The CFPB (Consumer Financial Protection Bureau – the agency
of the United States government
responsible for consumer protection in the financial sector) came out with a
report that said that
borrowers are paying too much simply because they didn’t shop for a mortgage.
It basically say’s,
‘Use an Independent Mortgage Broker who offers more products at very reasonable
terms rather than
going to a mega retail lender or big bank’.
Mortgage brokers compete with all the big banks and have more
options for loans than any single big bank. Find a licensed professional that
you can trust to save you money and get the job done without having your
paperwork sit on someone’s desk.
HOME BUYERS. The
first step even before starting to shop for a home is finding the right
mortgage professional to help get you approved.
Without a loan approval, you will not be
able to put in an offer to purchase a home. No Seller or Real Estate agent will
take your offer
seriously unless the offer is accompanied by a signed letter of loan
Your mortgage professional will go over the various loan
types available to you and the pluses and minuses of each one. One very important thing to consider is loan
closing costs. Most first time buyers
excited about getting into their new home that they often forget or don’t think
about the fees that
are associated with home loans. Alas,
there is some good news. Many mortgage
brokers may pick up
all or some of these fees, saving you buckets of cash. Something to talk to your broker about…
If you have any questions at all, contact us a 949-888-6368
or send us an email to Broker@southcountymortgage.com
For most people, home ownership in the United States is the quintessential American dream. Many responsibilities come with owning a home, but perhaps the best aspect of owning is to have a place to call one’s own and to be free from the shackles landlords place on renters. The primary hurdle for first time home buyers consists of lack of knowledge of the types of loans available to buyers on the market. Here are 4 facts first time home buyers should know about home loans.
Advantages. The easiest aspect of buying a home is arguably finding a place you want to call your own. Conversely, going about obtaining a home loan can be confusing. The good news is that there are certain advantages for first time home buyers. First of all, your preferred lending institution may offer to pick up your closing costs, saving you a bucket of cash. Second, down payments on your dream home may be smaller with certain lenders. Buyers should do their research, shop around, and find the best lending institution to take full advantage of saving money.
Disadvantages. As mentioned, first time home buyers should shop around so as to avoid, if at all possible, any disadvantages or negatives with respect to obtaining a home loan. One restriction that may arise is the amount of money an institution may be willing to loan. Of course, this is also dependent on your down payment, credit history, net income, and outstanding debt. Another restriction may consist of a limit as to what loans you may apply for. Again, these are hurdles that can be overcome and first time buyers should be aware of them and not become discouraged.
Types of loans. There are several types of loans on the market at present for first time home buyers. First time home buyers should do their homework and see which loan suits them best and is the most practical.
One of these is a FHA loan which is both fixed and adjustable. These are loans that are guaranteed by the Federal Housing Authority in the Department of Housing and Urban Development (HUD). Lenders have an affinity for these loans because the US government insures the loan. Lenders may be predisposed to permit smaller down payments and lend to first time buyers with a not so perfect credit score.
Another excellent home loan is the Veteran’s Administration loan, commonly referred to as a VA loan. This may be applied for if one of the home buyers is a veteran with anything other than a dishonorable discharge. Much like the aforementioned FHA loan, they are guaranteed by the Veteran’s Administration through the government. Common to these loans are no down payments, which can enable you to use your savings to remodel or renovate your home, or conversely, spend your money on furniture or appliance upgrades.
Still another is called the fixed rate loan. Fixed rate loans can be advantageous for first time home buyers because changes in the economy and interest rates do not affect your monthly payments. Therefore, however long the duration of your loan is, the payment will not change. If your interest rate is 3.75%, it will remain “fixed” for the 20 or 30 year duration of your loan. Finally, there is what’s known as the adjustable rate loan. These loans establish a low initial fixed interest rate, typically for the five to seven 5 years. As a consequence, your mortgage payment will be lower thus making it easier to buy your dream home. However, subsequent to the previously mentioned period of time, the interest rate will change to whatever the market value is at present.
Those dreaded closing costs. First time home buyers are typically excited about getting in a new home. As a result, they often forget that there are associated costs when buying a house. Additional fees consist of: appraisal fees, loan origination fees, cost of a title transfer, transaction settlement fees, and possibly more depending on the situation. Ensure that your lender provides you with a good faith estimate of all of these associated fees, along with your estimated house payment. This is required by law. Try to hold your lender accountable and obtain these estimates within a three-day time period subsequent to completing your loan application. As previously mentioned, your lender MAY pick up some or all of these fees. You need to ask.
Now that you have basic information you need to know, you’re pretty well set to look for your home and start the process leading to actually owning your own home.
If you have any questions at all, contact us at 949-888-6368 or Broker@gotohome.com