Credit Score Basics – For First Time Homebuyers

January 31, 2012 by Leave a Comment

We were able to ask Ken Venable with CREDCO about FICO Scores and what the fallacies and models used today. We are hoping to clear the air – because there’s so much information available now… and some of it is just plain misleading.

For instance the “Free Credit Score.com” jingle that folks listen to, and then PAY for doesn’t have a matrix that is anywhere close to the “Mortgage” matrix we must use to score you! We’ve seen many people who thought their credit score was “up” to 640 – when we pulled it and found that the score was actually 618, the customer thought we were crazy!  We weren’t… there’s just a difference between a Mortgage Report Score, A Medical Credit Score, and a Retail Credit Score.

Each credit bureau uses a “Score Logic” that is slightly different from one agency to another. Meaning that if 4 different people pull your credit, you might get a slightly different score – especially if the person pulling your credit doesn’t note that you are a junior… or if they have the wrong zip code!  That’s right, entering the wrong street address can change your score, slightly.

A credit report is just a snapshot in time… think about someone taking a picture of you in one day.  Well, they might get a picture of you at Starbucks, at your desk, in a meeting – you move during your day. Creditors can submit information to the Bureaus on any given day at any given time – so the snapshot (or pull of your credit) on a given day by different people might have slightly different scores.  It doesn’t happen often – but it can happen.

You need a credit score ABOVE 620 in most cases to purchase a home.  There are FEW exceptions, like if you’ve been in college and just don’t have much credit… but for the most part you need to be NEAR 620 to purchase a home in 2012.  If you are a First Time Home Buyer  – and you have questions about student loans, or your credit score – Call us!.  We want to help! Steve Thorne, Mortgage Banker in Cary , 919-649-5058.

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How to Write a Contract With A DAP

November 24, 2011 by Leave a Comment

First off – A DAP is the “mortgage babble term” for DownPayment Assistance Programs.  These programs USE to be funded by a SELLER paid contribution – these days, however, “the Home seller can only help buyers pay closing costs by giving a portion of their proceeds back to the buyer at closing, in the form of closing costs. The amount of seller assistance that’s allowed depends on the type of loan the buyer is getting.”

Post “housing Meltdown” there are now many laws, guidelines and regulations on the books regarding WHAT a Seller can “give” a Buyer – and what they are not allowed to give.  Sellers are no longer allowed to give home buyers down payment funds. In fact, there are many situations where the Seller is very limited to what they can even pay towards closing costs!

But All Is Not Lost! There’s STILL A Down Payment Assistance Program Available, With over $8,000 in FREE $$! [Read more...]

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How Do You Settle Up The Closing Costs? HUD 1

April 8, 2011 by Leave a Comment

That hour or so right before you get the keys to your new home are spent signing document after document with the Attorney. One of the most important documents you will sign at the closing table is the HUD 1 Settlement Statement (also known as a Closing Statement) is the document you sign that is the accounting of all of the charges associated with the purchase.

Most people in the mortgage industry just call it the “HUD” Which can be a little confusing for some borrowers, because they think we might be referring to a kind of loan you are getting, or a HUD home…

Unlike the Good Faith Estimate that you receive at application, the HUD1 is final so all the terms, costs, etc. will not change.  We normally match the Good Faith Estimate,from the application with the final number on the HUD1.  Because we have been doing this for so long, the “Accountings” are normally very close between our initial estimate, and the final numbers!

HUD 1 Definition

The HUD1 is a document required by RESPA (Real Estate Settlement and Procedures Act, the controlling Federal law) to show actual charges and adjustments for all parties including the seller, buyer, agents, lenders, and all third parties like attorneys and home inspectors.

Another name for the HUD1 is the Closing statement or Settlement statement.

HUD 1 Closing

A HUD1 is signed by the buyer, seller, and closing attorney at a closing of a [Read more...]

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Profile of 2009 – 2010 First Time Home Buyer

November 9, 2010 by Leave a Comment

The National Association of Realtors released information about First Time Home Buyers last week that showed some interesting trends!

  • 93 percent of those surveyed in 2009 – 2010 reported that they purchased using one of the first-time buyer tax credits. (Who’s surprised??? Nope, we’re not surprised either!)
  • Ninety-five percent chose a fixed-rate mortgage.
  • The median age of first-time buyers was 30 and the median income was $59,900. (This part was a little surprising!) The typical first-time buyer purchased a 1,540 square foot home costing $152,000 (bet they were keeping their total payments under the $1000 mark)
  • First-time buyers who made a downpayment used a variety of sources: 74 percent used savings, 38 percent received a gift (or a loan) from a friend or relative, (READ:  their parents) Eight percent tapped into a 401(k) fund, and 6 percent sold stocks or bonds.
  • Women accounted for 1 in 5 purchases, and single Males made the largest leap in the survey ever – which was attributed to the tax [Read more...]

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New Survey of Home Buyers by the National Association of Realtors

November 8, 2010 by Leave a Comment

There have been a couple of survey’s released recently by the National Association of REALTORS® that highlight long term (like over 8 year) patterns and shorter term (last 12 to 18 month) patterns in buyers.  If you are considering a home SALE or purchase, these trends are important.

  • Typical sellers had been in their previous home for eight years. This is up from the 2009 survey that showed home sellers in their home for only seven years.  The survey also showed that repeat buyers plan to stay in their home for 15 years… so we are all thinking a little more long term!
  • First Time Home Buyers plan to stay in their home for at least 10 years. This says (to me) that SCHOOLS are going to be an even bigger issue in the future.

Even with several years of price declines, the typical seller who purchased a home eight years ago experienced a median equity gain of $33,000, a 24 percent increase, while sellers who were in their homes for 11 to 15 years saw a median gain of 40 percent.

“Sellers who purchased at the top of the market and had to sell in a short time frame were hurt by the price correction, but the vast majority who are able to stay for a normal period of home ownership generally built enough equity to make a trade-up purchase,” NAR President, Ms. Golder of Arizona said. “Despite swings in the housing market in recent years, the fact is most long-term owners see healthy gains in the value of their property.”

Homeownership, despite all of the problems in the last few years, still appears to be an American Dream according to this survey.   NAR economists state in the survey that, “Eighty-five percent of recent home buyers see their home as a good investment, and nearly half think that investment is better than stocks.”  What are some of the OTHER reasons they are buying?

  • “Honey We Need A Bigger House!” A desire for a larger home influenced almost 10% of all buyers.
  • A change in their families’ situation (like divorce or death) influenced just under 10% of buyers
  • The Whopping $7500 and $8000 First Time Home buyer tax credit was cited by 8 percent of buyers
  • A job-related move (which we thought would be much higher) influenced 7 percent of buyers
  • Affordability Issues (meaning can’t afford your house anymore) only figured into just over 5% of those responding (which was surprising).

Another NAR Survey released details the massive numbers of First Time Home Buyers entering the market.  For more on that, click here.

If you have questions about purchasing a home, how long you need to wait after a short sale or modification – or special ways for First Time Home Buyers to qualify in NC, please call Steve Thorne 919-649-5057. We have the best mortgage interest rates, and the lowest Fees Available!

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What if Mortgage Rates Went to Zero? Would You Buy Then?

September 28, 2010 by Leave a Comment

I am a self proclaimed economics junkie, nerd, enthusiast. I got really excited looking at some recent information about the Economy and Interest rates!

A survey done by CNBC of  leading market participants indicates that THEY believe the Federal Reserve will boost it’s balance sheet by about a half a TRILLION dollars in the next six months.

If you are like one of my friends, you are scratching your head going, “and I care about this because….?” Well you care about this because if the Fed does this – a likely benefactor would be LOWER Mortgage Rates.

The Fed stopped buying mortgages in March, and rates didn’t skyrocket… but they just are not going below certain thresholds. The idea is that the Federal Reserve will have to come back into the market in some fashion, and when they do, mortgage rates will likely go lower.

But HOW low will they go?  And would a rate at, or near zero, have first time home buyers running to buy like the next $8000 Tax Credit?

“The difference between a 4.5% and a 3.5% mortgage isn’t that great. If we were at 10% and rates fell to 5%,” that drop would attract much more borrower interest. “When you’re talking about incremental declines in interest rates, it does add some [demand] but not as much as you’d think.”

Mr. Bernanke is scheduled to speak this Thursday and there will be even more people listening to his “tone” to see if there’s any hint about deflation and the Federal Reserve”s Balance Sheet. If the CNBC poll is correct, we could get below the current stale mate.  Either way, though, mortgage rates are at the historical low point and that’s only ONE of the reasons people are buying in the Raleigh / Cary real estate market!

To find out what you can qualify to purchase in NC, call Steve and Eleanor Thorne, Mortgage Banker in Cary , 919-649-5058.  We have the best rates and the lowest fees for mortgage loans in NC Do you think we need a new tax credit?  Read this

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USDA Guarantee Fee Update 8/23/2010

August 24, 2010 by 1 Comment

The Single Family Housing Origination Department of the USDA Home Loan Program announced yesterday that they should have their computer systems up and running to accommodate the changes required by Congress in their fees.

Since the end of May, USDA has been issuing “Conditional” approvals… and because of that, Wells Fargo, Bank of America (and many, many others) are not doing USDA Home Loans.

We are still closing these loans... here’s what the directive says:

Rural Development also is working on a more complete system upgrade to accommodate all provisions of the new law. We expect this full enhancement to be completed as early as possible next fiscal year. While the 3.5 percent up-front fee is sufficient at the current subsidy rate, we must be prepared to make adjustments in later years using the new authority for an annual fee to maintain a zero cost program. We appreciate your role as a lender in responsibly servicing loans in the SFHGLP portfolio and helping us maintain a successful program.

So here’s the headline folks… USDA has the authority to give a lower guarantee fee to “poorer families.”  They also have the authority to charge an ANNUAL (monthly) Mortgage Insurance Fee... they are NOT doing it right now, but reserve the right to do so in the future.

Almost all parts of our state qualify for the USDA Home Loan Program, which offers 100% no money down financing. You will need to meet the income requirements (which vary by county) and you need to have a credit score of at least 620.

If you are considering a USDA Home Loan, Call Steve and Eleanor Thorne, Mortgage Banker in Cary , 919-694-5058.

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One Borrower Has Income One Borrower Has Credit Score

August 18, 2010 by 1 Comment

When one borrower has most of the income… the other borrower has good credit scores… there ARE options for purchasing a home. Look at the question we had yesterday:

“We want to purchase a home, and I want to know if we can get it.  My husband currently has a mid credit score of 538,  and mine is 678.   He makes about 52,000 and I make 25,000.  I’m still in graduate school full time.  We saved  $4,000 for closing cost so far.  We want the house by the end of October 2010 Can we get a loan?”

Option 1:

Purchase a home using FHA, and have a non-owner occupied co-borrower on the loan with the borrower who has good credit scores. If you know that you can make the payments on your own, then having a parent, or other family member, on the loan will not be a burden to them.  After you’ve made 12 months of payments (and by all account mortgage interest rates will still be low a year from now) you can refinance the loan and take the family member(s) off. [Read more...]

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First Time Home Buyer Raleigh NC FAQs

August 14, 2010 by 1 Comment

We work with a TON of First Time Home Buyer’s, and we often find that they need the same basic information to avoid costly mistakes:

- I’m paying $1250 a month in Rent, can I keep my house payments at that same dollar amount? Great News!  When you buy a house, you can get a raise!  (for more info click here).

-  Can I buy a house if I’ve had some credit Boo-Boos? Okay this is tricky – but the answer is YES!  It’s just a matter of how long it will take to get your scores up to 620 (OR 580 if you qualify for NC Housing Finance Agency Money!).  We have a TON of information on Credit Scores, and how to get them higher!  Click here! [Read more...]

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FHA Guidelines on New Jobs

June 28, 2010 by Leave a Comment

Maybe you just graduated from College – or maybe you have been out of work and are so excited because you finally got a job!  YEAH!  You have a new job, and now you want to get a new house!

Well – go ahead and buy a house.  If you are getting a FHA Mortgage Loan, you will need to have at least 30 days of paystubs before you can close.  So if you have a change in employment of any kind… this applies. (read don’t change jobs while you are in process!)

For most loan programs, we just need ONE paysub, but for FHA we need a full 30 days of paystubs… this really doesn’t make sense sometimes. We have a customer that just graduated from Vet School, she’s worked as an Intern for 2 years (so it’s not like it’s her FIRST job)!  She wanted to purchase her first home, and close for the tax credit.

Well, her new job doesn’t start until July 1st.  If she could get a “non-revocable” contract, then I think the underwriter would have allowed it to close… but who is going to give someone a “non-revocable” contract!?!?  I mean we didn’t just find this out, we knew it within 3 days of taking the loan application, but still, I’ll  bet there ARE tons of people who are trying to close in time of the Tax Credit, and for some small little reason they can’t.

If you are ready to purchase a home in NC, and you are looking for a FHA loan – give us a call!  We know the FHA guidelines, and if there’s a way to make your situation work, we’ll help you get closed!!  Steve and Eleanor Thorne, Mortgage Banker in Cary , 919-649-5058.  We answer First Time Home Buyer Questions!

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