Tips for Home Buyers

TIPS FOR CURRENT HOMEOWNERS AND FIRST TIME HOME BUYERS WANTING TO JUMP INTO THE CURRENT MARKET

How many times have you thought of purchasing a new home only to get scared away by the mountain of information out there? Maybe you have daydreamed about the homes that you have browsed on that website that starts with a Z and ends with a LOW. Well, there is a lot of misinformation out there surrounding qualification, and I wanted to provide you with some easy action items to keep in mind as you get started.

Current homeowners:

Whether you are looking to downsize or to expand your living space, did you know you can do this with a conventional loan and as little as a 5% down payment? With a high enough credit score, your Private Mortgage Insurance will potentially be much less than what you would pay with a 3.5% down payment FHA loan. In today’s market, it is likely you could get enough back from the sale of your home to do a 20% down payment, but so many people don’t know that you can purchase with less.

• Save your money and focus on getting your debts paid down to get the best credit score and best credit profile you can upfront.
• When you are ready to apply, you will do yourself a big favor if your credit cards are below 30% credit utilization (or about 1/3 of your credit limit for each card), if you have on-time payments on all of your loans & credit cards for at least the most recent 2 years, and if you have at least 5% in the bank along with 3-6 months of reserves (or 3-6 months savings that could be accessed to make your payment if you were to suddenly experience a financial crisis).
• Make sure to mention to your loan officer any child support or alimony you might have as a liability, and make sure to also mention if you have any additional part time income that you have been receiving for at least 2 years.
• Make sure to mention if you own ANY other properties and let your lender know if they are mortgaged or owned free and clear, and provide the documentation to go with any properties including mortgage statement, homeowners insurance, and taxes, as well as any HOA or other dues/payments associated with the property. These will need to be factored into your Debt to Income ratios.

It is the little things that can make or break a file! Call me before you look so we can have you prequalified and matched with the perfect Realtor to fit your needs. So many people call the Realtor on the sign or the one that pops up on the website so they can gain access to the home, but do you want a Realtor that pays to get you as a lead or do you want one that is carefully hand-picked for you by your lender? The choice is yours, but hey, if you can trust me with your financials, you can trust me with pairing you with the right Realtor to fit your personality and your property needs!!

First Time Buyers:

It is overwhelming, isn’t it? Well, it doesn’t have to be. If you are a veteran, you can qualify with much higher ratios, and no money down! If you are not a veteran, you can still potentially qualify for a loan with no required down payment or utilize my down payment assistance program to get financial assistance upfront that can act the same as gift funds in certain situations. If you don’t qualify for the down payment assistance or no down payment programs, there are plenty of other options that will not break the bank and we can even finance your closing costs INTO the loan, if you choose!!! Some practical things to remember:

• Pay down as much debt as possible.
• Student loans still have to be considered in your debt to income, even if they are currently deferred. If the payment is reporting on the credit report as a $0 payment, the underwriter will require up to .5% of the outstanding balance to be considered for a program such as the FHA loan program (recently decreased from 1% to .5%).
• Make sure to go over EVERYTHING with your lender upfront, including but not limited to: Child support, being a co-signor on another loan, alimony, part time income, self-employment, recent credit inquiries, recent debts that might not be reporting on the credit report, liens and judgments against you, credit history such as bankruptcy, foreclosure or deed in lieu, divorce decrees, other legal proceedings with which you are currently involved, your pay structure, whether or not you plan on leaving your job any time soon, and complete work and residence history for the last 2 years.
• Your lender will want you to provide at the minimum the following: most recent 2 years of w-2’s/1099’s for all jobs worked, most recent 2 years of tax returns with all pages & all schedules, most recent 60 days of bank statements with all pages (EVEN IF they are blank) and no redacted information, and most recent 30 days pay stubs. You will also want to make sure that you have a valid driver’s license that will not expire before closing.

If you are in South Dakota and would like additional information, contact me and I can guide you through the process so you will feel educated and empowered when you go to make the offer and not just swept along in the process.

HAPPY HOME BUYING!!!!