What questions should I ask a mortgage lender in Netcong ? 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 Netcong. 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 Netcong 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.
Think You Can’t Afford to Buy a Home? Think Again
So most mortgage brokers in Netcong 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.
Mortgage Lenders - How to Choose the Right One For You
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 Netcong 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 Netcong, 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.
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.
Many people don't even realize that the USDA (United States Department of Agriculture) Rural Development Branch offers low-interest home loans to low-income families. Because I am a single mother with a lot of children, I qualified for a subsidized loan. I am only paying a measly 1% interest on this loan! You will only qualify for this low of an interest rate if you are very low income. For people with higher incomes you can still get a low rate.
Also, keep in mind that the house or property needs to be "rural." Now this doesn't necessarily mean that you need to live in the sticks. A friend of mine got a loan in Post Falls, Idaho, which has a population of about 30,000 and is only a 30 minute drive from a major city.
Other benefits are that the homes are required to be no more than 10 years old. They will also finance land/home packages with (brand-new only) manufactured homes and land up to five acres. The will also complete an inspection of the home and property for you to make sure it is sound and meets codes.
Here is a list of steps to take to qualify yourself for a USDA-RD loan:
- Go to the USDA income and property eligibility site and see if the home or property you are looking to buy qualifies as "rural," and if you are within the income limitations.
- Once you are sure that your income and location are eligible, go to the USDA site and look for the "office locater" link to find you local office. Contact them and ask to "prequalify." They will send you prequalification form(s), and if you do prequalify, send to a loan application.
- When filling out your forms, keep in mind that you can count child support and food stamps as part of your income. Quite often, there is a waiting list, so don't procrastinate!
- The rest of the process works pretty much like any other home loan. The USDA loan specialist you are working with will guide you through the process. You will be required to provide certain proofs of income and sometimes they require you to pay down your debt. They also can set you up for special assistance where no down payment is required.
- Once you are officially qualified for a loan, it is time to find home or property. The USDA-RD will fund loans for acreage (up to five acres) and manufactured home packages (which is what I have). However, manufactured homes have to be brand new, so you can't buy existing home/land set ups. Also, stick-built homes can't be anymore than 10 years old.
- So, what are you waiting for? If you have always dreamed of owning a home but haven't been able to afford it because of lack of income, here is your chance! USDA-RD loans are a great deal, and you can even get home improvement loans later on; in fact, I am getting a garage built on property this Spring with a USDA home improvement loan!
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.
A "New" Loan Product USDA Loan Guarantees
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.
If you are in the market, looking at properties and you want to see some high rental yield properties, then I’ve got 10 property listings that I’ve gone out and found for you guys.
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 Netcong?
Devon Marisa ZuegelBlockedUnblockFollowFollowingJul 30, 2017The government exercises tremendous power over residential design in the US. Its influence is nearly invisible, because it works through complex financing programs, insurance incentives, and secondary markets. These mechanisms go unnoticed, but their effect is hard to miss — they remade the United States into a nation of sprawling suburbs.This is the second post in a series about government policies that encouraged suburban growth in the US. You can find the first post here.What image springs to mind when you picture “federally subsidized housing”? Most people imagine a low-income public housing tower, a homeless shelter, or a shoddy apartment building.Nope — suburban homeowners are the single biggest recipient of housing subsidies. As a result, suburbs dominate housing in the United States. For decades, federal finance regulations incentivized single-family homes through three key mechanisms:Insurance,National mortgage markets, andNew standards for debt structuringThe housing market hides these details from the typical home buyer. As a result, most people are unaware of these subsidies. But their effects are striking — they determined the location and shape of development across America for generations.A New Deal to restore the housing industryDebt has a negative connotation these days. Credit cards, student loans, and auto loans are the anchors that keep many Americans in debt for most of their life. Meanwhile, we view mortgages very differently — they are seen as an investment, a symbol of adulthood, and a sign of financial stability.This was not always the case. In the early 1900s, mortgages were just like any other kind of debt. Nowadays payments are spread out over decades, but back then they came due all at once after a few years. Most people didn’t have enough cash at the end of the term. It was standard to pay back some and negotiate a new loan for whatever they still owed.This worked fine while the economy was booming, but investors refused to renew the loans after the 1929 stock market crash. Homeowners missed payments, and foreclosure rates doubled. The housing industry collapsed, taking the economy down with it.New Deal policymakers realized that restoring the economy depended on restoring the housing sector. In 1934, they created the Federal Housing Administration (FHA) with two key mandates:Revive the housing market, andMake homeownership attainable for more AmericansIn pursuing these goals, the FHA determined the design, structure, and location of new private development. In turn, it made suburbia the dominant form of housing in the United States.The FHA seems dry and technical, but its implications are immense. It provides insurance on mortgages that meet certain criteria, repaying the principal to lenders if borrowers default. We take the program for granted now, but in 1934 it was radical. While most Depression-era initiatives infused the economy with money, the FHA was unique in that it did not spend a dime to stimulate the housing market. Rather, it boosted the lenders’ confidence in the stability in the market.It mandated low interest rates, so investors’ returns weren’t as high as they had been, but risks were nonexistent. Lenders had been spooked by the crash, but they came rushing back with the promise of guaranteed profits. The FHA created a space for the private market to act, and in doing so it unleashed vast amounts of private capital. Government programs like the PWA or HOLC were tiny in comparison.“The most ambitious suburbanization plan in US history”By making an offer lenders couldn’t refuse, the FHA exercised tremendous power over residential design. Mortgages had to meet an opinionated set of criteria to qualify for the federal insurance. Lenders could invest in mortgages not covered by the program, but they had a strong preference for homes that conformed to the guidelines. Compliance was mandatory for the insurance, so they pressured developers to follow the rules. By 1959, 25 years after it was formed, the FHA had helped three out of every five American families purchase a home.By making an offer lenders couldn’t refuse, the FHA exercised tremendous power over residential design.FHA rules had implicit and explicit hierarchies of what homeowners ought to want. They had two key purposes: to stimulate the economy, and to constrain the market to only good investments. These goals — plus social assumptions of the time — were reflected in the FHA’s evaluation of a mortgage. The standards included:Large, new homes were given a higher score, because they increased demand for labor and materials. Older homes with small spaces didn’t create demand for new furniture. Features like long hallways and steep staircases lowered the rating, because they prevented easy moving of furniture.Homogeneity of neighboring housing stock was believed to indicate stable housing prices. To get the max score on the FHA evaluation, the manual preferred that a house be a part of “a sparsely developed new neighborhood … completed over the span of very few years.”Restrictions and guidelines in the 1936 FHA Underwriting ManualThe ideal house had “sunshine, ventilation, scenic outlook, privacy, and safety”, and “effective landscaping and gardening” added to its worth. The guide recommended that houses should be set back at least 15 feet from the road, and well-tended lawns that matched the neighbors’ yards helped the rating.The manual had strict definitions for how streets should be built.It prescribed minimum street widths and other specific measurements.It recommended a hierarchical network, with a major arterial roads interlaced with smaller streets. The idea was to separate through traffic and enable efficient circulation.It saw cul-de-sacs as the most desirable home locations, because they were most isolated from foot and auto traffic coming from outside of the neighborhood.The FHA thought this was a great investment.The guidelines favored auto- rather than transit-oriented development. The idea was that this would increase demand for cars, which were a growing part of American manufacturing.The FHA did not think that Greenwich Village was a good investment.The manual emphasized that suburbs must be arranged to promote strict separation of land usesMulti-use districts with “commercial, industrial, or manufacturing enterprise” were seen to threaten residential value. So, the FHA simply did not provide insurance for units where the first floor was a shop with residences above for most of the agency’s lifetime.Development like what you see in Greenwich Village and other traditional neighborhoods in east coast cities could not get an FHA loan. (These rules only changed in 2015.)“There would be no corner groceries; if there were any stores at all, they would be grouped into a single shopping center,” wrote Tom Hanchett in The Other “Subsidized Housing”.The combined effect of these standards was the most ambitious suburbanization plan in United States history. The FHA favored suburbia, so subdivisions became one of the most common neighborhood types within a few decades.New frontiers for suburbiaNew Deal programs enabled the expansion of suburbia into new regions, too. Prior to the Depression, mortgages were extremely local. Investors could not lend money from a distance, so capital accumulated in slow-growth areas and was scarce in fast-growing ones.In commoditizing mortgages, New Deal programs made possible a national mortgage market for the first time. FHA guidelines standardized home loans, which allowed lenders across the country to treat loans of the same rating as fungible. Since the quality of these homes was assured by FHA inspectors, “investors from all over the country would know exactly what a particular mortgage was worth”. For the first time, capital-rich investors could lend money to developers expanding into the south and west.The creation of the Federal National Mortgage Association (FNMA, better known as Fannie Mae) in 1938 took this a step further. Fannie Mae creates a secondary market by purchasing mortgages from lenders. It creates liquidity for these originators, which in turn allows them to underwrite more mortgages. The federal government created Freddie Mac (FHLMC) in 1970 to serve a similar purpose. The combination of these secondary markets and the FHA guidelines was in effect a massive financing of suburban sprawl, all facilitated by the federal government.This subsidized sparsely populated parts of the country, while disadvantaging older metropolitan areas.The government also set a national limit on interest rates for mortgages. It created a standard rate for the country as a whole, where before there had been immense variation. Mortgages had been far more expensive in the west and south than in the capital-rich northeast. The new standard rates made it artificially cheap to finance new development in the southwest. This subsidized sparsely populated parts of the country, while disadvantaging older metropolitan areas. It also coincided with the creation of the interstate highway system, on which we’ll go into more detail in an upcoming post.New markets for suburbiaWhile federal programs increased the geographic size of the market, they also increased the number of people who could afford a down payment. They did this by tweaking the structure of mortgage debt in two ways:(1) They decreased the size of monthly payments by spreading them over a longer period of time.Federally-backed loans required terms of at least 10 years, replacing the balloon mortgages of the 1920s. This paved the way for the standard 30-year mortgage that we have today.Borrowers focus on the size of these monthly payments rather than the total, so this made mortgages more affordable without actually decreasing their cost.(2) Federal programs slashed what was an acceptable downpayment.Before, the buyer had to pay upwards of 50% of the purchase price in cash, but with the FHA guarantees, banks were willing to accept down payments of just 10%.To reward G.I.s returning from WWII, the Veterans Administration (VA) offered mortgage aid as well. The VA insurance program was even more generous than the FHA, so by midcentury banks offered as low as 0% down to newly returned veterans. These set the standard for conventional mortgages within a few years.Harvard economist Edward Glaeser described the impact of “the mortgage subsidies that were explicit in the tax code and implicit in Freddie Mac and Fannie Mae” in a Boston op-ed:These home-borrowing subsidies … pull people out of America’s urban centers. More than 85 percent of people in detached homes are owner-occupiers, in part because renting leads to home depreciation. More than 85 percent of people in larger buildings rent. Since ownership and structure type are closely connected, subsidizing homeownership encourages people to leave urban high-rises and move into suburban homes.By making long-term, amortized loans with low down payments the norm, federal policies made it possible for millions of people to buy single-family homes. These homeowners enthusiastically moved into the new mass-produced subdivisions to the west.An aerial view of Phoenix suburbsInvisible subsidiesOn the surface, mortgages appear to be a mostly free market enterprise. Buyers take out financing through a private broker; they find a home through a private real estate agent; and they purchase their home from a private developer. Some people take out FHA loans, and everyone has to deal with the pesky permitting process, but for the most part homeowners transact with private parties.The system masks a huge amount of government intervention. It isn’t evident to the average person, because it works through obscure mechanisms like insurance and financing terms. These don’t look like conventional cash subsidies, but they distort incentives, supply, and demand in the same way. Though these mechanisms go mostly unnoticed, they have transformed residential finance in America.The US is the most suburban country in the world. Most assume this is the organic result of individual preferences, because there’s little visibility into the ways that policy has shaped incentives. The reality is that government intervention played a huge role. Because these subsidies are complex and technical, it’s easy to forget their long history, but if we want to begin to understand the current state of the housing market, we have to first understand how we got here.Thanks to John Backus, Siyang Li, Chris Barber, Leopold Wambersie de Brower, Omar Rizwan, Tiffany Jung, Aurélien Chouard, Rahul Gupta, Barak Gila, Marcel Horstmann, and John Luttig for reading this over. ❤Notes, resources, and further readingI cannot in good conscience discuss the history of home finance in the US without mentioning redlining. This was the practice of denying loans to residents of certain areas due to the racial makeup of those communities. The FHA and VA pioneered this racist practice, and they set the standard for private mortgage providers as well. It was a defining feature of the US housing market for generations, and until recently it was ignored in nearly every major high school history textbook. Other people have given this issue far better treatment than I ever will, so I’ll point you to those, but I wanted to at least mention it so you can learn more about it:The Racist Housing Policy That Made Your Neighborhood from The Atlantic1934–1968: FHA Mortgage Insurance Requirements Utilize Redlining from Boston Fair HousingLouis Hyman’s book Debtor Nation: The History of America in Red Ink was instrumental in writing this post. I originally picked it up as a history of credit in the US, but it went way beyond that. The chapter about home finance opened my eyes to the the government-created incentives that shape cities. It is what led me to learn more about the impact of policy on residential development and rethink deep-set assumptions about why our country looks the way it does.I nearly stopped writing this when halfway through I discovered Thomas Hanchett’s paper The Other “Subsidized Housing”: Federal Aid to Suburbanization, 1940s-1960s. It hit every major point I intended to articulate, and it introduced other ways that the government has shaped our communities that I’d never heard about. I decided to continue, because my purpose — to communicate these complex policies to people who aren’t finance policy nerds — was different from his, and new information has surfaced since it was published in 2000, but it’s a great resource to dive into more details that didn’t fit in this essay.There’s so much more interesting stuff to dive into about the structure, incentives, and outcomes of the FHA. I didn’t go into them here, but I encourage you to read more about it! It’s incredible how much they’ve shaped the US housing market, even today. You can find a full PDF of the 1936 FHA Underwriting Manual here.To learn more about the mortgage interest deduction:The Accidental Deduction: A History and Critique of the Tax Subsidy for Mortgage Interest from Law & Contempary Problems, Vol. 73Who Benefits from the Home Mortgage Interest Deduction? from Tax FoundationWays forward to more equitable land use law from City ObservatoryThe mortgage interest deduction: Its geographic distribution and policy implications from Journalist’s ResourceHow the mortgage interest deduction hurts our cities from MinnPostTo learn more about depreciation:Real Estate Depreciation and Tax Sheltering from Financial WebTo learn more about the capital gains exclusion:5 Things You Should Know About Capital Gains Tax from TurbotaxHomeowners get a big tax break when they sell: A capital gains tax exclusion from BankrateMore support for a real estate capital gains tax from City ObservatoryFurther reading:Street Network Types and Road Safety from University of ConnecticutTrump’s Industry, Real Estate, Poses Hurdle to Tax Overhaul from The New York TimesStarving the cities to feed the suburbs from Grist
Secured personal loans: Take personal advantages of your home!
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.