Ok, been a bit and I promise not to be Sooooo busy as to leave you without information to “brighten your future”
Time to get rolling: You are sick of renting, you are ready to embark on your next journey that includes home ownership or ready to begin a new chapter as a developer, rehabber or landlord.
As the Spring denotes renewal, neighborhoods are renewing themselves, people are at the gym and tracks renewing their body and religions are renewing their selves and celebrating rebirth,…… So is the Real estate Market.
This IS a Seller’s Market (currently), if you have an appropriately priced home, that is in reasonable condition, it WILL SELL, QUICK. Ask my client Erica Connor (thanks for the trust Erica).
But you have some questions:
- How will I get a mortgage?
- Which house should I purchase and how will I know I am buying the right one?
- Once I have the mortgage, how will I pay for the closing costs to complete the purchase?
- Who can I trust that will help guide me through this who thing?
We WILL EXPLORE ALL THOSE ANSWERS HERE !!
1: Getting a mortgage
Ok, this is ALWAYS the piece that STOPS people from going after their dreams. How can I get a mortgage? Where? Who? What will I need? What will they ask of me and from me? Credit Score, money in the bank, 401k, retirement money, debt to income, etc, etc, etc.
These are many of the roadblocks to applying and obtaining a mortgage. I am NOT a mortgage banker or mortgage broker so I DO NOT have all the answers but I do know two important things: 1: I know then process and what they (mortgage companies/ brokers) look for and more importantly 2: I know people that know far more than I about this. (by the way, we will be interviewing a mortgage broker that has guided hundreds of buyers and dozens of my own clients to home ownership in early June, be prepared to tune in).
Answer, there are mortgage programs from PHFA, PHA, FHA, VA, Homestyle, Conventional, and dozens more of programs to help buyers with unique needs and “limitations”. More detail will be given next blog on mortgages, send specific questions in reply to this post for answers.
Conventional Loans: What you need to know
A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government. Conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Mac allow down payments as low as 3% for first-time buyers or lower-income home buyers. Unlike FHA loans, conventional loans allow borrowers to eventually cancel their mortgage insurance or avoid mortgage insurance altogether if they put at least 20% down.
FHA Loans: What you need to know
This is the go-to program for many first-time home buyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment for a score that low. Mortgage insurance is required for the life of an FHA loan and cannot be canceled.
VA Loans: What you need to know
The U.S. Department of Veterans Affairs helps service members, veterans and surviving spouses buy homes. VA loans are especially generous, providing competitive interest rates, often requiring no down payment or mortgage insurance. Although there is no official minimum credit score, most VA-approved lenders require scores of at least 640.
PHFA Loans: What you need to know
PHFA are a bundle of unique programs specifically tailored to Pennsylvania residents. While each program has its own qualifying standards, a PHFA-approved lender can help you navigate the details. There are loans for All areas of PA suburban, urban and rural counties in Pennsylvania.
- Down payment and closing cost assistance.
- Programs for borrowers with disabilities.
- Tax credits may apply.
- Programs for purchase and refinancing.
- 30-year fixed-interest loans.
- Employer-assisted housing available through participating employers.
Borrowers’ liquid assets, including investment accounts, must be no greater than $50,000 after payment of closing costs (retirement accounts may be excluded with certain restrictions).
You should plan to use no more than 30% of your income to make your monthly payment.
Household income and purchase price cannot exceed county limits.
The home must be your primary residence.
Minimum credit score of 660 for some programs.
Borrowers with FICO scores lower than 680 must complete home buyer education.
** information from: https://www.nerdwallet.com/blog/mortgages/pennsylvania-first-time-home-buyer-programs/
As you can see, there are TONS of mortgage options available for all types of incomes and budgets. For more specific information ask questions here and have them answered next post.
2: Choose the RIGHT house for you
Once you have received the thumbs up from a mortgage broker you will be so very excited to start looking. You will send me many, many homes you want to see and will be super excited to view homes. It is my job to help you be well informed as my client, to choose the best home for you taking all of you needs, desires and limitation into account. I will be happy to do it as well. My typical advice is to look at at least 8-10 homes before choosing to place an offer but in a seller’s market (like now) you might need to adjust that.
There are many, many steps along the way AFTER the offer and my job is to represent your decisions based on the information and expertise I provide.
3: Closing Costs:
Ok, I typically say to a buyer looking to buy a home in Philadelphia that the cost to close on a home in Philly is about 10.25% of the price of the home when it is all said and done.
Plenty of ways to grab some of this money
- FHA mortgage down payment: 3.5%
- Transfer tax Philadelphia: 2.14%
- Real estate Tax: approx: 3% (varies depending on the area)
- Various Fees: (home inspection, appraisal, home owner insurance, title and mortgage fees) approx. 2.%
With that being said there are several ways to lessen the burden this might cause on you as the buyer.
The first low hanging fruit is Seller’s Assist which is where the seller of the property agrees (for the sake of getting a successful sale) offers to give back a certain amount of money or a percentage of the sale price to ASSIST the buyer with closing costs. The don’s physically give them the funds, it is deducted from the balance sheet at the end of the transaction from what the seller would get at closing.
There are many grant programs that most buyers are eligible for most specifically first time home buyers. They can be anywhere from $500 to up to $5000 is assistance to help with the above mentioned closing costs. Some are matched funds ($2 or even $3 for every dollar you provide) and some are dependent upon attending a program or class to help you better understand home buying. Popular ones like First Front Door, PHA HOMEstead, and many others that mortgage brokers have in their arsenal. Talk to them as some come into play everyday and you have to see which you are eligible for.
Gift letters are often overlooked but I know you have family that might be able to “give” you some money to help you with this goal/ dream of your. Ask and you shall receive. They will just need to write a gift letter and show where they get the funds from.
Sell some stuff and/ or Use some of your retirement:
Both are eligible with receipts and some restrictions. Talk to your mortgage person for details.
4: You guide through the process:
This, is where I fit in. This is the easy part believe it or not. Count on your real estate agent and mortgage broker to help you get through this part, this is what the have their training, education and practice for.
Any questions, Please give me a call and I will answer privately or through a post (if it is a popular question) I am here for you,