First Time Home Buyer Mortgage Programs With No Lender Overlays
This BLOG On First Time Home Buyer Mortgage Programs With No Lender Overlays Was UPDATED On June 6th, 2019
If you are a first time home buyer, you need to be aware and research on the home purchase and mortgage loan application process.
- Before you go out shopping for a home or contacting real estate agents, you need to consult with a mortgage loan originator
- A loan officer will help borrowers qualify them for a loan program
- The loan officer will go over borrower’s credit, income, and assets and see what amount they qualify for
- First time home buyer with bad credit and who do not quite qualify yet, the mortgage loan officer can help them get qualified for a home loan
- First time home buyer needs to get educated on the types of mortgage loan programs that are available and which mortgage loan program is best suited to your needs
- Types of mortgage loan programs include FHA, VA, USDA, Portfolio Loans, Jumbo, and Conventional, or Non-QM Loans
- Once you have set your mind that you want to be a homeowner, you should start the mortgage application process as soon as possible
- There are times when you think that you are a sure bet in getting a mortgage loan approval
- A mortgage loan originator can any first time home buyer with less than perfect credit, high debt to income ratios, lack of down payment and/or closing costs, collection accounts they do not know about, or most commonly, errors on credit report
- All of these items take time to take care of
- The sooner you get qualified the better situation you will be in when the right home steers your way and you need to make a purchase offer
In this blog, we will discuss First Time Home Buyer Mortgage Programs With No Lender Overlays.
Pre-Qualified Versus Being Pre-Approved
Your first step as mentioned above is to get pre-qualified and pre-approved.
- Once a mortgage loan originator deems a first time home buyer qualified and pre-approved and has reviewed the mortgage loan applications, credit report, credit scores, credit history, and an automated approval per Automated Underwriting System, the first time home buyer will have the green light to make a real estate purchase offer on a home
- There is no deadline date on a pre-approval
- As long as the first time home buyer is employed and are not late on monthly payments, the pre-approval should be good indefinitely unless the borrower’s income changes
- Take time shopping for homes
- Many times the right home will come up
- Buyers should never make a purchase offer without having to go through the pre-qualification and pre-approval process
The mortgage loan originator will give you a figure on how much house you can afford. Just because you are qualified for a certain amount of mortgage loan amount, you need to make sure that the monthly mortgage payments are affordable.
There are many advantages of being a homeowner versus being a renter, especially the appreciation potential. Real estate prices are still low after the 2008 real estate and mortgage meltdown and there are many properties where the upside appreciation potential is a true given and a no brainer. Many homes are listed and selling below construction and re-build costs which will eventually appreciate. Everyone likes a nice home with as much amenities as possible, however, you need to realize that as a first time home buyer and new homeowner, there will be a lot more expenses in being a homeowner than being a renter. Besides your principal, interest, taxes, and insurance ( PITI ), you will have added monthly expenses in being a homeowner. Water, scavenger, repairs, maintenance, landscaping, and other fees associated with maintaining your new home will occur and sometimes high ticket repairs like HVAC repairs and repairing appliances can occur without no notice and these repairs can be quite costly. It is recommended that you do not buy more house than you can afford and just because you qualify for a large mortgage loan amount does not mean that you can afford that mortgage amount. Mortgage lenders will not count your personal expenses such as entertainment, child care, schooling, and other expenses that you have. When a mortgage lender gives you the maximum amount you qualify for and your monthly payment, review it carefully always keeping in mind reserves for unexpected repairs.
Down Payment And Closing Costs
Many potential first time home buyers do not realize that they can actually afford to be a homeowner and that a huge down payment is not needed.
- I spoke with a first time home buyer just recently who told me she was not ready to purchase a home
- This is because she only had a 10% down payment
- She thought that she needed a 20% down payment
- That is so not true
- Most home buyers do not have 20% down payment to put down on a home purchase
- Borrowers can qualify for a conventional loan with 3.0% down payment, FHA with 3.5% down payment, USDA Loans, and VA Loans do not require any money down
As for closing costs, home buyers do not need to worry about that because they can get a sellers concession or a lender credit to cover some, most, or all of their home purchase closing costs.
What Are Closing Costs?
Every home purchase mortgage loan will have closing costs which are costs and fees associated with the home purchase and mortgage loan.
- Examples of closing costs include title charges, attorneys fees, one year worth of homeowners insurance premium, recording fees, and other fees and costs
- Normally, as a right-hand rule, 2% of the purchase price is generally the closing costs
- But your mortgage loan originator will get you a more accurate figure depending on where the property is located and what the third party charges are for that area
Get Pre-Approved Today
If you are a first time home buyer or veteran home buyer and need a pre-approval, click on GET PRE-APPROVED TODAY and complete the 4-page online mortgage application. I will get alerted via email and will contact you so we can get you pre-approved. The Team at Gustan Cho Associates is available 7 days a week, including evenings and holidays.