first time home buyers

First Time Home Buyers – How The Loan Process Looks

First Time Home Home Buyers in NC

Our Family at our Son’s Wedding last Spring

First Time Home Home Buyers in NC often ask us how the whole mortgage loan process thing works. They might not word it that way, but coming to see a mortgage loan officer can be pretty intimidating if you don’t know what to expect.  We know that – and often times, we don’t actually MEET with our clients.  Much of the work we do is done over the telephone and with email.

I work with my husband, Steve.  Generally clients who call us will end up talking with Steve most of the way through the process.  He is the MASTER project manager.  He keeps up with 25 or 30 clients at one time.  He’s very empathetic, and immediately upon talking to you, he will use words like “we need to talk to the Seller about closing costs.” Now, is he actually going to be talking to the Seller?  Well, sometimes he does – especially if the buyer doesn’t use a Real Estate Agent.

We help First Time Home Buyers in NC with the negotiations, although we strongly feel you would be better protected by using a Realtor, and we very often refer folks to top Agents we work with.  We feel really comfortable doing this – not only because we help dozens of first time home buyers in NC each month, but also because we just went through the process with our son, earlier this year.

Once you talk with us, the next thing that will happen is that we will ask you to send us a copy of your Driver’s License, a month’s worth of paystubs, your last W-2 (sometimes we need the last 2 years of W-2s) and at least one bank statement. We then draw up all of the documents you will need to sign, and send this really big email back to you with instructions about what you need to sign, and what you can expect.

Below is a letter that Steve recently sent to “Sarah and John,” first time home buyers who are buying a home in Clayton.  I thought it was pretty interesting – and wanted to share it for those who want to get a little better handle on how we work.

Sarah and John – Congratulations on this next step in your life!  I’m really glad we had the chance to talk about your goals, and I appreciate the fact that you sent me your documents back so quickly!

Attached are the loan documents we discussed.  Please sign all of them where I’ve marked them, and return them to me as soon as you can.

There is a first time home buyers mortgage tax credit that you are eligible for through the NC Housing Finance Agency called the MCC program.  These are in addition to the USDA home loan. It allows you to recognize tax credits which effectively reduce the monthly payment.  Let’s discuss how this program works in greater detail.  There are some upfront fees for the program that I have included on the fees worksheet, but you’ll notice that the credits will pay for those in the 1st 3 months of having the loan, so it is well worth it.  You can also read more about the MCC Tax Credit program on our website. There are a few additional disclosures that I will need to get to you for this program, but I have to get you registered at NC Housing first, so those documents will be coming within the next 48 hours.

The 2nd to the last form in the stack is a 4506T request for transcripts. Sarah, since you are not a borrower on the loan, this is the only form that I need for you to sign.  Also add your full name in block 2-a and your social security number in block 2-b.  You can hand write these in.  We are required to validate the Household Income for USDA – and this form allows us to obtain a copy of your Tax Transcripts from the IRS.  As we discussed, even though you are not a borrower on this loan, you will still have “marital rights” to the property as is the law in NC for those who are married.  

The last form in the stack is a gift letter for the funds to pay off the car loan.  This can be done at closing so your folks do not have to transfer the money now.  They can send it directly to the closing table.  I will need to get the gift letter completed and a copy of their Bank statement showing where the gift funds are coming from.  Nobody likes this part but the government makes us get a copy of the donor’s statement when there is a gift.  If I need to speak with them about this process, I’m glad to do so,  just let me know.  Are they giving you any additional gift funds?  Such as closing cost?  Let’s discuss this as well, once the negotiations for the contract are complete.

Sarah I will also need to get a recent pay stub.  NC Housing requires this to prove that you are not over the maximum household income limit for Johnston County.  They have an income limit – just like USDA.  We are fine for both programs – but with the tax credits there is just a little additional documentation required.

John,  Do you get statements on the student loans or can you access them online?  As most of them are in deferment and not reporting a payment to the credit bureaus I would like to establish what the likely payment on these are going to be when they come out of deferment.  USDA allows us to use 1% of the outstanding balance for debt ratios if we cannot establish what the future payments are going to be.  But I would rather get whatever we can gather about what the actual payments will be.  The future payments almost always are much less than the 1% calculation and our debt ratios are a little tight.

I will need for you to let me know who your home insurance is going to be with.  If you would like a referral I know several agents who do a great job.

Can you both get me a HR contact for your job?  Underwriting does a verbal verification of employment right before we close.  Speaking of which – we will also be re-pulling your credit 72 hours (or less) before closing.  Please do not close accounts, or open new charge accounts – or CHARGE a ton of things before closing.  We want your credit picture to remain pretty much like it is now (knowing that we are paying off your car).

John, I will need to get updated Bank statements and pay stubs as the ones that you sent earlier are out dated now.

I realize that this is a really big stack so please let me know if there are questions and lets touch base on some of these items that need farther discussion

First Time Home Buyers know that they can reach us – pretty much anytime, and that we are going to answer their questions, and not think they are silly.  We want to help you avoid the mistakes we see so many home buyers in NC make, and we want to make certain that you are getting the benefits you deserve… because in NC, there just aren’t that many places that offer ALL of the NCHFA Programs.

Are you a First Time Home Buyer in NC?  We’d love to talk to you about how all of this mortgage stuff works!  Please call Steve and Eleanor Thorne, 919-649-5058.   We are available to talk to you after work and on weekends – so give us a call, or leave a question below and we’ll do our best to answer it!  You can also find us on Facebook and Google +

I try and answer all questions :)