If you’re a fist time home buyer, you’ll want to know the basics.  Here’s what you have to know…and…no worries, we’ll be with you all along the way:

There are several steps in the process that begin with mortgage qualification.

This is step one and has to be done before you begin your search. Here’s why:

When you find a home you like and want to make an offer on it, you’ll be required to provide an “Approval Letter.” This comes from your mortgage lender and is proof that you have qualified to buy a home in the price range published.  The lender will check your credit rating and that of any co-signer, will check employment history, debt to income ratio and will then tell you what you’re qualified to do.  For instance, you may qualify to have a mortgage payment that includes property tax and insurance of $1,200 per month.  Assuming the taxes would be about $175/mo and insurance about $65/mo, the difference of $960/mo = the mortgage payment for principal and interest.

Right now, with good credit and all other things positive as well, and a debt to income ratio (that includes the new mtge.) at or below 31% of income, you’d probably be able to get a 5% rate or even as low as 4%. At the 5% rate, your mtge would run $5.37 per thousand.  Using this example, $960 divided by $5.37 = a mortgage no higher than $179,000.  The rates you’re offered vary according to your income, time in the work you’re involved in, total debt-to-income, credit history and score.

To get FHA financing, the only way right now to get a minimum down payment of 3.5% of the purchase price is you have to have a minimum credit score of 640 and debt to income with any new mtge of 31%, and be in your present job no less than 6 months.  So, you have to add up any and all monthly debt payments you now have, including student loans, to see where you’re at in the debt-to-income ratio.

The mtge lender you work with will go over all this with you but you have to do this as a first step.  I have good sources for mtge rates.  My sources will provide you with free qualification information and tell you what programs you are eligible for.  There are “first time buyer’s” programs and help with down payment plans you may qualify for.

Once you’re qualified and know what you can do, you can start searching. The qualification process is usually less than a week.

Part two: My M.O. on the search process is to set up an automated search that comes directly to you. This is designed to put you at “the front of the line,” where you’ll get all new listings as they appear on the MLS (multiple listing service) the same day all realtors do.  That way, you can get to the homes you like sooner than anybody else and not miss out on the home you really like.

You can also search other sites and send me any homes you want more info on.  When you see homes that appeal to you, send me the MLS #’s or the address.  I then pull up records to see when the home was last purchased, see what they paid for it and get an idea as to how we’re going to position to get you a best deal.  After you get the additional info, for any that you’re still interested in, I ask that you drive by before I make an apt. to get inside.  This is to ensure you like the homes’ curb appeal, n’hood and setting.  Those that pass,

we’ll go see.

You receive 10% of whatever fee I’m paid for bringing the listing agent a buyer.  On a $300k home, that would probably be about $810, and you’d get this from me the day you close on the home.

Part three: When you find the homes you want to see, we arrange a day/time to see them.  It’s best to do this in the daytime, hence, most usually on a Sat. or Sun?  We can see 3 – 4 homes per hour, including driving time.  So, in a 4 hour period, up to 16 homes.

When you find one you want to buy, we write a “Purchase Agreement.”  That takes only about 20 – 30 minutes.  At this point, you need to tender “Earnest Money” that you pay to the listing company. This demonstrates your high interest in the home.  It just sits in their “Escrow” account at the bank and becomes part of your down payment. Your down payment has to be at least 3.5% of the purchase price. On a $200k home that would be $7,000 that you have to bring to the close.  Closing costs for getting the mtge and all services needed are usually in the 3-4 % range.  However, I always negotiate with the sellers to pay that for my clients.  If the sale is not consummated, you get your earnest money back.

I then submit the “PA” to the sellers for an answer.

The sellers will go with your offer, turn it down flat or “counter” your offer. For example: say a home is priced at $220k and you offer $185k.  They would probably counter your offer at the midway point?  We can also counter their counter.  And, so it goes.

Part four: Once an offer is accepted, you’ll want to have the home inspected for anything that may be problematic, like a bad roof, a furnace that doesn’t operate properly, foundation problem, etc. This will cost about $350 and you pay for it whether or not you buy the house. If the inspection turns up a problem, we would insist the seller make repairs or give us a discount to cover the repairs.  If it passes, I then send copies of the PA to your lender and a Title Company for processing.  (You can expect to close on a home, that is-get all the paperwork done, within a month, but it can take about 6 weeks.)

The accepted offer now goes to your Lender and to the Title Company.

Part five: The lender’s ‘processer’ will check your employment history again, do another credit check, run ratios and then, if you’re all good there, order an “appraisal” of the home to prove it’s worth what you offered.  With that in the ‘OK’ column, the day/time and location for the close is set up and you make arrangements to get off work to be at the close, get the keys and garage door openers.  I always attend closings with my clients, just in case there’s a last minute problem and they need my help.

When we write a “purchase Agreement,” I include some protection for you. I write addendums that say: a) if you don’t get your loan, you get your earnest money back  b) if you don’t get the rate we indicated you would get, you get your earnest money back  c) If the home doesn’t pass inspection or if the sellers won’t make repairs we request, the deal is off and you get your money back  d) if the home doesn’t appraise for what you offered, you get your money back.

Again, it all starts with your qualification process. I’ll help you with it.  My sources are major banks and Independent Mtge Brokers.  It’s all done over the phone at no cost to you.

The “hurdles” in the qualification process are:  1) your age 2) your credit history 3) your employment history 4) your debt to income ratio 5) your personal assets.

It’s the best time to buy in the history of Real Estate!

Call today to get your process started.  It doesn’t matter whether you’re ready to buy now, but you need to know what you can do, when you are ready.

Call Ed: 651-770-5000  Can’t hurt to talk?

Whether you’re downsizing, up-sizing, investing in real estate or buying your first home…buying now, right now…is the best time to buy in 40+ years!

With over 7 million home owners behind on their mortgages, the already huge inventory of homes will get even bigger.  The choices available are phenomenal!

We’ve recently looked at so many foreclosures and short-sale homes and find a good percentage are not beat up at all.  In addition, many are eligible for the super FHA 203k plan, whereby you can get the fix-up cash you need…and…it gets better, since most of these will be devoid of all appliances, this program will kick in cash for that as well.  Nice! 

One of our “pros” recently put his client in a home that sold in the $230k’s just a few years ago.  Now, our client is in a large 4 bedroom, 2 bath home on a large, fenced lot with landscaping, a very big - new asphalt drive, new interior fixtures, new bath fixtures, new electrical box and some wiring, new plumbing, some new carpet and all new - higher end appliances.  He’s on cloud nine, thanks to our pro being informed.

All this was financed through this terrific FHA product and the client has nearly a new home.  He’s in it for the $164,900 he paid, plus the $25k he didn’t have but the FHA plan provided.

If you care to know how this plan could work for you, give us a call and we’ll give you the details.  We have so many first time buyers that know they can get a good deal but just don’t have the money to make repairs.  Find out how this plan can get you in the home you want and put the cash in your hand that you need.

And by the way, for those of you that would like to stay in your home, vs. a short sale or letting it go into foreclosure, give us a call, we’ll help you get the info you need.  No worries, you don’t have to be selling or buying, this one’s on the house!

We come across so many people that don’t understand how the “HAMP” program works…or…they’ve called their mortgage company and get nowhere on the phone with them.  You have to know how to work with these birds and what the rules are because half the time, they don’t know themselves.  Let me share a success story with you:

another of our “pro’s” is talking with one of our clients; a single mom with a serious financial crisis…less hours and very reduced pay, no where near the child support money she needs and…increased mortgage payments from an adjusted rate mortgage plan.  What to do?  She calls her lender and is told they will have to see if she’s qualified to adjust her payment…they’ll get back to her.  Weeks go by, no call back. 

She calls again and gets the same story.  (Enter our guy.)  She tells him what’s going on and he tells her she is qualified and asks her to give him an authorization letter, where he will be allowed to talk with her lender on her behalf.  He called the lender and told them she was absolutely qualified, to read the mandates and get busy helping this lady.  Within days…new ball game.  The lender is cooperating and the mortgage will be adjusted to a comfort level for her.  The family can stay put!

                                                                   Dontchaloveit!

And don’t be embarrassed if you paid too much, have no equity and the bank is on your case. (Cute story,see theWSJ /2/8/2010 by JamesHagerty.)  

My interpretation: the MBA (mortgage bankers association), movers  and shakers…right(?)…paid $79 million for their newer headquarters in 2007.  They thought they might be better off to sell it now.  They have an offer and it looks like they’re going to take it.  They owe the bank $75 million but the offer is for less, only $41.3 million.  Oh shucks…looks like they’ll have to come to the close with the balance…right?  Oh, but some good luck, they may not have drawn the whole amount because the bldg. was under construction.  They’ve refused to be interviewed about their intentions.  Smell fishy to you too?  But wait..there’s more!

Their chief executive, John Courson, in an interview last year, said that people that were “under water” -borrowers owing more on their home than it was worth- should keep paying their loans if they could.  He went on to say defaults hurt by lowering property values and sent the wrong message to their kids.  Well guess what?  He refused to be interviewed about what his Association was going to do about the balance owed.  Can we guess what that means?  Funny stuff, this?  You should feel bad about your situation?

                        Call us, we’d be happy to help you end the financial pain!

Back to the “buy” side; rates we thought were going up are still in the 5% range and jumbo rates are still in the 5.5% range…hey…the time to buy is right now…remember…you make money in real estate “on the buy.”  Also, if you’re buying to occupy, there’s the $6.5k to $8.5k govt. tax credit, or, cash if you don’t owe taxes. But that will blow away if you aren’t under contract by the end of April and scheduled to close by June 29th of this year.  Doesn’t look like they’ll extend it either…so…latch on if you can! 

Next time: “The Hogger.”  (Don’t miss it, it’s pretty funny…pathetic…but funny.)

 

Ed