Hot Homes Mortgage Coach Dave Udy talks about the fundamentals in home buying.
The Sub-Prime, Alt-A and Jumbo melt down in the markets has affected the entire Mortgage Industry.
The Rules have changed!
We are back to traditional lending rules and much tighter underwriting standards. Even if your friends got a loan 2 months ago,
that does not mean you can. It may even mean that the company is no longer in business or even that the broker or banker is
gone as well.
It is now back to the basics. One more word of caution: Make sure that whatever Mortgage professional you talk to that they actually
know what they are talking about. The last 8 years in the Mortgage Industry has created a huge number of brokers and companies that
don’t even know how to work with the traditional programs. It has simply been too easy to take the Alternative road and that road is now a dead end.
Find a professional to work with. Someone that specializes in Mortgages and has been around for a while. Probably about 10 + years.
Don’t lose heart. You can still buy a house and the traditional programs are a better deal for you than the Alternative stuff anyway.
What you should know as a first time home buyer.
1) How’s your credit and your scores?
This is the most important part of a new mortgage loan. It is actually cheaper to “Pre-Qualify” with a lender (normally about $20 for a credit report)
than to get the freebies on the internet. By the time you get the score information it will cost you a couple of hours and as much as $50.
If your credit is not up to par, a professional mortgage person can give you some tips on how to get it up to a working level.
2) Know what you can afford!
As long as you are meeting with the loan professional, be prepared to give them accurate data on your current income and savings.
The answers you get, as to how much of a payment you can qualify for, is only as good as the information you supply.
Most people buying their first house will be making a payment that is significantly higher than the rent they are paying.
I still remember my first house and that $115 a month payment scared me to death but after a few months it was no-big-deal.
3) Get information!
You are entering a whole new world, with its own language, rules and terms. LEARN them! An informed buyer is one that can’t be taken advantage of.
So know your rights and terms. When you visit a mortgage professional they are required to give you a HUD booklet about Settlement costs.
READ IT. I tell all of my first time home buyers that it is required reading to get a loan. It is one of the few government published booklets
that makes sense and is readable. It will help you in making decisions about your loan and your lender.
Another great way to get information is attend “First time buyer Seminars.” These seminars are designed to give you the basic information and help you
prepare to understand what has become a very complex process. The best part is you can get your questions answered and get lots of valuable information.
4) Do some preliminary shopping!
Remember, I mentioned that you can no longer get that “get you in and worry about the payments later” loan that your friends got only two months ago.
Poof, they are gone. Don’t envy your friends, when their payments start to escalate, they will envy you. After steps 1,2,3 above, you should have a pretty good idea
about the price range of the house you can buy. Get on the internet and go shopping. Look at all of the areas in your range. Go to a few open house. You may not be ready to buy yet but get a feel for the market.
5) Save some money!
Three reasons to save. First you may need down payment and closing costs. Second, it is a good idea to have some extra money to spend on that new home
even if you qualify for a “0” down program. Third, if your rent is $700 and your new payment will be $1500, you should be able to save the $800 difference just
for good practice. If you can’t save that much how are you going to make the payment?
Now the good news
We are heading rapidly back to a “buyer’s market.” Even if the prices are not falling, you have a much better chance of getting sellers to pay some or all of your
Also there are and have been for some time great “first time home buyer” programs. These are what we call “agency programs” with as little as “0” down.
These programs do not have the pitfalls of the now dead “Sub-Prime loans” but you do have to actually qualify to get them.
See Hot Homes of Utah every Sunday morning at 10:30 AM. And if you have a question for mortgage coach Dave Udy, go to www.hothomesofutah.com Be sure to attend the Home Buyer Seminar, Thursday, September 27 at the Miller Campus of Salt Lake Community College. For to the Hot Homes website for details.