First Time Home Buyers

What will work and what is myth

As we enter into the buying season, the idea of first time home buyers getting a deal is running rampant in the media. The TRUTH is with the declining market that has bashed so many home owners who got in over their head there is a fantastic opportunity for home buyers to buy their home.

Many people who felt like they missed the boat are getting a second chance to grab onto the dream of homeownership. The trick is to know what you can afford and making sure that you are able to qualify for a mortgage in this tightening credit crunching market.

All those words sound horrible, and they should, but they have been hyped once again by our friendly media to get us to watch their programming or read their papers.

Financing options are available for any person who truly should own a home. True, the guidelines of approval have somewhat tightened, but programs like 100% financing are still on the table for a broker who knows how to do his/her job.

With the government programs stepping up we can also offer 97% financing very easily. The key is the Debt To Income Ratios showing the true qualifying role since these programs are fully documented loans meaning that income is verified by showing tax paperwork.

There are two ratios that are used in determining the qualifying factors in home loan financing with a fully documented loan. They are called the top end, which is the housing expense in comparison to the gross household income, and there is the bottom end which is the total household expense compared to the household income.

Example:

            Bob makes $2,500 per month

            Mary makes $2,000 per month

            Household Gross income is $4,500 per month

Debt To Income Ratios (the outgo divided by the inflow) are as follows..

1. .Home costs can equal 31%-40%
2. Total expenses reporting on a credit report can equal 41% to 52% depending on the program chosen

In this example we look at a $4,500 income and back is out to see what is the affordable housing expense and overall expense that is acceptable by lender terms.

Let’s say we have the following payment made outside of the home…

1. Car: $300
2. Credit Cards: $200
3. Total : $500

If we take $500 and divide it into the total gross income we have a ratio of 11%

Now let’s take a look at the housing expense that would fit into these guidelines

For conventional financing which would require a minimum payment  45%-11% = 34%

34% of $4,500 = $1,530 to be allocated to the mortgage payment, taxes, and home owners insurance

Figure a rate of 6.25% for a fixed rate loan and that would give you a purchase price of $215,000

Here is how it breaks down…

1.      $215,000 @ 6.25% = $1,323

2.      Taxes @ 1.25% of $235,000 = $223.36

3.      Insurance of $50

4.      Total = $1,596

There are a number of programs to use to get the home you want and home ownership is as good of an investment as it has ever been.

When qualifying for the best possible loans, as the credit market has tightened the guideline, the king factor is Credit FICO Scores. This little three digit number plays a major role in determining who gets to qualify for a home and who does not quite make the grade.

The GREAT news is that Credit FICO Scores are a game that have rules and brokers in the know, know how to work with your credit scores. There are CREDIBLE companies out there who can work with you to improve your scores over a short period of time to make sure that you can qualify for you home loan.

We work with a sister company of ours, Credit Improvement Specialists to make sure that all of our clients can get the home they truly deserve.

But, even with a perfect FICO Score, you will still need to qualify for the home under the income requirements. Stated Income loans have become increasingly difficult to obtain and rightfully so.

To find out what you truly qualify for when purchasing a home, please fill out some basic information and we will get in touch with you quickly to give you a FREE consultation as to what will work best for you.

We can even work with you to cover the closing costs of your transaction. Most people miss the fact that even if a purchase can be 100% financed, there are still costs associated with the purchase that may or may not be covered. This is determined by the way in which the Real Estate Agent structures the offer.

Our other Sister Company Above The Clouds Real Estate will work with you to make the best advantageous offer to cover as much of the costs as possible.

If you are a the type of person who likes to search for your home on your own, we will provide you the tools and then write the offer for you. For you performing the search work on your own, we will credit you up to 60% of the Real Estate commission which is paid by the seller. On a $400,00 purchase with standard commissions paid out that would be a $7,200 to you and that would pay for the closing costs for your home purchase.

Creative Lending Solutions, Above The Clouds Real Estate, and Credit Improvement Specialists are here to get the job done for you and get you the best deal and even credit you thousands of dollars. It only makes sense to check us out and see what we can do for you.

You can fill our simple form by clicking here and we will be in touch with you within 24 hours.

Wishing You the best in Happy House Hunting.

Only Deal with the Best who have your Best Interest at Heart.

Greg Plummer

Contributing Author for Creative Lending Solutions