RSS
Home
Mortgage lender Q & A
Print
Email
RSS
Subscribe
Tips for saving to buy a home.
Are you a first time home buyer wondering which loan option is best for you?
Wondering if people are still getting loans to buy homes?
Neil Christiansen, president and mortgage adviser at Capital Financial Network LLC, lends us his professional insight on the state of mortgage lending.
What are the best loans available to first time home buyers now?
This will depend on how much the buyer has for down payment but I would have to say FHA is leading the pack.
Currently FHA allows 3.5% of purchase price for a down payment, which can be a gift from a blood relative and the money does not need to be seasoned (transferred and sitting in the buyers account for a minimum of 60 days) as it does on a conventional loan.
Conventional loans may offer a slightly better rate but require 5% down compared to FHA’s 3.5%. In addition to needing less money for a down payment, FHA is more forgiving on a buyer’s credit then conventional. If a buyer’s credit score is less than 740, conventional rates can start getting very expensive.
FHA will finance a buyer with a credit score of 600 and will not adjust the rate to reflect risk unlike conventional financing. The other popular loan for a first time buyer or anyone looking to purchase a home that needs a little TLC is FHA’s minor repair remodel loan. This loan allows a buyer to purchase a house and add to the new loan $35K of minor improvements, i.e. carpet, paint, basement remodel, appliances…etc. The rates are attractive and qualifying is easy!
Is it harder for people to get loans?
Yes! However, if you have a job and make money - lenders are still lending money. It sounds funny to say that but it’s true. Borrowers buying homes today will ensure for a better future in the housing industry.
What are your top 5 tips for first time home buyers preparing to buy a home?
1. Once you are serious about buying a home, do not go out and purchase anything until you are in your new house.
2. Before you start looking at houses make sure you are qualified or pre-approved with a licensed mortgage broker.
3. Prepare a budget and stick to it.
4. If possible, have 1-2 months of income in savings after you have purchased the house. Even though you might have received a gift to purchase your first house, having a couple dollars in the bank helps for those unexpected expenses that happen when you buy your first home i.e. new drapes, shelves, pictures, furniture…etc.
5. Have fun during the process. It can be a little stressful but if you have hired the right professionals, you will be in your new home before you know it.
SUBSCRIBE to my Examiner Column by clicking Your email address is kept confidential and will not be shared with anyone (not even us Examiners). |
