsequently higher payments. Also you will be required to provide full proof of your income, often making qualifying difficult.
If you are required to put money down, ask your mortgage professional if they use a down payment assistance program. Many times these programs will help you purchase a home, and grant the money to you. You are not expected to pay the money back, and it is a great way to purchase your first home. The down payment assistance program must be in the offer to purchase, so you need to tell your realtor that you are going to be using one. Your local mortgage professional can tell you if you qualify for such a program.
Although it is possible to buy a home with no money down, it will be important to remember most purchases will require a down payment and perhaps closing costs. Although gift money is allowed, it will be important to disclose this early in your conversation with your loan consultant in order to help guide your loan application towards the right lender.
Some lenders will require 2 months cash reserves to cover the mortgage payment, taxes and insurance. This is becoming more popular in today’s market as the market tightens up.
Most lenders will allow 3-6% seller concessions. This basically means that the seller will pay your closing costs for you, up to 3-6% of the purchase price. Be aware that the seller usually cannot pay ALL of your closing costs. Usually you will have to pay certain costs yourself, such as pre-paid interest or tax and insurance reserves.
Situations like this are not uncommon. If the purchase is for your primary residence, you will have an easier time getting a loan than if you were using the home for investment purposes.
Colorado Down Payment Assistance Programs
Down Payment Amount: $20,000
Phone Number: (303) 738-8065
Down Payment Amount: $10,000
Phone Number: (303) 360-0053
Down Payment Amount: $5,000
Phone Number: (303) 572-9445
Down Payment Amount: $5,000
Phone Number: (303) 572-9445
Down Payment Amount: $6,000
Phone Number: (303) 572-9445
Down Payment Amount: $3,500
Phone Number: (303) 572-9445
Down Payment Amount: $5,000
Phone Number: (303) 572-9445
Down Payment Amount: $10,000
Phone Number: (719) 387-6714
Down Payment Amount: $10,000
Phone Number: (303) 477-4774
Down Payment Amount: $10,000
Phone Number: (303) 534-8342
Down Payment Amount: $10,000
Phone Number: (303) 572-9445
Down Payment Amount: $10,000
Phone Number: (303) 477-4774
Down Payment Amount: $10,000
Phone Number: (970) 328-8771
Down Payment Amount: $10,000
Phone Number: (970) 328-8771
Down Payment Amount: $10,000
Phone Number: (970) 328-8771
Down Payment Amount: $9,000
Phone Number: (970) 221-6595
Down Payment Amount: $2,000
Phone Number: (970) 945-9762
Down Payment Amount: $5,000
Phone Number: (303) 275-3450
Down Payment Amount: $7,900
Phone Number: (970) 667-3232
Down Payment Amount: $9,000
Phone Number: (303) 441-3987
Down Payment Amount: $11,800
Phone Number: (970) 874-8204
Down Payment Amount: $3,000
Phone Number: (303) 477-4774
Down Payment Amount: $5,000
Phone Number: (970) 542-0955
Down Payment Amount: $25,000
Phone Number: (719) 584-0817
5,000.
Phone Number: (719) 544-8078
Down Payment Amount: $10,000
Phone Number: (970) 728-3034
Down Payment Amount: $10,000
Phone Number: (970) 468-2403
Down Payment Amount: $11,772
Phone Number: (970) 453-3557
Down Payment Amount: $10,000
Phone Number: (970) 453-3404
Down Payment Amount: $3,000
Phone Number: (970) 453-3557
Down Payment Amount: $4,000
Phone Number: (970) 352-1551
In addition to the government sponsored down payment assistance programs, there are many non-profit organizations that will grant you your down payment. You should ask your mortgage broker what program is right for you.
Condominium
Condominium – A form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex; the owner also shares financial responsibility for common areas.
For many first time home buyers, a condominium is an ideal starter home.
An individual condo owner holds title to the condominium unit only, not the land beneath the unit, so condos can be stacked on top of each other.
Despite being similar, town homes or townhouses are not considered condos. They are considered an attached single family residence or a planned unit development.
Condos serve as a great purchases for someone who doesn’t have a large family and doesn’t want the burden of cleaning or the maintenance that a larger home requires.
Condos are classified as high rise, more than five stories, and low rise, less than five stories.
On most condo projects a home owner association has been established to maintain the grounds and common areas.
Condominiums typically require slightly higher homeowners association dues to pay for insurances that are required and up keep of amenities and common areas.
For a mortgage loan secured by a condominium unit to be eligible for delivery to Fannie Mae (FNMA) or Freddie Mac (FHLMC), the condominium project must be approved by FNMA and FHLMC. In order for a condominium development to be accepted, it must meet certain requirements promulgated by Fannie Mae and Freddie Mac. Some of the more important requirements are, the minimum number of units already sold, the number of owner occupied units and units being rented in relation to total number of units in the development, and if any one investor holds title to more than a certain percentage of total units.
Condominium boards often require an interview with a condo buyer to ensure the potential occupants meet their requirements. Some of the condo boards’ criteria are the occupant’s family size and income situation.
The Condominium Market is booming across the United States. Apartments are being converted into condominiums in record numbers and prices continue to rise. This phenomenon is being met with mixed emotions by some. On one hand it reduces rental units available for those not financially capable or interested in home ownership. On the other hand it is argued that Condominiums aid many buyers in getting in on entry level home ownership.
A great way for young adults to get started buying their first home is by using the FHA “Kiddie” Condo Loan Program. This type of mortgage allows a person to co-borrow with a blood relative (e.g. parent, grandparent, sibling, etc.) who helps qualify for the loan using their income or assets. Both borrowers take title to the property and sign for the loan.
One advantage to owning a Condo is not having the requirement for a survey to be done.
Some lenders will consider a mortgage loan secured by a condominium to have more risk than a loan secured by a single family residence. In this case, the lender will charge a slightly higher rate of interest for the condominium loan.
This is an ownership where the owner gets title to a unit, in a multiple dwelling plus a proportionate interest in some of the common areas.
Some financial “gurus” have advised against this because you are turning unsecured debt into secured debt. While this is basically true the fact is that defaulted unsecured debt can be secured against real property very quickly once the debtor is sued for it and a judgment is received.
In order to decide if a debt consolidation is your best action, you should figure what you are paying now and how that will translate in the length of time it will take you to pay off those credit cards. You may find that rolling those debts into your mortgage will save you thousands of dollars in interest payments.
A mortgage agent can help you decide if refinancing credit card debt into a mortgage is your best option. Using financial calculators available, they can compare how long and how much it will cost you to pay off credit card debt using your current monthly payments vs. refinancing the debt into a new mortgage. Very often the monthly and lifetime savings is large.
One major difference between unsecured (e.g. credit card) debts and secured (e.g. mortgage) debt is should a financial disaster arise, such as health issues, or lose a job, and a homeowner defaults on unsecured debts, he can file bankruptcy protection and keep the home, whereas if he defaults on mortgage payments, he would be forced into foreclosure.
If you are planning on selling your home in the near future, you may want to rethink consolidating. You need to make sure that you have enough equity to pay for realtor’s commission and down payment or closing costs on the new home.
If you have gotten buried in a hole with credit card debt it could be a necessity to refinance your home and pay off your credit card debt. It has been known to save thousands of dollars. On the other side of the spectrum, if you only have 5 months left on a credit card bill it is note wise decision to bury that into a mortgage.
You can consolidate your credit card debt through use of your first mortgage or by obtaining a second mortgage or a home equity line of credit, also known as a HELOC. A HELOC works with the same basic principals of a credit card. It is a revolving account that as you pay the equity line down, you have that money available to you to use again. With a second mortgage you simply have a set term (5 years, 10 years, 15 years, etc…) that you will pay on the loan for and when it is paid off you are relinquished of your obligation to this debt and the account closes. All 3 (1st mortgagee, 2nd mortgage or HELOC) are excellent choices for debt consolidation but you and your mortgage broker will need to figure out which one makes the most sense for your particular situation.
Consolidating credit car debt into your mortgage can save a homeowner hundreds and sometimes even thousands of dollars per month by lowering their total monthly obligations. When you consolidate credit cards into your mortgage you also are able to lower your interest rates on those credit cards which essentially saves you a lot of money but you are able to write off the interest on your tax returns from your mortgage and you can not do this with your credit cards.
If you want to use a refinance loan to consolidate some of your debts, you’re going to have to borrow more than the actual amount remaining on the loan that you’re refinancing. This additional amount will be used to pay off those debts that are being consolidated and will affect the monthly payment of your refinanced loan. By doing this, however, you can make your finances and outstanding debts much more manageable and will likely become debt-free much faster.
When deciding to refinance for debt consolidation you might want to consider how long you will have to pay your credit cards if you are only making the monthly minimums. This can take you much longer in most cases than paying on a traditional 30 year fixed mortgage.
Other sites: Mortgage Broker | Investor Loans | Reduced Documentation Loans | Fixed-rate mortgage | Increasing your homes value | Why should I refinance | MIP | Rehabilitation mortgage | VA| Pay Option Arm Calculator
First time home buyer
Editors Note: Due to the mortgage and credit crunch, First time home buyer mortgages may be harder to obtain. If you’re in need of a Denver FHA Mortgage contact us to discuss your mortgage options.
Many people dream of owning a home but the home loan process can be confusing for many first time home buyers. Mortgage lenders offer first time buyers with many home loan options and assist the buyer in finding the best home loan for them. First time home buyer programs can offer lower interest rates, low down payments, or reduced taxes.
If you’re a first time home buyer and need help paying closing costs, consider a loan that allows you to roll your closing costs into the loan amount. 103% – allows 3% of the purchase price to be rolled into the loan. 107% – allows 7% of the purchase price to be rolled into the loan.
Many lenders and insurance companies offer a First Time Home Buyers Education course that is free. Some first time home owner loan programs require you to take this course. The company that offers the course will often issue a certificate once the course has been completed.
Be sure to get pre-qualified by your mortgage professional so that you will know how much you can afford to spend on a home. There are many different first home buyer loan programs available. It’s important to consider all aspects of the program, not just the amount of the down payment, to ensure that it will be the best one for you both initially and over the next several years.
If you have not owned a home in 3 years you are considered a first time homebuyer and can be eligible for first time homebuyer programs.
Some of the programs require you to be a true first time home buyer. This means that you have never had any interest in any real property, ever, compared to some other programs that simply require a three year window with no ownership.
Many states and local counties offer down payment assistance programs to First Time Home Buyers. To qualify, most such programs require that the FTHB’s incomes be within a certain limit. There may also be limits on the property locations and project developments. These programs also have measures in place so assistance recipients cannot profit from selling the homes or refinancing the mortgages to cash in the equities built in the homes within a specified period of time.
Fannie Mae and Freddie Mac both have 100% first time home buyer programs. You may have to pay Private Mortgage Insurance (PMI) There are alternatives to paying PMI, ask you mortgage broker for more information.
With an abundance of no and low down payment loan programs along with loan programs that allow seller contributions toward closing costs, the climate as never been easier for the first time home buyer.
If you are a first time home buyer, please speak with a loan officer and your realtor or seller about seller’s concessions which may help cover closing costs in a no money down or 100% financing scenario.
Ask your mortgage broker about what first time home buyer programs that are available to you. You might even qualify for a down payment assistance program. There are several down payment assistance programs that may be able to grant you the money for your down payment. The grant must be agreed upon by both the seller and buyer, and must be in the offer to purchase. The grant money does not need to be paid back, and could help you qualify for your first home!
Some of the first time home buyer programs can be used with multiple down payment assistance programs on the local and state level as well.
There are some differences in Buyer’s Assistance programs though. Some programs will actually put a lien on the property for a certain period of time. As long as you own the home for that time period the lien will be released and won’t have to be paid back. You might want to ask about the program if you are looking at this option to determine if it will fit into your needs.
Many first time home buyers purchase property with no money down.
In 2005 43% of first time home buyers used 100% financing. That’s right! No money down! Those buyers only had to pay their closing costs.
Being a first time homebuyer can be a scary yet exciting time for a family. Along with the freedom and pleasure of owning your own home come many responsibilities. You will now have to pay property taxes, homeowners insurance, maintain the upkeep you your lawn, landscaping and exterior of your house, be prepared for inside home maintenance and take care of old worn out appliances in your home. When you furnace goes in the middle of winter there will be no landlord to call to come over immediately and have it fixed or replaced. However the rewards of owning your own home tremendously overshadow these minor responsibilities. Being a homeowner allows you to have the freedom you have always desired to have with YOUR OWN HOME. This home will belong to you and is yours to do with as you please. No more rules from parents or family members, no more landlord restrictions, no more neighbors that live above you and below you as in the apartment you just moved out of and no more having to be quiet as a mouse so that you will not disturb your neighbors through the paper thin walls in your apartment building. You make your own rules now. Being a homeowner gives you tax advantages during income tax time, it provides you with an investment of your money, and it provides you with a place to grow memories for yourself and your family. A good mortgage professional can help you understand what to expect during your first years of homeownership and will walk you through step by step of the mortgage process so that you understand what is going on throughout the processing of your home loan application. Find a mortgage professional that comes highly recommended from a family member or friend, or make sure you find someone you can TRUST when you are looking to buy your first home. This will truly make a big difference.
There are many programs for purchasing a new home with no money down. Perfect credit is not required and in most cases closing cost up to 6% of the loan amount can be financed into the loan.
Not only can you acquire 100% purchase which entails no down payment money, but a good real estate professional can also get the seller to pay closing cost. Which means no money out of pocket at all.
Find a good loan professional in your area to give you an overview of the process and also get pre approved so that you know what price of home you can purchase.
Using a real estate broker is a very good idea. All the details involved in home buying, particularly the financial ones, can be mind-boggling. A good real estate professional can guide you through the entire process and make the experience much easier. A real estate broker will be well-acquainted with all the important things you’ll want to know about a neighborhood you may be considering…the quality of schools, the number of children in the area, the safety of the neighborhood, traffic volume, and more.
Your mortgage broker can recommend a realtor in your area that specifically works with first time buyers. They will be more sensitive to 1st time buyers needs as well as their constraints.
With the many 100% financing mortgage programs available today you may not need to use a down payment assistance program if you have fair credit. Ask your mortgage broker the pros and cons of each scenario.
First Time Home Buyer Loan Programs
Editors Note: Due to the mortgage and credit crunch, many First Time Home Buyer Loan Programs may no longer be available. If you’re in need of a Denver Mortgage contact us to discuss your mortgage options.
Today, there are many first time homebuyer programs to choose from.
FNMA and FHLMC has several loan programs with features designed to benefit First Time Home Buyers.
Buying a home can be a daunting experience — even for a savvy veteran. When it comes to a first time home buyer, it’s downright scary. It can keep you awake all night. There’s a whole new language to learn and your personal financial life is hanging out for a bunch of strangers to examine and rule on. It’s confusing and intricate with a million things to remember and follow up on. Not to mention the basic underlying questions: Is this house really worth the money? Will the value go up or down? Am I buying in the right neighborhood? What if the house falls down soon after I buy it? Am I doing the right thing? Should I just rent for another year? In the light of day, however, it’s a business transaction that thousands go through every day. If they can do it, so can you.
In today’s aggressive residential finance marketplace, it has become increasingly easy for people with good and even fair credit histories to take advantage of promotional first time buyer programs which allow for no money down 100% bank financed mortgages incorporating closing costs, as well as aggressive introductory rates on the mortgage and on HELOC’s and credit cards from the same lender.
Another way to get some, if not all, of your closing costs paid is to have the seller of the home contribute a percentage to be applied towards your closing costs. The most common is a 3% contribution and most contracts have a provision for this. Ask your realtor how to structure your contract.
80/20 –no money down combination program. Eliminates mortgage insurance with 80% First Mortgage, 20% Second Mortgage.
Many of the first time homebuyer programs require as little as $500 from the borrowers own funds. The rest can come from gifts, grants, or seller concessions.
FHA – often the best choice in first time home buyer programs. Requires 3% down and upfront mortgage insurance.
Fannie Mae My Community Mortgage 97 or 100% is a great loan for the first time homebuyer with little or no down payment as well borrowers with little or no credit history.
A first time home buyer may also qualify for the Down Payment Assistance Programs as well by qualifying for any owner-occupied home loan from a lender who accepts grant funds from a nonprofit organization, and by purchasing a participating home from a seller who agrees to make a contribution to the program after the home closes.
A first time homebuyer is someone who has NOT owned a home in the last three years.
The Texas First Time Homebuyer Program provides below market interest rate mortgage loans through a network of participating lenders to eligible families and individuals who are purchasing their first home or who have not owned a home in the past three years.
There are great first time home buyer programs for neighborhood champions. Teacher Flex if for a full or part time teacher, administrator, librarian, counselor, administrative staff and support ampersand custodial staff. Police and Firefighter Flex is for full time sworn member of a police department, sheriff’s office, corrections department or other agency who is responsible for law enforcement or offender detention, full-time sworn member of a fire department who is responsible for fire suppression, emergency medical response, ampersand terrorism response. Medical Worker Flex is for a medical resident, physician or fellow: full time dentist, oral surgeon, dental assistant; full time healthcare employees including RN, LPN, LVN, CAN, AUA, UAP, physicians assistant, licensed medical technologist or therapist.
It is important that you get away from renting and become a homeowner in order to start building your equity for future upgraded home purchases.
There are also loans where the first time homebuyer may opt to roll the closing costs into the loan.103% – allows 3% of the purchase price to be rolled into the loan.107% – allows 7% of the purchase price to be rolled into the loan.
First Time Homebuyer
Editors Note: Due to the mortgage and credit crunch, First Time Homebuyer Mortgages may be harder to obtain. If you’re in need of a Mortgage in Denver contact us to discuss your mortgage options.
A first time homebuyer can purchase a home and obtain a home loan with zero money down many times. The better your credit is, chances are the better your mortgage interest rate(s) will be.
In some states/counties, first time homebuyers are entitled to a discount on some of the fees associated with purchasing a home. There is often a discounted transfer tax. You may be required to sign an affidavit stating that you are a first time home buyer. The affidavit will also define what qualifies as a first time home buyer. In some instances you can not have owned any interest in any property ever, in some cases it is if you have not owned any property in the past three years
Lenders are constantly coming out with new mortgage programs to help first time home buyers purchase a home. Check with you local mortgage professional to see what programs are available for you.
First time homebuyers who don’t have a down payment end up doing an 80/20 and usually on a 2/28 or similar product. It just makes better since because getting one loan or a fixed rate would result in a larger monthly payment.
When you are making an offer on the home you should ask for seller concessions. Many lenders allow seller concessions up 6%. These concessions will cover all the closing costs and will allow you virtually zero out of pocket expenses.
You may also be able to use a down payment assistance program if you cannot secure 100% financing and have no down payment of your own.
How to shop for a mortgage
Mortgages are complicated. Not only is the process complex and stressful, but it may be the largest financial transaction of your life. It is important that you choose the right loan, the right mortgage banker, and get the best rate. So how do you coordinate all of these things and still manage to close on your home?
When shopping for a mortgage choose the mortgage broker that focuses on your needs and addresses those needs with the right loan program.
Shopping for a mortgage can be overwhelming to an inexperienced loan shopper. The process can be complex and intimidating. It is probably best to work with someone that comes highly recommended by a friend or relative. However sometimes you have to do your own research. In that case, choose a mortgage professional that conveys your needs and understands your unique financial needs. Make sure all of your questions are answered clearly and to your satisfaction.
When shopping for a mortgage learn about the various types of mortgages available–such as 30-year or 15-year fixed rate, adjustable rate mortgage (ARM), balloon etc. Get quotes from at least three lending institutions or brokers before settling on one. Get referrals from your realtor, friends and family members who have recently purchased homes. Request an itemization of closing costs from each lender before submitting an application. Inquire about charges on one lender’s list that are not on others; this may prevent undisclosed fees from surprising you at settlement.
Make sure you are 100% comfortable with the mortgage professional you choose. If at any time you feel out of the loop, this mortgage professional should be willing to answer your questions and/or concerns in a timely manner.
Unless told otherwise, your mortgage broker will always assume your property and situation are plain vanilla. Be sure to inform your loan officer if the property is a single family residence, a unit in a condominium, or other type of property, and be prepared to divulge your social security number and authorization for us to pull your credit report.
Remember your broker takes all your info and uses that to determine the best loan for your situation but you ultimately have the final say in which loan you want.
For first time home buyers, when it comes to determining how much mortgage can you afford, it is important to stay realistic and be honest to yourself. Lending institutions’ qualifying ratios completely ignores your other financial goals, such as contributions to retirement/children’s college funds. Nor do they take into account remodeling expenses.
Today the loan process is so much easier online. Before the Internet the loan process was a hassle. You would typically have to take off work to meet with bankers and present mounds of paper work before you had any idea what programs might be available for your situation. Now you can do your necessary research online in the comfort of you own home.
Getting the best deal depends on more than just finding the best interest rate or lowest closing costs. You must take both of these things into account. You must also be sure that the loan itself is appropriate to your situation. You wouldn’t want a 2-year ARM if you know you will be living in the house for a long time and don’t plan on refinancing. Likewise, you wouldn’t want a 30-year fixed rate mortgage if you plan on moving or refinancing within a year or two. Different loan programs have different interest rates, so you must be sure to get a loan that is appropriate to your situation, or you may pay too much!
Getting a mortgage and getting your vehicle fixed are two very different propositions. But they are alike in the fact that you truly want someone you can trust to perform the needed duties. A good mortgage agent and a good mechanic should have the same goals: to serve the customer in such a way that they will return and refer other business in the future. Go with someone you can trust.
Choosing the right loan for you can be difficult, once you have chosen your mortgage broker their job is to choose the right loan for you and your situation.
Sources for Down Payment funds
Editors Note: Due to the mortgage and credit crunch, many down payment programs are no longer be available. If you’re in need of a Denver mortgage contact us to discuss your mortgage options.
There are many acceptable ways to obtain some additional funds for a down payment and closing costs. First time home buyers and investors are more recently applying for 100% financing. If you have funds for a down payment and/or closing costs, this can help to reduce your interest rate.
A Secured Line of Credit such as a Home Equity Line of Credit (HELOC) can be used as a source of funds.
If down payment money is hard to raise for you and your family, talk to us about 100% financing and seller’s concessions.
If you are relocating at the request of your employer, find out if your company offers programs to assist in paying for part of the down payment and closing costs. Many large corporations have such programs as employee benefits. Even if you work for a small company that does not have such programs in place, you may still be able to negotiate for some relocation assistance.
The Genesis and Enterprise are two other programs that will help with down payment assistance. Some of the down payment programs are set up where they put a lien on your property for a certain period of time such as 5 years. As long as you own the property for this amount of time the lien will be released.
Each type of mortgage and lender has different guidelines for what are allowable sources for down payments. Consult with your mortgage broker as to what is the best place to start and how to track the funds for approval.
There are also programs available through non-profit and/or your local, state or federal government called Down Payment Assistance (DPA) programs.
Honesty is the best policy when getting a mortgage. Watch out for anyone who asks you to withhold information from the lender. Some home buyers might be tempted, for example, to fudge the facts about the source of their down-payment money. A lender will assume that the down payment comes from savings. If the money comes as a gift or a grant, that fact has to be disclosed — even if it means the borrower has to pay a higher interest rate or shell out for mortgage insurance.
Family is a great place to start. Talk to your immediate family, parents, brothers, sisters, grandparents, etc. they may be able to help you out with a Gift of funds. This Gift is not a loan, and they will often have to fill out a Gift Letter stating where the funds are coming from and how they are related to you. In some cases a bank statement from them may be required to source the funds.
Many states and cities have bond programs that provide down payments for homebuyers.
A good source for a down payment is money that people with 401k’s have already saved. Using money in a 401k for a down payment on a home, if done wisely can be just a good of an investment in their future. Real Estate normally is a low risk investment when compared to other types of investments. Homes usually appreciate over time under normal conditions. This appreciation over time can often outpace the gains made in a retirement account.
Another source for down payment assistance are grant assistance programs such as the Nehemiah program that you do not have to pay back! You can get as much as 6% down of the final contract sale towards down payment or closing costs.
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