First Time Home Buyer

Minimum Credit Scores for Mortgages Spring 2013 Update

May 10, 2013 by Leave a Comment

First Time Homebuyer Minimum Credit ScoresFor the past couple of years, when we talked to a borrower with a credit score of 580 to 600 – we told them they had a 3 to 4 month waiting period before they could buy a house.  In MOST cases, that was all the time we needed to help someone who was motivated, and who could really afford a home, to get their scores in order.

Minimum credit scores for the NC Housing First Time Homebuyer program was 600, and we could help people get into houses if they qualified for the program and had the scores.

On May 1, 2013 that changed.  It changed from a couple of perspectives… first the NC Housing program changed SIGNIFICANTLY. The changes include higher credit scores, more flexibility for homeownership status, and a better downpayment / closing costs assistance program.

Additionally, changes were made in April to the Automated Underwriting Systems for Fannie and Freddie – with those updates, Credit Score requirements for Governement loans went up to 640.  Can Underwriters override the “Automated” Approval systems?  Yes.  But Will They???  That takes a VERY well documented case. [Read more...]

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What The 2013 First Time Home Buyer Looks For

April 30, 2013 by Leave a Comment

first time homebuyers ncFirst time Homebuyers in NC are an important part of the Real Estate Market Recovery.  They allow folks who own a home, and need to move to a bigger (smaller) home the opportunity to do so.  As those folks move out of starter homes into a larger one, the chain just gets stronger.  According to US News, the First Time Home Buyer is important because, “ When potential new buyers sit on the sidelines, existing homeowners are stuck, unable to move out and up.”  The NC First Time Homebuyer is facing pressure.

For one, the NC First Time Homebuyer Program recently changed, and with that change, came the requirement for a minimum credit score of 640… up from the previous requirement of 620.  Additionally, NC First Time Homebuyers that we meet are now faced with more Student loans than we’ve ever seen. According to US News Student loan debt for the  average 20-something First Time Homebuyer in NC is almost $30,000.  This makes it difficult to rustle up enough cash for a down payment. [Read more...]

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Documenting Large Deposits for a Mortgage Loan

April 17, 2013 by Leave a Comment

Large Deposits should be documentedMany times we have questions from underwriters about deposits showing on a bank statement.  Seems kinda silly at times… but they really do want to know where that extra $350 came from!  If you are buying a house, and you are having a yard sale to try and raise a little extra cash – this can be difficult to document!

If there are any unusual or extraordinary deposits into your account the deposit will need to be documented.  If they cannot be documented the funds will not be given credit in your transaction.  This could lead to a denial, because an underwriter suspects a cash advance on a credit card or the funds that are otherwise borrowed.

We have had delays for many different deposits over the years that are perfectly legitimate, we just  needed to prove it: money earned while keep a neighbor’s child on a one time basis, brother or sister paying off a loan made several years earlier, inheritance or gift funds, lottery winnings, sale of an asset like a fishing boat. [Read more...]

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Get A Tax Refund, Buy A House!

April 9, 2013 by Leave a Comment

Average age of First Time HomebuyersIt’s that time of year!  All of the Car Dealers are shouting “Take Your Tax Refund and Buy a New Car!”  Wait!  Don’t Do That! The slogan for First Time Home Buyers in NC should be… Get A Tax Refund, Buy A House!

In another week, it will be April 15, 2013, and your 2012 Tax Return will be due.  Truth is, for many who do NOT own a home – there will be no ta refund… But if you are one of the Lucky ones, what are you doing with that tax refund?

There are borrowers we talk to who see their tax refund as “free Money” -  but it’s not, it is what you over paid to the government and now you are getting it back from your non-interest bearing account.

We believe in the Dave Ramsey conservative approach to money.  We suggest you take part of any “extra” cash you receive and Bank it.  We suggest that you place some of your “extra” cash into an account where you are unable to touch the funds for a year and with next year’s refund put the two together to make your down payment, or pay your closing costs.  That way, you’ll have money for furniture, and a lawn mower!

USDA doesn’t require a downpayment – so this is the way most of the folks we work with get into a home with very little out of pocket.

Have some Credit Boo-Boos?  Then pay down or pay off those credit cards or unpaid bills.  Negotiate with your creditors on pay off balances.   If they agree to a lesser amount make sure you get it in writing before you send them any monies.  [Read more...]

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First Time Home Buyers in NC Have Questions

April 3, 2013 by Leave a Comment

NC first time home buyer programsIf you are a first time Homebuyer in NC, you probably have questions… We try to take time and answer the individual questions you have about your unique situation, but here are some questions we hear over and over about buying your first home in NC.

  • What if I don’t have a ton of credit, I only have student loans:
    Credit Models currently give the best score to those who use revolving credit MODESTLY. We recommend that you get added to someone’s credit card as an authorized user, or you establish 2 or 3 secured credit cards.  If you are added to an account, remember that the card needs to have been opened AFTER you turned 18, and the balance on the card needs to be 1/3 of the available balance.  It takes 3 months (typically) for these types of cards to impact your score. [Read more...]
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Reporting Gift Funds for Downpayment

April 2, 2013 by Leave a Comment

Gift Funds for down paymentWe get questions all the time from folks who want to understand WHO can give someone a gift for a downpayment on a home.   We also get a ton of questions about reporting Gift Funds for downpayment.  “Do Banks report all of these transactions to the IRS, ” I was asked this week.  “What does a gift letter need to say?”

The money MUST come from someone who is not involved in the Transaction.  So if your spouse is buying a house, and you are not on the contract – you can provide funds to your spouse as a gift.

Additionally, we have to document a relationship between the buyer and the person giving them a gift.  This can sometimes be difficult to do with same sex partnerships, but we’ve made it work. Gift funds can come from family, close friends (including fiancee) or an employer.

In North Carolina, we also offer a down payment program for First Time Home Buyers and folks who have not owned a principal residence for the last three years.   For all of the loan programs we offer, remember that the Seller or the Realtor can not “Gift” money to the buyer. [Read more...]

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Documenting Gift Funds To Close On Your First Home

April 1, 2013 by Leave a Comment

gift funds for a mortgageWe get tons of questions from first time home buyers who are buying their first home.  Some of them realize that they will need some help with the cash needed to buy a home, and they are getting gifts from family.  Documenting Gift Funds to close on your first home can be tricky.

If you receive the gift funds in April (for instance) and you are not purchasing the home until August – then the money will have “seasoned” in your account, and very little documentation is required… but let’s say that you are getting the money pretty close to the time of loan approval, then we have a TON of documentation to do.

Most lenders require  2 months of bank statements these days. That means all pages of the bank statement, not just the first page showing the balance.  If you receive the money now, in April, then your April statement will show the large deposit, and raise questions. Your May and June statements will start with the larger balance, and those funds will be assumed to be your own.

Regardless, the gift from your family should really be a gift in either case, and not a loan pretending to be a gift. [Read more...]

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Sales Concessions: Seller Paid Closing Costs

March 6, 2013 by Leave a Comment

Seller paid closing costsIf you are buying your first home, you might be looking for ways to be able to pay for your dream!  You have several options… you can use a mortgage program that does not require a downpayment, you can get the Seller to help with closing costs, you can rob your 401K account,  and you can get a gift.  We are going to tackle having the NC Seller pay Closing Costs, or a Sales Concession to cover closing costs, with this post.

We work with many first time homebuyers,  and the vast majority of the buyers purchasing a home under $400,000 in North Carolina ask the seller to pay for some or all of their closing costs.  

For more expensive homes, you don’t normally see as many Seller paid Closing Costs unless it’s a “New Construction” neighborhood, and the builder is paying for “upgrades” and / or some combination of Closing Costs.

Sellers are generally fine with paying some of your costs, but they will consider how much it costs them to do so.  Let’s look at an example of how this works:
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Requirements for A Home Loan in NC: Payment Shock

March 5, 2013 by Leave a Comment

requirements for a home loan Let’s say you’ve been living at home, saving money to purchase your first home, and you are one of those lucky folks who have never paid rent before.  Did you know that you could be scrutinized by the mortgage underwriter a little harder than other folks, even if you have good credit scores?  One of the requirements for a Home Loan in NC  is a great Rental “Housing” payment record.  If you’ve never paid for rent, then the Underwriter is forced to consider Payment Shock.

The term “payment shock” signifies the increase in housing expense experienced by a borrower.

Let’s look at another example.  What if you’ve been sharing an apartment with friends, and your portion of the rent was only $300 a month?  A mortgage payment is likely to be at least $600.  Even if you can easily afford the $600, and you have good credit scores, one of the requirements for a Home Loan that a NC underwriter considers will be to explain (basically) in the file why they “believe” you can handle the higher monthly housing expense.
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The NEW NCHFA Program Begins March 1, 2013

February 25, 2013 by Leave a Comment

NC First Time Homebuyer ProgramThis is the LAST WEEK to register a loan with NC Housing that has credit scores between 600 and 620. Effective this weekend, minimum credit scores for first time home buyer programs go UP! There’s a new First Time Home Buyer Program in NC: Available March 1, 2013.

There are just a few more days until the new mortgage program starts. The program is a FIRST in NC and allows us to combine the FHA, VA and USDA Home Loan with powerful new benefits!  NCHFA refers to the program as the  N.C. Home Advantage Mortgage.

March 1st the new mortgage program goes live (details on the NEW NCHFA First Time Homebuyer Program).  You may see details about it in advertisements that are currently running in multiple real estate outlets. Don’t be left out! [Read more...]

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