Buyers Buying First Home And Qualify For Mortgage
This Blog On Buyers Buying First Home And Qualify For Mortgage Was UPDATED And PUBLISHED On February 15th, 2020
Seeking the proper advice when home buyers buying first home is extremely important.
- There are so information for home buyers buying first home need in seeking the right home purchase advice
- Many buyers buying first home for first-time buyers often do not know who to turn to and get conflicting home purchase advice for first-time buyers
- This is even from loan officers and realtors
- This blog on home purchase advice for first-time buyers was published to help folks who have made a decision to purchase a new home
- Whether you are buying a first home or have experience in buying homes before, there are many things home buyers need to think about and consider throughout the home buying process
- Home Purchase advice for first-time buyers is to realize that the home buying and mortgage process is not as complicated as it seems
- We will try to list some basic home purchase advice for first-time buyers on this article
Chances are that the reading you are reading this blog is because you have decided on buying a new home and are looking for home purchase advice for first-time buyers. I like to congratulate you on making the decision on buying a new home.
Choosing Your Team To Help You With The Home Buying Process
Buyers Buying First Home should seek as much advice and tips as possible.
- Many real estate professionals will give home purchase advice for first-time buyers
- Most will often advise first time home buyers they will be making one of the largest investments of their life
- It is extremely important that home buyers understand the overall home buying and mortgage process
- This is due to the many factors involved
- However, home buyers do not need to worry
- This because they will not be stranded
- They will have a team of professionals who will guide them the right way throughout the whole home buying process
- Homebuyers worries and stress will be relieved
- The home buying process can be an enjoyable memorable and rewarding experience
- It will be an exciting event with the assistance of the home buyer’s realtor and loan officer
- Besides working with the real estate agent and loan officer, the home buyer may also have an attorney represent them
- There are states like Illinois where most home buyers are represented by real estate attorneys
- There are other states like Florida and California where real estate attorneys are not used
The title company handles all the work with the help of the real estate agent.
What Will My Real Estate Agent Do For Me?
Real Estate Agents are licensed professionals who represent home buyers and sellers for a living:
- They are familiar with the properties that are listed in the areas they represent
- Real Estate Agents will not just know the homes that are listed on the MLS
- But will also be very familiar with the neighborhoods, schools, shopping proximity, and other things about the area on the neighborhood buyers are targeting in buying a home
- A home buyer does not have to pay any fees or commissions to the home buyer’s real estate agent
- It is the responsibility of the home seller to pay the realtor’s commission on a home sale
- Which is normally 6% of the sales price of the home
That 6% realtor’s commission is then split up 50/50 between the listing real estate agent of the property and the home buyer’s real estate agent.
Hiring Real Estate Agent To Start Shopping For Homes
Here are other duties real estate agent will do for clients:
- Make a list of factors that are important to you and your family
Areas and neighborhood:
- minimum square footage of the home
- maximum purchase price
- property taxes
- proximity to schools
- proximity to major expressways
- proximity to stores and shopping center
- proximity to churches
- police, fire, parks
- other places of interest of the home buyer
The Role Of Real Estate Agents
With the information the real estate gathers, the realtor will start eliminating the homes that do not fit criteria and will select those that match buyers needs and price:
- The real estate agent will assist and offer their opinions on what they think is a good investment and those that may be overpriced
- The real estate agent will help buyers negotiate the home purchase transaction
- Real estate agents have a network of professionals
- They can always recommend to any service providers their clients may need
Real estate agents have databases for loan officers, insurance agents, real estate attorneys, title companies, home inspectors, contractors, and other professionals in the home buying process.
What Can I Expect By My Loan Officer?
Choosing The Right Mortgage Loan Officer is one of the most important decisions in the mortgage process for first time buyers.
- Need to do own credit and financial evaluation and choose a lender that is best suited to handle your home loan
- Not all lenders are alike
Most lenders have their own mortgage lending requirements which are called lender overlays.
What Are Lender Overlays?
Gustan Cho Associates has a national reputation of not having overlays and being able to close loans in 21 days.
Here are what overlays are and to better understand the importance of not having lender overlays:
- Overlays are lending requirements that are in addition to the minimum agency mortgage guidelines required by FHA, VA, USDA, FANNIE MAE, and FREDDIE MAC
- If you are a borrower with 800 FICO credit scores, low debt to income ratios, and no derogatory items on credit report, you do not have to worry about choosing a specific lender
- These types of borrowers can get qualified and approved anywhere and all they have to do is rate shop
- Unfortunately, this is not always the case
Buyers Buying First Home With Bad Credit
Many Buyers Buying First Home do carry some baggage:
Many Buyers Buying First Home have issues such as the following:
- lower credit scores
- collection accounts
- charge off accounts
- prior bankruptcies
- prior foreclosures
- tax liens
- higher debt to income ratios
- recent late payments
- late payments after bankruptcy and/or housing event
- other credit issues
Borrowers with credit issues need to find a loan officer and lender that specializes in tougher to do loans.
Finding Direct Lender With No Overlays
There are many lenders that do not have overlays. Gustan Cho Associates at Loan Cabin Inc. are direct lenders with no overlays on government and conventional loans:
- Borrowers do not have to pay off outstanding collection accounts or charge off accounts to qualify for a FHA Loan under HUD 4000.1 FHA Handbook
- HUD 4000.1 Handbook is the newest sets of FHA Guidelines
- HUD 4000.1 Handbook outlines the most recent FHA Lending Requirements
- However, many lenders will require additional requirements that surpass the minimum HUD Guidelines
- Borrowers can search online for keywords such as FHA Lenders With No Overlays or FHA MORTGAGE LOANS WITH NO OVERLAYS
- They should get a list of reputable lenders who do not have any overlays on home loans
- Can also ask a real estate agent for a referral of loan officers they can recommend
- Or an attorney or accountant
Choosing The Right Mortgage Loan Officer
Over 75% of our borrowers at Gustan Cho Associates are folks who either gotten a last-minute mortgage loan denial or are currently going through a stressful mortgage process with their current lender. The only reason for a last-minute mortgage loan denial or major stress during the mortgage process is because the loan originator has not properly qualified the borrower.
There are two reasons for this:
The loan officer did not know their mortgage lending guidelines:
- Loan officers need to know the basic lending guidelines on the loan program they recommend their borrowers
There is a two year waiting period to qualify for a FHA Loan after a Chapter 7 Bankruptcy discharged date:
- There is a four year waiting period to qualify for a Conventional Loan after a Chapter 7 Bankruptcy discharged date
- There is a three-year waiting period to qualify for an FHA Loan after a foreclosure, deed in lieu of foreclosure, and short sale
- There is a four year waiting period to qualify for a Conventional Loan after a deed in lieu of foreclosure and/or short sale
- There is a seven-year waiting period to qualify for a Conventional Loan after a standard foreclosure
If you had a mortgage part of your Chapter 7 Bankruptcy discharge the following applies:
- There is a four year waiting period to qualify for a Conventional Loan from the discharged date of your Chapter 7 Bankruptcy discharged date
- This holds true no matter when the foreclosure and/or sheriff’s sale was
- The foreclosure recorded date could have happened after the Chapter 7 Bankruptcy discharged date and the borrower can still qualify for a FANNIE MAE/FREDDIE MAC Conventional Loan
- This is because the waiting period start clock on Conventional Loans starts from the discharged date of the Chapter 7 Bankruptcy discharged date
Not the recorded date of the foreclosure, deed in lieu of foreclosure, or short sale date.
Buyers Buying First Home With FHA Loans
For FHA Loans, it is different:
- If you had a mortgage as part of your Chapter 7 Bankruptcy discharge, the waiting period is three years from the actual recorded date of the foreclosure, deed in lieu of foreclosure, or short sale date
- The discharged date of the Chapter 7 Bankruptcy does not matter
- Same with other government loan programs
- VA Loans has the same guidelines as Conventional Loans with prior mortgage included part of the bankruptcy
- The waiting period time clock does not start until the actual recorded date of the foreclosure and deed in lieu of foreclosure
- The waiting period starting from the discharged date after the Chapter 7 Bankruptcy discharged date only applies to Fannie Mae and Freddie Mac
The mortgage loan officer did not know their company’s lender overlays:
- Just because a borrower meets the mandatory minimum mortgage lending guidelines of FHA, VA, USDA, FANNIE/FREDDIE, does not mean that a loan officer can get the borrower approved and their mortgage loan closed
Most lenders have their own overlays:
- Lender Overlays are additional mortgage guidelines that are above and beyond those of government and/or FANNIE/FREDDIE minimum lending guidelines
- to qualify for a 3.5% down payment FHA Home Purchase mortgage loan only requires a 580 FICO credit score
- Many lenders do not care about what the minimum FHA Credit Score requirements are and may require the borrower to have at least a 640 FICO Credit Score
HUD does not require borrowers to pay off outstanding collection accounts and charge off accounts:
- However, most lenders will have overlays on outstanding collection accounts and charge off accounts
- if a loan officer is not aware that the mortgage company he or she works for has overlays on collections and charge offs, this could be a deal killer
Buyers Buying First Home Should Know What To Expect From Loan Officer
Buyers Buying First Home should know what to expect from their lender.
- The most important person in the entire home buying process is the loan originator
- Not only does the loan officer need to be knowledgeable in all aspects of the mortgage process, but borrower needs to get along with their loan officer
- The loan officer is in charge of making sure borrowers get their mortgage loan approved
They need to be on top of the mortgage process from the time of application until the loan gets clear to close and closed.
Duties Of A Loan Officer
Here are some of the things borrowers should expect from loan officer:
- Loan officer needs to offer the best loan program that is best suited for borrowers and their needs
- Be readily reachable via phone and email 7 days a week
- One of the biggest complaints by borrowers against their loan officers is that the loan officer does not return phone calls and/or emails promptly
- I have heard horror stories where loan officers have not returned phone calls to real estate agents and borrowers in days
- The loan officer should be available at all times to answer any questions borrowers may have
- Best way for a loan officer to explain complex mortgage questions is through using case scenarios
Home Buyers Buying First Home in need of home purchase advice for first-time buyers, please do not hesitate to contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email me us at [email protected] We are available 7 days a week, evenings, weekends, and holidays. Gustan Cho Associates is a national mortgage lender licensed in multiple states. Gustan Cho Associates has a national reputation for no overlays and closing loans in 21 days.
This BLOG On Buyers Buying First Home Was UPDATED On February 15th, 2020