Cedar City Real Estate BlogRecently posted or modified blog posts by tag - Mortgageshttps://www.cedarcityonline.com/blog/Copyright CedarCityOnline.com2020-05-15T13:41:03-07:00tag:cedarcityonline.com,2012-09-20:3924Loan or Home, Which Comes First?
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by Sam Dodd
You found the perfect <a href="https://www.cedarcityonline.com/cedar-city/" target="_blank">new home home in Cedar City</a> for your family! That's great. It's in the right neighborhood for you, it has all the room you need and the yard is exactly what you're looking for. Now it's time to seek a mortgage loan, right? Wrong.The time to shop for a home loan is before you shop for a home.
While seeking a loan before you even find a home might seem like putting the proverbial cart before the horse, it is crucial that you take steps to ensure you are qualified for a loan before you get your heart set on a property that might be unattainable under your current circumstances. For you "glass half full" kind of home shoppers, it is possible you are selling yourself short if you haven't talked with a mortgage lender before you decide on a home.
I've seen it time and time again; a buyer finds a home they absolutely love and establishes a firm resolve to buy it! Then, they start looking for a loan. Here are the problems with that kind of mentality:
1. Until you have met with a lender, you might not know whether or not you qualify to buy a home.
2. Even if you are highly qualified to obtain a loan, a pre-approved buyer could slip in and buy your dream home even as you fill out the paperwork.
3. Sellers are less inclined to take an offer seriously when it comes from a buyer who has not been pre-approved. In fact, some sellers will not even consider an offer (or show their home) without a letter of pre-approval.
4. Homebuyers do find nasty surprises on their credit reports from time to time. Even if those surprises were recorded in error, it takes time to resolve credit issues. You could be forced to begin the home-shopping process all over again.
I love being a Realtor. I literally look forward to waking up every day to the new opportunities the industry offers me. One of the benefits I love most is the ability to make my clients' dreams come true. It's all about handing over the key and seeing the incredible pride and satisfaction on a successful buyer's face. The art of bringing buyers and sellers together is actually thrilling. My profession helps me fulfill the needs of people who are buying Cedar City homes and selling Cedar City homes and when a deal comes together, it's a beautiful thing.
I confess, there are some downers that come with working in the housing industry. One of the worst is seeing a seemingly well-qualified buyer lose the opportunity of a lifetime because he or she is not prepared.
I'll say it again, a mortgage pre-approval is an absolutely crucial first step in the homebuying process. Let's get your ducks in a row! This blog does not delve into the requirements of obtaining a home loan. I am assuming here that your debt is under control, that you regularly check your credit report and immediately act when something is amiss. I'm assuming that you are well-established in your job or profession and have a good handle on your finances. I'm also assuming you understand you will have to bear some upfront costs and have saved for that contingency. I'm not assuming you are qualified for a loan and that is why our Cedar City home buyers seek pre-approval first!
I have great news for you; even if you are not qualified for the mortgage loan you need or want, lenders will take heroic steps to help you understand exactly what you need to do to get qualified.
What is a Loan Pre-Approval?
Ready to take this on this mortgage challenge and <a href="https://www.cedarcityonline.com/blog/financing-your-first-home/" target="_blank">finance your first home</a>, or second, third? This will be one of the most important purchases of your life. Don't take it lightly. At the end of our interaction, I want to see you smiling (not tearing your hair out in frustration). A letter of pre-approval does not guarantee you will get the mortgage loan you want. It does improve your chances significantly. Mortgage lenders will check your credit, verify your imployment and income, and determine how much you can reasonably spend on housing. This is important because the lender will tell you how much money you can borrow to buy a home. You are obviously not required to use the maximum amount offered, in fact you will be the one to determine the maximum with which you are comfortable spending. Once the process is complete, the lender of your choice will give you a letter of mortgage pre-approval that outlines your spending qualifications. <br />
1. Research local lenders
I work with lenders every day and have a pretty good handle on those who can meet the needs of different buyers. Call me, I'm always happy to make a referral. Just as you will shop for the best home for your money, you need to shop for the best rate and loan re-payment agreement for you.
2. Identify three lenders you trust.
Once you have identified three lenders you trust, make an appointment to visit with each one (in person if possible). Carefully vet the lenders. Real estate scams are on the rise so if you apply over the phone, check the lender's reputation with the <a href="https://www.bbb.org" target="_blank">Better Business Bureau</a> and the <a href="https://dopl.utah.gov" target="_blank">Utah Division of Professional Licensing</a>.
3. Ask a million questions.
Ask each lender a million questions (or as many questions as you have) and write down the answers. What kind of mortgage rates do they offer? What mortgage terms do they offer? Are they familiar with buyer's programs that can help you save on down payments and/or repairs? In what type of real estate do they specialize? How stringent are their requirements?
4. Be honest with your answers.
We're all adults here. You will expect straight forward, honest answers and you need to be prepared to give them. Don't fudge your numbers or leave any debts out (even if they don't show up on your credit report), and for heaven's sake don't imply you have access to a down payment and closing costs if you don't. The goal here is to not only help you buy a home, but also to make sure you can make the full payments on time while meeting your other financial obligations.
5. Be prepared to provide information and make adjustments.
Your potential mortgage lender will ask you to provide important personal documents including W-2s, income tax documentation. You will be asked to fill out a loan application. I recommend creating a folder with copies of all your important financial records so you can readily provide the information required.
No doesn't mean never. If you fill out an application truthfully, verify your employment, allow the lender to pull your credit reports and end up with a big fat "not today," don't become discouraged. Most lenders offer programs to help you resolve credit issues, dispute erroneous information on your credit report and better prepare for that glorious day when the answer is a big fat "yes, you're approved!"
The American dream of <a href="https://www.cedarcityonline.com/new-harmony/" target="_blank">buying real estate in New Harmony</a>, UT is worth is worth fighting for. Once you understand the steps you need to take to qualify, half the battle will be won. That letter of pre-approval is the first step of the actual buying process and I can't wait to see you beaming when you come to me ready to shop for your new Cedar City house.
Still have questions? Let's talk. I will happily share my experience in order to help you secure your home.2019-09-14T17:43:00-07:002020-05-15T11:30:50-07:00Sam Doddtag:cedarcityonline.com,2012-09-20:3774Financing your First HomeFinancing Options for First-time Homebuyers
There are many programs and grants for first-time homebuyers that offer financial help, and you may be eligible for various types of assistance.<br />Here are nine programs and grants designed to help you land a great mortgage and get a place of your own to become a permanent resident in Iron County.
FHA Loan
With an FHA loan, the Federal Housing Administration in an agency within the U.S. Department of Housing and Urban Development and insures the mortgage. With this backing lenders are guaranteed a layer of protection, meaning that they won’t experience a loss if you default on the mortgage.<br />These loans typically come with competitive interest rates, smaller down payments and lower closing costs than conventional loans.
You can be eligible for a mortgage with a down payment as low as 3.5 percent of the purchase price with a credit score of 580 or higher. If your credit score is lower than 580, you may still qualify but with a higher down payment, typically at least 10 percent.
USDA Loan
This loan is not well known but is offered as a homebuyer-assistance program through the U.S. Department of Agriculture. The catch for this type of loan is that the home must be located in specific rural areas. However, you don’t need to <a href="https://www.cedarcityonline.com/cedar-city/cedar-city-land-lots/" target="_blank">buy a farm or land in Cedar City</a> to be eligible. Like, the FHA, the loan is guaranteed through the USDA. In addition, there may be no down payment required and the loan payments are fixed. Typically, applicants can get streamlined processing with a credit score of 640 or higher.
You can still qualify for the loan with a score below 640, but the lender will ask for extra documentation about your payment history.<br />This type of loan also has income limitations, which can vary by region.
VA Loan
A <a href="https://www.benefits.va.gov/homeloans/" target="_blank">VA loan</a> is designed to help active-duty military members, veterans and surviving spouses buy homes. The Veteran’s Administration guarantees part of the loan, making it possible for lenders to offer some special features. The loans come with competitive interest rates and require no down payment.
You aren’t required to pay for private mortgage insurance, and a minimum credit score isn’t needed for eligibility. In addition, if it becomes difficult for the homeowner to make payments on the mortgage, the VA can negotiate with the lender on your behalf.
Good Neighbor Next Door
This program is sponsored by HUD and provides housing aid for law enforcement officers, firefighters, emergency medical technicians and pre-kindergarten through 12-grade teachers.
Fannie Mae or Freddie Mac
Fannie Mae and Freddie Mac are government-sponsored entities. They work with local lenders to offer mortgage options that benefit low and moderate-income families. With these entities backing your loan, lenders can offer <a href="https://www.cedarcityonline.com/blog/5-ways-to-get-a-better-mortgage-interest-rate/" target="_blank">competitive interest rates</a> and accept down payments as low as three percent of the purchase price.
Energy-efficient Mortgage
A green mortgage is designed to help add improvements to your home to make it more environmentally friendly. The federal government supports EEM loans by insuring them through the FHA or VA programs.
The advantage of this loan is that it allows the homebuyer to create an energy-efficient home without having to make a larger down payment. The extra cost is simply rolled into your primary loan.
FHA Section 203(k)
The FHA Section 203(k) is a rehabilitation program that allows a buyer to be able to purchase a fixer-upper and be able to afford the work that needs to be done. This type of loan is backed by the FHA and takes into consideration the value of the residence after improvements have been made. It then allows the buyer to borrow the funds needed to carry out the project and includes them in their main mortgage. The down payment for this type of loan can be as low as 3 percent.
Native American Direct Loan
The Native American Veteran Direct Loan program has helped Native American veterans and their spouses buy homes on federal trust lands since 1992. The VA serves as the lender. If eligible, the buyer doesn’t have to make a down payment or pay for private mortgage insurance. This first-time homebuyer loan offers a 30-year fixed-rate mortgage and low closing costs.
Local Grants and Programs
In addition to the programs offered by the federal government, many states and cities offer help to first-time homebuyers. You can check with your state’s or community’s website for information on housing grants and programs available in your area or contact the Sam Dodd team as we stay on top of all these programs for you or local HUD-approved housing counseling agency to learn more about programs in your area that might apply to your situation.
If you are thinking of <a href="https://www.cedarcityonline.com/cedar-city/" target="_blank">buying real estate in Cedar City</a> and would like more information on any of these programs please use the form below and we will call or email you! 2019-09-04T15:05:00-07:002020-05-15T12:06:43-07:00Sam Doddtag:cedarcityonline.com,2012-09-20:3773Buying your first homeWant to buy your first home and don't know where to start?
Here's some tips to help!
Buying a new <a href="https://www.cedarcityonline.com/cedar-city/cedar-city-single-family-homes/" target="_blank">Cedar City single-family home</a> in can be exciting and create a lot of anxiety all at the same time, especially for first-time homebuyers. If you’ve never bought a home, it’s difficult to know what to expect. But with bank rates at an attractive low, it’s worth taking the time to do a little financial homework.
These five steps can make the process go more smoothly.
Check your credit
The homebuyer’s credit score is one of the most important factors when it comes to qualifying for a loan. There are lots of different free credit checking websites to use. One of which is CreditKarma.com. Once you have your report, Scour the report for mistakes and collection accounts. Remember you may pay everything on time but that doesn’t mean your credit is stellar.
The amount of credit you’re using relative to your available credit limit can tank a <a href="https://www.credit.com/credit-scores/" target="_blank">credit score</a>. This is considered your credit utilization ratio. The lower the utilization rate, the higher your score will be. Ideally, first-time homebuyers have less than a third of their credit used.
Repairing damaged credit takes time. If you think your credit may need work, you want to begin the repair process at least six months before shopping for a home.<br />
Evaluate assets and liabilities
Next you want to evaluate how you spend your money and whether you have piles of money left over every month, or are you on a shoestring budget?<br />A first-time homebuyer needs to have a good idea what they owe and how much money is coming in. It’s a good idea to track your spending for a couple of months to see where the money is going.
Likewise, buyers need to become familiar with the basics of mortgage lending and how lenders will view their income. For instance, some professionals, such as those who are self-employed or working on straight commission, may have a more difficult time getting a loan than others. For these homebuyers most lenders will require a strong two-year earnings history to show stability and a steady cash flow.
Organize documents
Homebuyers need to document income and taxes. Mortgage lenders will typically ask for two recent pay stubs, the previous two years’ W-2s, tax returns and the past two months of bank statements — every page.
Qualify yourself
Homebuyers should know how much of a home they can afford and the difficulty, if any, of <a href="https://www.cedarcityonline.com/blog/is-getting-a-home-mortgage-still-too-difficult/" target="_blank">getting a mortgage</a>. New home buyers need to know how much money they can spend each month on a mortgage payment even before the mortgage lender tells them. There are several online mortgage calculators available to help. By calculating debt-to-income ratio and factoring in a down payment, you’ll be able to figure out what you can afford.
Figure out your down payment
Coming with a down payment isn’t easy and while there are loans available that can assist buyers that qualify based on income and specific situations many of loan programs do require a down payment. In Southern Utah, we have multiple zero money down programs available so don't let not having a downpayment stop you.
Speak with mortgage lenders when you’re first starting the process to see what you may qualify for. Check with friends, co-workers and neighbors to get referrals on lenders they’ve enjoyed working with. Additionally, ask them questions about the process and what other steps they might recommend you take when buying your first home.
Are you ready to get started looking for that <a href="https://www.cedarcityonline.com/beaver/" target="_blank">new home in Beaver, UT</a>? Fill out the simple form below and a highly respected loan officer will contact you to help you with the pre approval process. Also if you have any questions feel free to call me, Sam Dodd at 435-701-0448 as I am always happy to help. 2019-08-31T14:56:00-07:002020-05-15T12:22:00-07:00Sam Doddtag:cedarcityonline.com,2012-09-20:3770How to get a mortgageHow to prepare for a Home Mortgage Loan
It’s important to know what you’re getting into before securing a home mortgage. Here are a few simple things you should do to be sure you’re completely prepared. By following these tips, you can avoid some of the pitfalls that can cost you time, money or even the home you want to buy.
1. Make sure you’re ready to <a href="https://www.cedarcityonline.com/cedar-city/" target="_blank">buy a new Cedar City home</a>. Do some basic personal accounting to find out your financial state and figure out if you can afford to purchase a home. Also, how much can you afford?
2. Find out your credit scores. Lenders use what is called FICO scores to evaluate your ability to repay your loan. Take the time to understand this score and more importantly how they influence the offers you’ll receive. Have a mortgage lender pull your credit scores and ask them to help you figure out what you need to do to prepare for a home loan.
3. Reduce your debt-to-income ratio. Besides your <a href="https://www.investopedia.com/terms/f/ficoscore.asp" target="_blank">FICO scores</a>, lenders also look closely at your debt-to-income ratio. By comparing your mortgage debt obligations against your monthly income lenders can determine if you are capable of taking on more debt. It’s a good idea before applying for a mortgage to reduce your debts by paying down credit card balance.
4. Slow down on borrowing. Applying for a new loan or credit card initiates what is called a “hard pull” on your credit report, which can impact your credit score negatively. If you’re going to buy a home it’s best to hold off on applying for new lines of credit in the six to 12 months prior to securing a mortgage.
5. Organize your paperwork. There’s nothing worse than waiting until the last minute to organize your paperwork, which may delay the application process. You may also miss out on a chance to buy your perfect home. Ask your mortgage lender what documents you need and get them together before you go into fill out the paperwork.
6. Find a mortgage that makes sense for your financial situation. Look closely at the fine print of the mortgage you’re applying for and make sure it fits your situation. If you can’t find a mortgage that suits your situation, it is best to hold off and revisit the situation later.
7. Make the time to get preapproved. Preapproval occurs when the bank gives you a preliminary okay on your loan and tells you approximately how much you qualify for.
This one detail is sometimes what makes the difference between you and another prospective buyer. Make sure you do what you need to get preapproved before you start shopping for a home.
Do you have additional questions or want to be pre-approved right now? Use the <a href="https://www.cedarcityonline.com/contact/" target="_blank">contact form</a> below to contact a recomended loan officer in our area. 2019-08-19T14:21:00-07:002020-05-15T13:41:03-07:00Sam Dodd