How much do I need to put down on my home loan?

For conventional financing that answer is going to be: it depends. With great credit as little as 5% down has you in a conventional loan. With mediocre credit, 10%. But to eliminate the mortgage insurance you still need 20% down. Sometimes, with a bit more down, you may be able to get a better rate. Having a lender who will talk to you and find out what your needs are and presents different options is the best thing. Robyn Robertson from Suburban Mortgage (480-355-8106) talks to me in this video about different types of conventional loans and what is available today in the ever changing world of home lending.

The home buying process, the loan and what you should know

Once you have found the house and had your offer accepted there is a lot that needs to be completed. If you get all your paperwork into the lender in advance that is one less thing that needs to be done in the first week.

Find out what you qualify for before house shopping

I sat down with Robyn Robertson from Suburban Mortgage today. (480-355-8106) We talked about how just over the phone in a quick conversation she could estimate what you should be able to qualify for in a loan. But before you head out and get serious, be sure to get all the documentation to her to confirm the numbers, and get the Pre-Qual form filled out. It not only helps when submitting your offer, but also makes the first week of the contract process easier with lending requirements already taken care of.

Purchase and Remodel a home with only 3.5% cash out of your pocket

Today I attended a class on the FHA 203 K loan.  It has always been one of those things that sounds really good but is practically impossible to get done.   But I met a team of peeps all working together and getting the FHA 203k loans closed and people into their beautiful homes.

One of the challenges in todays market is that so many of the homes (foreclosures and short sales) are in poor condition.  Having items and issues that need repair in order to get a loan on the property; and with both short sale and foreclosure properties being “As Is” transactions, and no repairs being completed by the seller, getting a loan approved, funded and closed can be like pulling teeth without any Novocain.

In comes the FHA 203K team!

Together, a lender who will complete this type of loan; the home inspector, termite inspector, general contractor, HUD inspector, and a handful of other people that together know what is required, are working in unison to help people purchase these distressed properties, make the needed repairs and do some remodeling and updating at the same time.

How does it work?

The home buyer finds out what they will qualify to purchase.  Working backwards from there, if you qualify for 200,000 and you are going to put 20-35,000 into repairs and remodeling; look for homes priced around 160,000.  At the same time you have the home inspection, also bring in the general contractor and maybe the HUD inspector too.  Find out the cost for what is needed to be repaired and what you would like to have remodeled.  The cost of repairs and remodeling are rolled into the final loan amount. At closing the general contractor gets in the house and makes the repairs and remodeling, a few weeks later the home owner gets to move into their beautiful newly re-done home.

This takes an experienced team, a well oiled machine and fantastic communication.  I am glad to know the players! and to have been invited to join the team and help a few more buyers get into their dream home.

Understanding Credit

How a credit score is calculated is a mystery to many people.  Here are a few basics on understanding credit, and how your score is calculated.

Payment history is responsible for about 35% of your score. Make on time payments.

Outstanding balances are responsible for about 30% of your score.  Meaning how you manage your debt.  How much debt do you have in relationship to how much credit is already available to you?  If you have a credit card with a $1000 credit limit, it is best to have no more than 50% balance or $500 on that account. It is even better if you only have 40% or $400 on that account. 

Types of credit for a good balance;  The ideal is a mortgage, credit card and car payment.  You want to have at least one year of payment history with each of your accounts or credit lines.  If you have all brand new accounts, they will need on time payments, over time to bring your score up. 

Another 10% of your score is based on inquiries.  Each time you apply for a credit card, cell phone, or any other business that requires your social security number, they are all checking your credit.  Too many times and your score could be impacted by as much as 2 -50 points.

As for the rest, well there are still a few mysteries in the world.  Make your payments on time, don’t max out your accounts and don’t have too many accounts (that can hurt worse than too few).