I am at the train park in Scottsdale, located at Indian Bend and Scottsdale Road. This is a popular location where families bring their young children to play and ride on the train. A common question amongst young families is how to buy a home, and how much down payment is needed. The best loans in terms of repayment require a small down payment. If you have excellent credit, a conventional loan requires as little as 3% down. If you have less than perfect credit, a FHA loan requires 3.5% down. There are some lenders offering 1% down, but there...
First Time Homebuyers
BUYDOWNS – FIRST-TIME HOMEBUYER VIDEO SERIES
With mortgage interest rates rising, buyers are looking for ways to reduce their payment. One way to do this is with a buydown. There are temporary and permanent buydowns. Temporary buydowns are trending. Temporary buydowns reduce the rate one year at a time, gradually increasing to the negotiated rate. Temporary buydowns can be 3/2/1, 2/1, or 1/0. A 3/2/1 buydown means the rate is reduced by 3% for the first year of the loan, 2% for the second year of the loan, and 1% for the third year of the loan. For example, if today’s rate is 7%, then the...
August 24, 2023August 24, 2023john
APPRAISALS – FIRST-TIME HOMEBUYER VIDEO SERIES
You entered into a contract and agreed to a purchase price with the seller. You are applying for a mortgage, and the lender asks if you are ready to order the appraisal. What is the appraisal and why is it necessary? An appraisal is an independent opinion of value provided by a licensed appraiser. The lender requires an independent appraisal of the property to assure that the agreed-upon contract price is representative of the value of homes in the area. The lender will rely on the appraiser’s opinion when approving the loan. So, if the appraised value is less than...
August 5, 2023August 5, 2023john
FIRST-TIME HOMEBUYER VIDEO SERIES – COMFORTABLE PAYMENT
If you are a first-time homebuyer, be sure you are comfortable with your new payment. Lenders may pre-qualify you for a higher loan amount and monthly payment than you want to spend. Don’t fall into the trap of going for the higher payment just because the lender says you can qualify for the mortgage. In determining your qualification, lenders do not take into account your cell phone bill, streaming services, internet, electric and utility bills. You will have to pay these in addition to your monthly mortgage payment. The monthly mortgage payment includes principal, interest, taxes, insurance, and mortgage insurance...
July 15, 2023July 15, 2023john
FIRST-TIME HOMEBUYER VIDEO SERIES – CREDIT
Credit is a big factor considered by lenders when applying for a mortgage. The better the credit score, the better the interest rate, the lower the mortgage insurance, and the lower the payment. One quick tip to get a good credit score is to keep your credit card balances low. Although there is no magic percentage of the credit limit you should maintain, try to keep balances less than 50% of the credit limit during the entire billing period, and 30% of credit limit seems to be a good rule of thumb. Many people think their credit may not be...
July 8, 2023July 8, 2023john
FIRST-TIME HOMEBUYER VIDEO SERIES – DOWN PAYMENT ASSISTANCE
You may have heard of loans where you don’t have to put any money down, where the county or another entity will make the down payment for you. These are known as down payment assistance (DPA) programs. The down payment assistance can take many forms, such as a loan that will have to be paid back, or a grant that does not need to be paid back. Even though it sounds great that you don’t have to put any money down, many times the loans have higher rates and costs than if you did make a down payment. ...
June 27, 2023June 28, 2023john
FIRST-TIME HOMEBUYER VIDEO SERIES – FHA V. CONVENTIONAL LOANS
There are a couple of different types of loans that are popular for first-time homebuyers. A conventional loan requires a minimum 3% down payment, and has monthly mortgage insurance. The mortgage insurance can be removed from the payment when you have 20% equity in the home. A FHA loan requires a minimum 3.5% down payment, and has 2 types of mortgage insurance: up-front mortgage insurance which is a lump sum that is added to the loan amount, and a monthly amount that is included in your monthly mortgage payment. Typically, if you have a great credit score, the conventional...
June 17, 2023June 22, 2023john
FIRST-TIME HOMEBUYER VIDEO SERIES – CLOSING COSTS AND PREPAID EXPENSES
When you purchase a home with a mortgage, closing costs and prepaid expenses are due at closing, in addition to the down payment. Closing costs include items such as underwriting fees, processing fees, appraisal, credit report, title insurance, title escrow, and recording fees. These are the costs that are paid to obtain the loan. Prepaid expenses include one year’s homeowner’s insurance premium, a number of pro-rated months of homeowner’s insurance and real estate tax payments to fund an escrow account, and a certain number of days of interest for the loan. If you are purchasing a home that is located...
June 17, 2023June 22, 2023john
FIRST-TIME HOMEBUYER VIDEO SERIES – THE MORTGAGE PAYMENT – PITIMI
The monthly mortgage payment includes the following items, known by the acronym PITIMI: P = principal I = interest T = taxes (real estate) I = insurance (homeowners) MI = mortgage insurance The principal and interest is what you pay back to the lender. These are the monthly payments to the lender based on what you borrowed. The taxes and insurance are pro-rated amounts that are collected monthly by the lender. The lender will pay these bills when they become due from the monthly payments they collect. Mortgage insurance is collected by the lender if you put...
June 17, 2023June 22, 2023john
ATTENTION FIRST TIME HOMEBUYERS!
Are you looking for a home loan, but don’t know where to start because you don’t know anything about home loans? You’ve researched on-line and found many different programs, but do not know which program is right for you. Should you put a little money down, no money down, or a lot of money down? What is mortgage insurance and will you have to pay it? Should you apply for a FHA loan, VA loan, USDA loan, or conventional loan? Will your payment be the same as your rent, more than your rent, or less? If it will be more...
June 4, 2023June 17, 2023john