What questions should I ask a mortgage lender in Berkeley Township ? If you’re dealing with a mortgage broker there’s some questions that you should ask both on your first meeting with the mortgage broker and throughout working with your mortgage broker to make sure that you’re getting the best service possible.
USDALoanInfoNJ is going to go through 10 different questions that you can ask your mortgage lender in Berkeley Township. Be aware that your USDA Loan or Mortgage broker will be getting the loan that you need and the service that you want.
The first question that I think everyone should ask a mortgage broker is a pretty straightforward one.
How Much Will a Mortgage Broker Cost?
Most mortgage lenders in Berkeley Township actually work for free.
So it doesn’t actually cost you anything in order to do it.
They get money because they are paid by the banks when you successfully get a loan.
So they get a small commission of the loan that you apply for and if you get it.
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So most mortgage brokers in Berkeley Township will work for free and it won’t cost you anything.
However, there are some mortgage brokers out there who do require deposits or who do require you to pay.
So, it’s important to ask, “How much will this cost me?” when assessing which mortgage broker you want to go with.
How much do Mortgage Lenders earn in commission from me and from my loan?
This is less to understand exactly how much they make.
You can see what percentage of commissions they make and things like that by visiting USDALoanInfo.
But it’s more to understand whether or not they’ll be willing to give you this information.
A transparent mortgage broker is someone that’d be willing to give you this information and you know that they have your best interest at heart.
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If they skirt around this issue and they don’t tell you how much they earn.
Well then that would send out red flags for me because I can’t trust them to put my best interest at heart because there are some circumstances where one loan will earn them more money than a loan that could potentially be better for me but not as good for them.
So, I’m just trying to establish whether or not this mortgage broker in Berkeley Township is someone that I can trust.
And by asking them the big question, the money question,”How much will you earn from me?” That’s a great way to understand whether or not you can trust the mortgage lender.
So ask that question and see how they respond.
Do Mortgage Lenders Invest Themselves?
Now, I don’t think a mortgage broker has to be a property investor in order for them to be able to get you a good loan and for them to help you successfully invest in property.
However, if they are interested in property in Berkeley Township, if they do invest themselves, then that is going to go a long way to help you because they understand what it’s like to be in your shoes.
They understand what you’re trying to get out of this and they’ve done it themselves so they can help you miss some of the pitfalls and things like that.
If they don’t invest themselves, then I would want to ask them, “Have you worked with many people that invest in property?” Because as mortgage brokers, some of them just work with people who are buying their own home.
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Some of the mortgage lender folk who work with people who are doing particular investment strategies.
So, some might work with people who invest in positive cash flow property or who invest in rural areas, who invest using developments.
NSH MortgageBlockedUnblockFollowFollowingJan 26, 2018FHA Loan Limits Rise In Every CountyThe Federal Housing Administration (FHA) has released a mortgage loan limit update. Five more new and easy steps for FHA loan limits that can help multi-unit home-owners during 2018. NSH Mortgage has the knowledge and tools that can help you with discovering how much you can save on your multi-unit home.Effective immediately, FHA insured mortgages are now available for loan sizes up to $679,650 for one-unit homes. FHA loan limits are higher for double unit, triple unit and quadruple unit properties, and for homes in Honolulu, Hawaii and several other Hawaiian cities. During 2018, FHA loan limits may be higher in nearly every county nationwide, with a new floor loan amount of $294,515.What Is A FHA Loan?It can be confusing, but the FHA is not actually a mortgage lender. Rather, it is a mortgage loan insurer. The FHA provides insurance which protects against loss the banks which make FHA loans. The FHA keeps a book of rules and says, so long as you make loans that follow these requirements, we will insure those loans against loss. FHA backed loans are often easier for which to qualify than their conforming mortgage counterparts, and come with several home buyer friendly characteristics.As a few examples of the FHA’s buyer friendly rules:FHA mortgages require a down payment of just 3.5%.FHA loan down payment monies can be gifted from a family member.The minimum credit score requirement for a FHA loan is 500.There are other FHA loan perks, too. For example, FHA loans are assumable. This means that a future buyer of your home can assume its existing mortgage at whatever the mortgage rate happens to be. If today’s mortgage rates are 4% and rates are 10% when you sell, instead of applying for a new loan, your buyer can assume your existing 4% FHA mortgage rate instead. Another FHA loan perk is that FHA mortgage rates do not change with low credit scores, or property type. FHA mortgage rates are the same, no matter whether your score is a 740 or a 580. For instance, whether you live in a single family home or a quadruple unit. Everyone gets access to the same FHA mortgage rates.2018 FHA Loan Limits By CountyIn particular, to get approved for a FHA loan, your loan size must be within the maximums of what the FHA will insure. Known as FHA loan limits, these maximums vary by area, based on local median home values, and by property type. FHA loan limits, for example, are lower than FHA loan limits in the Bay Area of California, and in Los Angeles and Orange County.In addition, FHA loan limits on a double unit home is higher than the limits on a condo. There are four tiers of FHA loan limit pricing. There is a standard tier, a mid-range tier, a high cost tier, and a special exception tier. Most of the United States is considered standard tier. For single unit homes properties which include single family detached homes, town-homes, row homes, condominiums, and co-ops FHA loan limits now begin at $294,515.Standard 2018 FHA Loan LimitsSingle Unit home : $294,515Double Unit home : $377,075Triple Unit home : $455,800Quadruple Unit home : $566,425Standard FHA loan limits, like all loan limits, are based on a mathematical formula. The floor, which governs FHA loan limits in more than 80% of U.S. counties, is equal to 65% exactly of the conforming loan limit of $453,100. It is used in cities where you can multiply the median home price by 1.15% and the product is less than $294,515.Mid-Range 2018 FHA Loan LimitsSingle Unit home : From $294,515 to $679,650Double Unit home : From $377,075 to $870,225Triple Unit home : From $455,800 to $1,051,875Quadruple Unit home : From $566,425 to $1,307,175Mid-range FHA loan limits apply to cities where you can multiply the median home price by 1.15% and get a product greater than $294,515. Whatever that product is, so long as it is less than $679,650, is the local FHA loan limit. Areas in which mid-range FHA loan limits apply include Cincinnati, Ohio, Philadelphia, Pennsylvania, Minneapolis/St Paul, Minnesota, Boston, and Massachusetts.High Cost 2018 FHA Loan LimitsSingle Unit home : $679,650Double Unit home : $870,225Triple Unit home : $1,051,875Quadruple Unit home : $1,307,175High cost FHA loan limits are the maximum insurable FHA loan size sometimes called the ceiling. High cost areas are areas in which the median home price multiplied by 1.15% is greater than $679,650. There are about 80 of them nationwide. High cost areas include Washington, D.C. suburbs Loudoun County, Virginia; and Bethesda and Potomac, Maryland; as well as San Jose, California, and the entire New York City metro area.Special Exceptions 2018 FHA Loan LimitsSingle Unit home : $1,019,475Double Unit home : $1,305,325Triple Unit home : $1,577,800Quadruple Unit home : $1,960,750The FHA grants special exception loan limits for certain parts of Hawaii, Alaska, Guam, and the U.S. Virgin Islands. The elevated loan limits are designed to offset higher construction costs in these states and territories.FHA Streamline Refinance: Not Subject To Standard Loan LimitsAmong the biggest benefits of using a FHA backed mortgage is access the agency’s designated home loan refinance program, the FHA Streamline Refinance. The FHA Streamline Refinance is available to homeowners with an existing FHA mortgage only. It gives homeowners the ability to refinance without having to verify income, credit, or employment.The FHA Streamline Refinance has three main qualification standards. First, to get qualified, you have to be making your current mortgage payments on time. The Federal Housing Administration does not extend the FHA Streamline Refinance to homeowners who are behind in their payments, or who have a history of falling behind on the payments. The FHA wants to see that your last three mortgage payments have been paid on time, and that you have been late on payments no more than one time in the last 12 months.Second, your current FHA mortgage must be at least six months old. The FHA will verify that you have made at least six payments on your current mortgage refinance before allowing you to use the FHA Streamline Refinance program. Once you have made six payments, you have cleared this hurdle.Furthermore, thirdly, this agency will verify that there is a benefit to your refinance. Known as the Net Tangible Benefit clause, your mortgage payment must reduce 5% or more to become FHA Streamline Refinance eligible. If you meet these requirements, the standard FHA loan limits will not apply.Homeowners using the FHA Streamline Refinance get access to elevated FHA loan limits if their current FHA loan amount is above 2018 limits. For example, a homeowner purchased a home with a FHA loan in 2013 when the FHA loan ceiling was $729,750. The borrower can get a FHA streamline loan at $700,000 even though current limits stand at $679,650. The FHA Streamline Refinance is among the FHA’s most popular programs.
So I would want to find a mortgage broker who either had that experience themselves or who had clients that they had got similar deals for cause that way I know that they can negotiate on my behalf and they can get this deal across the line.
What details do Lenders need from me?
It’s one thing to call up a mortgage broker and just to get an estimate of your borrowing capacity but if you’re going through pre-approval and stuff like that, then you’re going to need to provide the mortgage broker with more in-depth details.
You might need pay slips; you might need proof of identity, all of that sort of stuff.
If you ask them up front, “What details do you need from me?” And when you go to your meeting with them you actually provide them with those details, well that just makes things so much easier.
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Remember, a mortgage lender is only paid once the deal goes through and once you actually get financing.
So the easier you make it for them, the more likely you are going to get better service.
What can I do as a client to make this go as smoothly as possible?
You have the goal of getting financed for your property, the mortgage lender has a goal of you getting financed for your property and no one wants it to be difficult.
And so, if you can ask the mortgage broker, “Look, how can I work with you? How can I make things easy for you?” They’re the experts; they know what they’re doing.
They can tell you exactly what they need and then you can work hard to provide that for them so that they can get everything across the line as quickly as possible.
You know, I have customers,I deal with customers and even though I’m not a mortgage broker myself, I know that when there’s difficult customers that you don’t want to deal with, it just makes life so much harder and you don’t want to work hard for those people.
And when there’s customers who are really nice to you and who try really hard to help you provide them with the service you provide, you will bend over backwards to do anything you can for those customers to get them across the line, to help them as much as possible.
So, be one of those customers that the mortgage broker wants to bend over backwards to help you because you have their interest at heart as well.
You want to see them get paid.
You want to see them do an easy mortgage so they get paid easily.
And so you can develop a relationship into the future.
Which lenders can I borrow the most from?
Most people go into a mortgage broker looking for the cheapest interest rate possible.
What is the cheapest interest rate I can get? And the fact of the matter is a mortgage broker is likely to show you the banks that will lend you the amount of money you need and will also have the cheapest interest rate as well.
However, they might not showy ou banks that will lend you more money than you potentially need at the moment.
Now, it’s important to ask, “Which lenders can I borrow the most from?” because this will help you to project into the future.
Maybe you don’t need to know that for this loan right now but maybe, in the future, you might need to borrow money again and you know, or roughly my borrowing capacity is this.
Or if you find out which lenders you can borrow more from, and you find that you can actually borrow an extra $300,000, well you might split up your deposit and invest in two investment properties instead of just one.
And so asking them, “Which lenders can I borrow the most from?” is a great question to ask to really understand your position.
Because, yes, interest rate is important but how much you can borrow is also important as well.
Can I see a full list of my borrowing options?
Most mortgage brokers will provide you with, usually, like a top three or sometimes only a top one.
And I always like to think, “Can I see a full list of my borrowing options?”Again, this is less to say you want to go through all of this in minute detail and see.
You’re probably going to still choose from one of the top three ones.
But you just want to see that they’re giving you the full amount of information.
And most mortgage brokers are good people but there are some dodgy mortgage brokers out there who are just trying to get the deal that gives them the biggest commission.
And so by asking to see a full list of what your borrowing options, you can then look at that and you can then assess, “Okay, well which loan do I think is going to be best for me?” rather than just taking the recommendation of the mortgage broker who may or may not be thinking about themselves.
So, again, most mortgage brokers are great people out there to help you but it’s always a good idea to get a full list of your borrowing options that are available.
Will this put a mark against my credit file?
And so this is when you’re trying to work out how much you’re going to borrow and stuff like that.
When you go into a bank and you try and find out how much you can borrow, often, the bank will do a credit check and this puts a mark against your credit file.
And what happens is if you have a lot of these marks against your credit file, even though it’s nothing bad, this can actually stop you getting a loan.
So, talk to your mortgage broker and when you’re looking at, “What can I borrow?”or your looking at getting pre-approval, just understand, “Will this put a mark against my credit file?” ‘Cause it’s not bad to have a couple or whatever.
But if you’re getting lots and lots of marks against your credit file, then that could be an issue.
So just make sure and you know when a mark’s being put against your credit file and when a mark isn’t being put against your credit file.
How soon can I revalue or borrow again?
So if you’re investing in a property to renovate it or to develop it or even if you’re investing in a property that’s potentially under market value, you want to know how quickly can you revalue that property so you can get equity and then hopefully draw equity out of the property to go ahead and invest again.
There are a lot of lenders out there who don’t allow you to revalue within a 12-month period.
So, speak to your mortgage broker about the lenders that will allow you to revalue faster.
And basically, this will give you an idea of how quickly you can revalue to consider going again.
You’re also going to want to ask them, “After I invest in this property, how soon can I borrow again or what do I need to do to put myself in a position to be able to borrow again and to purchase the next property?” Because hopefully, your goal isn’t just to purchase one property but to grow your property portfolio and to achieve that financial freedom and that financial security that you’re striving for.
Will My Loans be ‘cross-collateralised’?
Now, I have heard a lot of stories about investors whose loans have been cross-collateralised and it’s cause major problems when they’ve gone and sold their property because the bank shave been able to take that money and pay off debt.
And basically, you want to avoid this at all costs from what I hear.
And so, it’s good to ask your mortgage broker, “Will my loans be cross-collateralised in any way?” Generally going with the same lender for two loans does it by default, even though it doesn’t say they’re cross-collateralised.
So, it’s just something that you want to look at the fine print, you want to understand, “Are these cross-collateralised?” And if they are, try and avoid it, try and get loans that aren’t going to be cross-collateralised.
So there you have some questions to ask your mortgage broker next time you go and see a broker to find out how much you can borrow or get pre-approval or get financed for another property.
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You can see what high rental yield properties look like that are likely to generate a positive cash flow.
Did You Know – You Can Get Pre-Approved for a USDA Loan in Berkeley Township?
The Business and Industry (B&I) loan program administered by the United States Department of Agriculture (USDA or Agency) guarantees loans by qualified lenders to benefit rural businesses. For eligible projects, community banks can obtain an 80% guarantee for loans up to $5 million, a 70% guarantee for loans between $5 million and $10 million and a 60% guarantee for loans between $10 million and $25 million. The B&I guaranteed loan program allows lenders to expand their loan portfolio, obtain a deficiency guarantee, increase earnings by participating in the secondary market, make loans in smaller communities with traditionally lower collateral values and extend loans above their legal lending limits.
For each loan, lenders submit a detailed guarantee application to the Agency office in the state where the project is located. Approval or denial decisions generally take several weeks. Projects eligible for B&I financing include business acquisitions, commercial real estate purchases, startup costs and working capital, machinery and equipment purchases and some refinances.
On December 17, 2008, the USDA published a new interim rule pertaining to the B&I loan program in the Federal Register. Effective October 1, 2009, the new rule is designed to streamline the application, accelerate the guarantee approval process and expand the types of eligible projects. The Agency ultimately decided to abandon the new rule and instead focus on working within the existing regulatory framework to improve the B&I loan program.
Under the previous rule, the B&I loan program required lenders to compile burdensome applications and to deal with lengthy approval timelines and limited loan features. For example, a common lender complaint has been the laborious guarantee application process. For every loan under the previous regulations, B&I lenders had to submit to the local Agency all of their underwriting and loan approval documents, at least three B&I application forms, the draft loan agreement, copies of loan origination and servicing policies and procedures, and details concerning lending history, experience and their relationship with regulators. The Agency also awarded guarantees on a "priority scoring" basis, which gave loans in particularly rural areas with compelling purposes priority over otherwise eligible loans that earned a lower "score". An approval or denial decision for lower scoring loans could take months from the application submission.
The USDA aims to reduce these drawbacks with the revised rule. The new rule attempts to streamline the original application process. Lenders must apply to participate in the guaranteed loan program by submitting background information such as descriptions of lending history and experience, policy and procedures and documentation concerning regulatory compliance (7 CFR 5001.9). Although lenders had to submit this information under the old rule, they are now permitted to submit summaries instead of copies of their policies and procedures (§5001.9(a)(1)). Once approved by the agency, lenders will no longer have to submit this background information when applying for loan guarantees (§5001.9(b)(4)). The revised rule also reduces the number of guarantee application forms (§ 5001.12(a)) and eliminates the draft loan agreement (§5001.34). In addition to simplifying the application process, the new rule endeavors to reduce the guarantee approval timeline.
Two changes aim to accelerate the guarantee approval process. The Agency has eliminated its "priority scoring" system in favor of a simpler first-come-first-serve approach (§5001.103(f)(1)). Additionally, the Agency has created a preferred lender program (PLP) (§5001.9(d)). The benefits of obtaining PLP status include a ten day approval or denial decision (§5001.11(c)), a smaller guarantee application package (§5001.12(b)) and the opportunity to obtain preferred status in more than one state with a single PLP application (§5001.9(d)(2)). In addition to streamlining the application process, the Agency has introduced some new loan features to the B&I loan program.
B&I guarantees may now be issued for additional uses and purposes. Under the previous regulations, lines of credit were ineligible. Lines of credit are now eligible when used for annual operating/business expenses, debts advanced for the current operating cycle, scheduled non-delinquent term borrower debt or closing costs (§5001.103(b)(2)(xix)). Projects involving leasehold improvements and the purchase of mixed use commercial and residential buildings are also now eligible for B&I guarantees (§5001.103(b)(2)(xviii, xx)). Another new feature removes the prohibition that interest rates change no more often than quarterly, and allows lenders to set a variable rate that adjusts as often as daily (§5001.31(a)). These new features allow lenders to obtain a valuable B&I guarantee for projects that previously were ineligible.
Although these features are now available to lenders, some revisions to the rule are less clear and useful tools have been eliminated. For example, the Agency has replaced the proposed cash equity criterion with a debt-to-tangible net worth ratio criterion (§5001.6(c)), but has failed to define this calculation other than referring to Generally Accepted Accounting Principles. Additionally, the rule eliminates the Agency's limited authority to issue 90% guarantees. Again, the Agency ultimately decided to abandon the new rule and instead focus on working within the existing regulatory framework to improve the B&I loan program.
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Good afternoon this is Bubba bachelorwith Austin's lender right here in Central Texas this video was designed tohelp you get a better understanding of what it takes to qualify for an FHA loanand why there's so many different stories about what FHA really has tooffer and what it takes to get qualified so I've taken some notes and if youdon't mind I'm going to go through them as we go I don't want to miss any of theimportant factors that are going to help you get qualified or you the realtorhope you get your borrower qualified to purchase a new home so we're going to goover understanding FHA and some of the misconceptions in how to qualify for anFHA home loan FHA is a great option for first-time homebuyers for buyers thathave a little bit more debt ratio than is allowed under Fannie Mae or FreddieMac it even borrowers with less than perfect credit it's easy to say that FHAis probably the most lenient of all the lending programs out there but it'simportant to know that FHA is not a lender FHA is an insurer and they writeguidelines and then they give the guidelines to lenders and say if youwill approve a loan based on our guidelines we agreed to insure it butyou can also put any extra conditions on that you feel are important and that iswhy it's very important to know which lender you're going to go with becauseevery lender is going to underwrite FHA a little bit differently in very fewaustin's lender is one of them we underwrite exactly to FHA guidelinesallowing more customers to get approved to own a home and be part of theAmerican Dream it's also good for borrowers with a limited down paymentbecause with FHA you only need three and a half percent down and that actuallycan come in the form of a gift from a family member or 401k funds so there's alot of flexibility with FHA again with FHA the minimum downpayment is three anda half percent if your credit score is over 580 if your creditsis between 500 and 579 you would need 10% down plus closing costs again all ofthat can come from your own funds retirement funds 401k or even a giftfrom a family member FHA loans are not just for first-timehomebuyers they're also great for people who have again restricted income or theyhave a high debt ratio or you just are trying to buy a little bit more homethan Fannie Mae or Freddie Mac would be willing to give an approval for sohere's what they're looking for when qualifying for an FHA loan the firstthing is verifiable income so there's two different categories you either havea person who's employed or a person who's self-employed and they're lookedat somewhat differently every lender is going to take a complete loanapplication and run it through an automated underwriting approval systemand the underwriting approval system is going to tell that lender exactly whatthey need in order to verify and get the loan finally closed and approach so ifyou're an employed person that means that you go to a job and you get a w-2in taxes are taken out so your gross income from that job is going to be usedto calculate your qualifying income if you're self-employed that means that youcontrol your own income in your own expenses so they're going to want to seea two-year average of your tax returns to get qualified so if you're employedat your w2 if you're self-employed it's to your stature terms so you have to beself-employed for at least two years in the same occupation in order to getapproval through FHA now if you're employed that means you get a paycheckin a w-2 you only have to be on your job for six months with a two-year historywhat that means is if you were a college student and you've recently started ajob and you've been on in six months that's fine they're going to ask for acopy of your transcript showing your student and then verifyof employment shown that you've been employed for two years one of the nicethings about FHA if for a first-time homebuyer or somebody just gettingstarted you can also have a non occupying co-borrower so in the old dayswe used to call them Kitty condos you're going to go off to the University ofTexas or maybe to another school and you want to buy a condo that you can live inall four years but as a student you clearly wouldn't qualify because youdon't have a regular and recurring income so in that case the loan could goin your name and your parents name assuming you're over 18 years of age andthe loan would be based on your income if you have any your deaths and yourparents income and debt so it's a great way for a person who's trying topurchase a home to find a family member that's willing to be a non occupyingco-borrower now remember that non occupying Co borrowers credit scoretheir income and their liabilities are all taken into account so finding theright non-occupied code borrower is going to help you substantially ingetting approved so really what they're looking for an income is stability ofincome they want to make sure that the work history is good as we mentioned twoyears for self-employed and at least six months on the job if you're employed youreally shouldn't have more than four jobs in the last two years if you areemployed so job stability is very important under FHA shorter work historyis accepted but it is underwriters discretion so I really wouldn't ridethat too hard I want to make sure that you do have a good work history thesecond thing is you want to be able to afford the housing payment in any otherdebts that you have so what they're going to do is we're going to take thehouse payment plus taxes and insurance plus any other minimum payments thatappear in your credit report in all of those combined need to equal in a goodrule of thumb is about 50% of your gross monthly income so if your income is$4,000 a month fifty percent would be two thousand and inside of thatyou should be able to pay the house the taxes insurance if there's an HOAhomeowners association and any other bills that appear at your credit reportunfortunately we see some people that go out and get an $800 car payment wellunfortunately they're driving their house so they either have to get afamily member to finance the car into their own name or some or maybe evensell a house that just comes down to what's more important to you that fancynew truck or the boat or having a home that you can live in many lenders saythat your debt ratio should not exceed 50% but in all reality FHA does not havea maximum debt to income ratio per the guidelines so when you run into thesesituations where a lender says oh you have to have a 580 credit score or youhave to have a 640 or even a 680 credit score that's where the lender hasimposed additional guidelines on top of the actual FHA guidelines because FHAsays you can have a credit score as low as 500 but with a low credit score likethat you're gonna have to have 10% down and you're just gonna have to be a goodstory behind why the credit is what it is for example maybe you were part of ahurricane maybe you had a bad accident and the credit report is littered withmedical bills so there has to be a compelling reason why you should getapproved but it is possible we actually were able to approve a customer with acredit score of 504 so I'm living proof it happens it is very possible but theyhad a big 401k the guy was a fireman had money in the bank they were putting downI think 20% so there was a good reason why those people deserve and they have asick job many lenders also said that the housing ratio shouldn't exceed thirtyfive percent that is thirty five percent of your income should equal or less thanthe house payment plus taxes insurance that also is not a hard-and-fast numberwe've been able to get him approved as high as forty and forty five percent sowhat I'm trying to tell you is there's a lot of stories on the street and thereason is because lenders impose what they call overlays so even though FHAsays they'll take score as low as 500 some people say nowe're gonna say 580 or maybe 620 or maybe 680 if your credit score is belowtheir self prescribed minimum they're going to decline your loan so choosingthe right lender is more important than anything and I will tell you that hereat Austin's lender we follow the guidelines we go all the way down to a500 credit score and we have the ability to approve loans that other locallenders are turning down every single day you know how I know it because we doand you know what all the customers say mama why did my realtor send you to meto you first and I good question I don't know but I'm glad you're here now so wecan get your loan approved another thing is downpayment now with a credit scoreof 580 and above you only need 3 and a half percent down plus closing costs ifthe credit score is 579 all the way down to 500 you're going to need 10% downplus closing costs so you keep hearing me say closing cost what are the closingcosts well you have to order an appraisal you also have to establish anescrow account that way the lender can hold taxes and insurance so that at theend of the year the taxes and insurance can be paid for you the size of theescrow account depends on what time of the year you're buying a home so whenyou call our office we can go into more detail with you on that but remember thedown payment can be a gift from a family member in the down payment itself thethree and a half or the 10% has to come from the borrower or a gift from afamily member the other closing cost can actually be paid by the seller so let'ssay that you find a home that you want to purchase in it's $300,000 the sellercan contribute up to 6% of the sales price for your closing costs rememberthat down payment has to come from you the closing costs can actually be paidby the seller so let's pretend that you find a house that you want to purchaseand it's listed in MLS for 310 thousand dollars and you've negotiatedit down to 300 but you need an extra seven thousand for closing costs so youcan write the contract for three hundred and seven thousand with the sellercontributing seven thousand they still get their three hundred you agreed uponand seven thousand dollars will go towards your closing costs to reduceyour out-of-pocket cash so you can get the home that you truly desire credit isalso very important they're looking for an established credit history generallywe're looking for three trade lines an automobile a credit card something thatappears on the credit report for at least twenty four months the minimumallowed is to trade lines and we can use alternative trade lines for example ifyou've paid Allstate insurance or you paid Liberty Mutual and you paid yourauto insurance on a regular basis we can use that as a trade line as anacceptable pay history your mobile phone your electric bill your health insurancebill so there are other things that can be used and those are referred to asalternative trade lines and those will allow you the trade lines required inorder to fulfill the FHA guidelines we talked about credit score a little bitepic Jaison minimum credit score is five hundred a lot of people are going totell you five eighty six hundred six twenty six 4680that's because they have overlays and let me under hope you understand that alittle better if you went to a bank like Chase Wells Fargo Bank of Americathey're all regulated by the FDIC the Federal Deposit Insurance Corporationand what they're doing is making sure that all the people who put money in thebank their money safe so the FDIC says they can't make a loan to anybody whenthe credit score below 620 so even though FHA would approve five hundredcredit score if you go rolling into the bank with a five ninety three creditscore they're gonna turn you down because your credit score is below theirinternal set number of 620 some banks say 640 some banks goes like 680 but theactual guideline for FHA is five hundred so choosing theis very important a lot of Realtors don't understand how important this isthey work hard trying to find a customer they get them all lined up they sendthem to the preferred friend at the bank and the bank turns them down thecustomer is told that FHA turned him down and that's not true F actually didnot turn them down they were turned down by the bank if they could come to uswe're mortgage brokers and what a mortgage broker does is we sent yourloan directly to the investor we know will close in fund your loan so workingwith a mortgage broker is extremely important because we don't have thoseoverlays other overlays may be minimum credit score or if you're going to use agift letter sometimes they'll say you have to have three months reserves thatis property your payment taxes and insurance whatever it totals let's sayit's $1,000 then after closing you'd have to have an extra three thousanddollars in the bank that's an overlay that's imposed by thelender not FHA so really I can't stress how important it is to make sure thatyou use a great lender and I'll tell you also the lender is great I teach lendingand have for the last 25 years we know the guidelines we don't open a long thatwon't close so if you call us at five one two nine five three seven three fivenine or visit our website www.
Com get higher andthey find the perfect home that they can buy for three hundred and they year fromnow that house is gonna be three thirty so by waiting a year to try and save aquarter on the interest rate they ended up spending thirty thousand dollars morefor their home that's a big mistake if you can qualify for the home by thehome you can always refinance it a year or two when you get your credit scoreincreased so the problem is if you go to a lender with overlays and they havea higher minimum credit score or they have additional reserve requirements andyou don't meet those they're going to turn you down and they're going to tellyou that you were turned down by FHA which again is not true and itinfuriates me because people deserve a home they deserve to be part of theAmerican Dream home ownership makes people better citizens better employeesbetter parents it makes children feel more secure so I can't stress you howimportant it is to choose the right lender remember FHA is not the lenderFHA is the insurer they write the guidelines the lenders follow alllenders don't follow the exact guidelines they put on overlays I thinkI beat that to death but I really want you to know how important that is thenext thing is a home purchase price FHA has federally set limits on how much youcan borrow with an FHA money in it varies by state and by countyfortunately the limits are pretty high here in Austin the limit is threehundred and eighty nine thousand eight hundred and fifty dollars that's themaximum loan amount so that means you can buy a house probably for about fourhundred thousand with a little bit of doubt three and a half percent downyou're there so that's good news FHA does not have income limits some ofthe other programs you may have heard of home possible or home readythey have income limits again based on County FHA does not have income limityou can make as much as you want and still qualify for an FHA loan which isgreat news lenders offer a variety of different loans in addition you can tothe standard FHA is a 30-year fix you can get a 15-year fixed you can even getan adjustable rate mortgage I don't suggest that because we know that ratesare on the increase so locking in a good rate right now ismore important than ever earlier we were talking about thedifference between a mortgage broker and a mortgage banker the mortgage bankerself imposes some overlays that you have to be able to jump that hurdle to getapproved which brokers do not have in addition to themortgage bankers have layers of management you have the bank and youhave a regional manager and an area manager and a branch manager all ofthose people have to get paid when you go to a mortgage broker you'regetting pure pricing and pure guidelines so I can tell you at Austin's lender ourrates beat the market by almost a full point because we don't have all thelayers of management as a matter of fact we have the guy who teaches mortgagelending for the state of Texas right here our office and that's about thebest thing you can get as a consumer because we're going to tell you thetruth we don't have to call somebody and ask an underwriter quite often I findmyself sending the guidelines to the underwriter telling them no this is whatthe guideline says please approve my borrowers loan and they always did inthe last five years we have not turned in one loan that did not close in fundfor the guidelines and we're really proud of that so the next thing that wewant to talk about is the drawback to FHA now if you qualify with a 620 orhigher credit score Fannie Mae and Freddie Mac are great options they havea 3% down program they have the home possible program they have the homeready program in their brain options so if the credit score is 620 or higheryour lender should automatically look at Fannie Mae or Freddie Mac unless thedebt ratios too high because Fannie Mae and Freddie Mac do have a hard and fastrule debt to income ratio cannot exceed 50% it can't even be 50.
0 one it willnot approve the loan so if the debt ratio is a little bit higher if theychange your way together if you've got a low debt ratio in a credit score over620 Danny Mae Freddie Mac is going to be the way to go and of course here atAustin's lender we have those available so we're here to serve you all the wayaround now to draw back to FHA is you have to have mortgage insurancenow what mortgage insurance is is it's insurance that in case you default thelender gets help in getting the loan paid off if the house sells at a loss soif you go traditional Fannie Mae Freddie Mac and you20 percent down which you don't have to I can't tell you how many people say ohI'm waiting to my house still have 20 percent down you don't have to have 20percent down 3 percent with Fannie Mae Freddie Mac three and a half percentwith FHA USDA is zero money down in the same with VA and we offer all of thoseprograms so when you apply in Austin's lender comwe're going to evaluate your loan application your credit report yourability to prove income and we're going to put you in the program that is inyour best interest it doesn't make any difference to us we get paid regardlessso we want to make sure that you can get the absolute best loan you can excuse mebecause when we're finished we're going to ask you to do a survey and we'regonna ask you to tell people that we are awesome and that we do what we saidwe're going to do we show up on time we say please and thank you and that iswhat we do with every customer we serve so the only drawback with FHA is you'reborrowing more than 80% of the value and you have mortgage insurance mortgageinsurance protects the lender in case the home goes into default to cover anyshortage when the house is sold so FHA used to allow you to get rid ofthe mortgage insurance once the value of your home was 80% where the lum was 80%of the value that changed you can't do it anymore so the only ready to get ridof the mortgage insurance or you've heard it called mi or PMI privatemortgage insurance the only way to get rid of that is to refinance your housewhich is fine not a bad option unless the rates are higher then you wouldn'twant to do with the mortgage insurance ends up being a less expensive thing buteven still mortgage insurance is not that expensive and with FHA it's even areduced rate to allow you to get along because this is for first-timehomebuyers specifically but you don't have to be a first-time homebuyer so ifyou think that you are ready to purchase a home I hope you'll visit our websiteaustin's lender com if you have any questions youcan email me Bubba at Bubba bash or a compbu VBA at BU B ba ba sh 8 EUCOM we our current market incorporateddoing business as Austin's lender and we loan all over the state of Texas and mypartner is in Florida and we loan there as wellso visit Austin's lender or Austin slender calm and begin by clicking onthe apply button at the top of the screen once that application comes inwe're going to call you we're going to fill in any empty areas and we reallywant to understand from your perspective what's important to you because at theend of the day if we don't fulfill your needs and wants we've wasted our timeand we understand that so thank you for watching this video FHA is the best wayto go don't let anybody tell you 680 or 640 or 620 or even 5 80 credit score FHAapproves all the way down to 500 but if you've got a lower credit score and I'mgonna say 540 and lower you are gonna have to have a decent downpayment 10% isthe minimum probably 15 or 20% down the good news is there are options availableand everybody should be a homeowner it's such a great opportunity because itbuilds a retirement plan for you if you buy a house today in Austin for 300,000next year to probably sell for 330 the next year to probably sell for 370that's 70 thousand dollars of equity think how long it would take you to save$70,000 in the retirement plan and that money accumulates just by virtue ofowning your home now we've been in a great market and I hope we stay in agreat market but as you know the value of homes goes up and downluckily Austin in Central Texas has been pretty stablebut there's no guarantee of that but I do know that the values always end uphigher than they were years past so you may see a short dip but it won't staydown long it always comes back it always has with that being said thank you forwatching Austin's lender wants your business and we do have one advantageover everybody else we call it our dhoklas system so once you do thatapplication that austin's lender calm we can click a little button and it sendsyou an electronic form that you can complete and send back and we willgo get your tax returns your pay stubs your w-2s you don't have to go diggingthrough boxes and storage to try and find all that stuff we're one of the fewlenders that offers that and we have 24-hour underwriting we can close an FHAloan in as little as 10 days and we do it all the time we want your businessaustin's lender is your lender.