Monthly Archives: August 2013

FHA Loans for the 1st Time Home Buyer

1st Time Home Buyer Tips

It may seem that there are a lot of “rules” to follow when it comes to FHA loan programs, but actually much of it is quite straight-forward, and if you have questions at any point in the process, your FHA Orange County, FHA Los Angeles, or FHA Ventura County lending professional is there to help. Here are a few key facts to keep in mind:

1. FHA loans must be made by a lending institution (such as a mortgage company or bank) that is insured by the FHA. The FHA itself doesn’t loan money or set interest rates, but rather insures loans so lenders are more willing to work with borrowers who don’t necessarily have stellar credit, high incomes, or a hefty down payment.

2. Expect to put up to 5 percent down (maybe more) on your 1st home if you’re going through the FHA program. However, there are exceptions to this requirement, and an experienced lender will help you determine if a smaller down payment is an option for you. In some cases, you may be able to pay as little as 3 or 3.5 percent at closing.

3. For more information on FHA loan programs, talk to your mortgage professional or visit the HUD.gov website, which has all the details about FHA loans as well as tools such as the ability to search for HUD-approved properties and developments.

Choose an Experienced Lending Professionalimages (51)

A lender who is familiar with the FHA loan process can make the approval process (especially for new housing developments, condos, and other special situations) go more smoothly.

When it comes to FHA Orange County loans, as well as loans in Los Angeles and Ventura County, FHA loan programs make special exceptions, because houses in this area tend to be more costly than those in other parts of California. Unfortunately, Congress recently declined to extend a temporary economic stimulus incentive for “high-cost areas,” so the maximum house price allowed by the FHA is again $625,500 (rather than $729,750) in Los Angeles and Orange Counties, and down to $598,000 for FHA Ventura County loans. However, you can still buy a higher-priced home as long as you can make a larger down payment or pay part of the cost difference.

By choosing a real estate professional who has been through the FHA loans process, you’ll be more likely to have a positive experience in buying your first home.

Home Ownership Tips

If you’re a 1st time home buyer, it may seem obvious that you’re about to embark on a journey that is much different from apartment living or renting a house. Before you sign your FHA loan papers on the dotted line, keep in mind:

1. You’ll need to make sure that your income is sufficient, not just to make the mortgage payment, but to pay property taxes (your lender can probably hold your funds in escrow and do this for you), maintain your home, and deal with any unexpected expenses related to your house or condo. Write out a budget ahead of time, and make sure it includes saving for routine maintenance and emergency repairs.

2. Bone up on your handyman (or woman) skills. When the fence blows down in a storm or the faucet starts leaking, it’s not just a matter of calling the landlord. You’re the landlord! Local and chain retailers such as Lowe’s and Home Depot offer classes for 1st time home buyers and anyone who wants to learn how to do anything from installing a toilet to laying tile. Your local library will have plenty of books to choose from, too.

3. Enjoy your new home! Home ownership is a wonderful thing, and with today’s reasonable FHA loan programs, the dream is in reach for qualified buyers.

What All FHA 1st Time Home Buyers Need to Know

With the availability in today’s real estate market, receiving a low interest mortgage rate combined with the government backed programs provided by FHA, stepping in to the life long dream of becoming a first time home buyer is completely attainable.

Don’t believe it to be true? It is understandable to look at all the information floating across the newspapers, television screens, computer websites, social sites, mobile apps, home flyers, and so on and so on. But the reality isimages (50) this, with the opportunities found in FHA loans, becoming a first time home buyer is in your future; you just need to start walking towards it.

As a potential home buyer, for the first time, lists of details and responsibilities grow long and last throughout each year. However adjacent to the list of adulthood lies the freedom of homeownership; planting what you want, painting the colors of each room to your desire, listening to music as you entertain family and friends…having a home is a haven for today and an investment for your tomorrow. Within the FHA loan programs available now, this haven we like to call ‘home,’ can be yours.

Now before you go running towards making an offer, there are some important items to know and understand before you proceed in buying your home in Orange County, Los Angeles, or Ventura and we’ve listed them below:

A. Before The Home, Get The Loan! As a first time home buyer, make sure you talk with an FHA lender to line up a pre-qualification for a home loan. This will save you time, frustration, and money later when you are further into the home buying process and discover that either the home is above your price range, or the sellers will not accept your offer because you are not considered to be an ‘approved’ buyer.

·       Banks, Credit Unions, and Mortgage Bankers supply home loan.

·       Mortgage Brokers process the loan meaning, they will file your application for the home loan, process all and necessary loan documents, and manage the loan through funding.

·       If you have possible bad credit, consult with your lender for directional steps to improve your credit prior to the process.

B. Save Your Money! Banks supply you with the FHA loan will require an amount of savings in your bank, preferably for a minimum of 3 months. Once you have received your FHA loan approval and found a home, you will need to make a down payment to secure the next steps along with charges placed towards closing costs at the end of the process.

·       Down payment requirements over an amount vary the type of home loan acquired. To know the percentage expected per the home’s purchase price, best to discuss in detail with your lender prior to putting in an offer to eliminate any home buying surprises.

·       Closing costs refer to charges over services related to the closing of your home buying and home loan transaction. They include (but not limited to): Escrow fee, Title Policy Issuance fee, Mortgage Insurance fee, Loan Origination fee, Fire and Homeowners insurance fee, County Recorder fee

·       Be sure to consult with your lender over an estimated amount of closing costs to help you plan.

C. Know Your Loans! Overall, there are 2 types of loans: Conventional and Government. For first time buyers, Government Loans offer more buying comfort and power over others.

·       Government Loans for first time home buyers include the Federal Housing Administration Loan, known as a FHA Loan.

·       FHA loans offer both fixed or adjustable interest rates for mortgage home loan.

·       Talk with a lender specializing in FHA loans to informed with the most up to date information.

·       With an FHA, the loan amount is backed by the government. In exchange, you must attain mortgage insurance.

·       Mortgage insurance helps to protect the lender providing you with the loan from possible loss should you not be able to comply with the mortgage payments.

·       Conventional Loans do not require mortgage insurance. In exchange, the lender does require a larger down payment on the loan prior to closing.

D. Educate Yourself! In addition to all the avenues of knowledge available to you 24-7, many organizations offer first time home buying and loan counseling. Through these classes, you will learn and discuss over each of the steps towards becoming a homeowner. Such topics include:

·       Selecting your home

·       Realtor services and responsibilities

·       Lenders

·       Loan programs: Conventional and Government like FHA loans

·       Responsibilities as a homeowner

·       How and how much to save for a down payment

·       Additional important items within the home buying and loan process

·       Some first time home buying programs require the home buyers to attend an approved class like this in order to receive eligibility for various programs

Now that we’ve covered the first few points of things you need to know as a future home owner, join us each week to continue learning more about all of the what’s, how’s, when’s, why’s, and who’s for your FHA home mortgage loan and purchase.

First Home Buyer FHA Loan Prequalification Tips

There are few things more exciting than falling in love with a house, especially if you’re a 1st home buyer. On the flip side, few things match the disappointment of missing out on your dream home because you didn’t have the facts about FHA loan programs and can’t secure the mortgage you need. The solution? Get prequalified or preapproved for FHA loans before you go shopping. Then you can focus on the amenities of your future home without worrying about paperwork and home loan rates. Here are some tips on how to prequalify.

1. Connect with a Mortgage Professionalimages (49)

If you plan on securing an FHA Orange County, FHA Los Angeles, or FHA Ventura County loan, your lending professional can walk you through the entire process. He or she will tell you what you need to bring to the table in terms of proof of income, employment status, and other requirements for prequalification or preapproval.

2. Understand What ‘Prequalifying’ Means

Preapproval is different from prequalifying, although some use the terms interchangeably. You can get prequalified in an hour or so, just by giving a lender some financial information. And you don’t even have to stick with the lender who you were dealing with. In some cases, this step may be enough for you to feel comfortable that, once you formally apply for a loan, it will go through. However, to be even more confident that you can secure the first home buyer loan you need, consider taking the extra steps to get formally pre-approved. You’ll generally need to pay an application fee and provide more documentation. Then, your information will go through the underwriting process where your assets, employment, and credit status will be verified.

3. Do the Paperwork

Once you’ve connected with a lender, you’ll need to fill out a mortgage loan application. It will ask you to list details such as your income (from all sources), past and present employment, where you’ve lived, assets and liabilities, and so on. FHA lenders need to be confident that you can afford the loan. Be honest and accurate. If you’re taking the further step of getting pre-approved, they’ll also run a credit check, so make sure you’ve taken steps to clean up any issues on your credit report, such as errors regarding your payment history that could affect your FICO score.

You’ll need to give the lender some supplemental information, such as W2s or 1099s to prove your income. The U.S. Department of Housing and Urban Development also advises bringing: social security numbers, six months’ worth of bank account statements, evidence of assets such as stocks or bonds, pay stubs (and a way for the lender to verify your employment), lists of your credit cards and how much you owe on each, other outstanding loans, and the last two years’ tax returns.

4. Get the Proof

If you’ve decided to take the extra step to get preapproved by a specific lender, get it in writing. You may even be able to lock in an interest rate. Technically, preapproval is still not a promise of a loan. But it does carry a lot of weight with sellers as you negotiate a home purchase. Show the seller (or their agent) a loan approval letter and you’re steps ahead of the buyers who haven’t been prequalified or preapproved.

5. Go House Shopping!

Now that you’re prequalified or preapproved, here comes the fun part: looking for the home of your dreams. Armed with the FHA home loan requirements and your prequalification, you can “shop” with confidence. Your real estate agent will direct you toward houses in your price range, and you can also look online and in newspapers to see more of what’s on the market without worrying that you’re aiming too high or too low.

When you make an offer as a 1st home buyer, your lender or mortgage professional will help you complete the application and, after a successful appraisal and perhaps a second credit check, the bank should approve you and issue a “loan commitment.”

There are programs and loan packages designed to make it easy for the qualified FHA 1st time home buyer to get into the home of his or her dreams, and FHA lenders can help make it happen. Contact your mortgage professional today.

FHA Loan Programs for the 1st Home Buyer

Compared to the typical conventional mortgage, FHA loans are often a much better deal for the 1st time home buyer, both in the short and long term. Even with today’s low rates, many borrowers stand to get an even better deal if they opt to go through the FHA process. That’s true nationwide as well as for FHA Orange County, FHA Los Angeles, and FHA Ventura County loans. Here are some of the biggest “plusses” of going with an FHA loan.

1. More Leeway on Credit History

Often, FHA loans are “easier” to get than conventional loans. Lenders must still be diligent to ensure that borrowers are a good risk, and documentation (such as wages and credit history) will be required to back this up during the application process. However, these government-insured loan programs tend to be more forgiving of past problems of a first home buyer such as late credit payments, collections from federal liens such as student loans, and even bankruptcy. A higher-than-usual debt-to-income ratio is often OK, too. You can have a lower credit score and still qualify for an FHA loan, whereas you’d be locked out of a conventional loan.

2. Less Money Downimages (48)

FHA loan programs were designed to get people into homes, and typically the 1st home buyer hasn’t saved up the 20 percent down payment that used to be common generations ago, and is still required by many conventional loans. FHA loans can require just 3 percent down, plus closing costs, and they’ll also allow gifts from family members.

3. Geared Toward First Home Buyer

The U.S. Department of Housing and Urban Development (HUD) has entire programs designed to help people achieve the American Dream of home ownership. Besides special FHA loan programs, there are federally funded housing counseling agencies that walk the 1st home buyer through the process. HUD also partners with local homebuying programs and city and county housing and community development entities. There are lots of options. You can even buy a “HUD home” (several Orange, Ventura, and Los Angeles County properties are listed in the HUD home store) and HUD will cover many of your closing costs.

4. Competitive Home Loan Rates

Orange County loan rates, just like Los Angeles mortgage rates and those for Ventura County home buyers, are competitive for FHA borrowers, and are usually as good a deal as or better than conventional loans. You can take advantage of low mortgage rates while also enjoying the benefits of FHA loan programs. Ask your mortgage professional for details. He or she will connect you with FHA lenders.

Congress Passes New Maximum Loan Limits That Increase FHA Loan Power

The day has come where 1st home buyers are able to step forward with both confidence and success as they move towards attaining their first FHA Orange County home. This long awaited agreement has placed the ability for FHA loans to move into the light and at the top of the list. With higher mortgage limits for the Federal Housing Administration, commonly referred to as FHA loans, and absolute no change to the popular Fannie Mae and Freddie Mac loan ceilings, both buyers and loan refinancing officers will be looking to FHA loans as they are showing to offer an even stronger option for 1st home buyers. With the maximum loan limits raised in over 660 markets across the country, FHA loan programs will be a power source in one’s option for financing.

Here are just some of the voices commenting on the positive outcome from congress’s recently announced maximum loan limit agreement:images (47)

David H. Stevens, former FHA Commissioner and current President and Chief Executive of the Mortgage Bankers Association states, “there’s no doubt this will drive more business to FHA.”

Bob Walters, Chief Economist of National Lender Quicken Loans, mentioned his thoughts on how be believes the increased loan limits will benefit many consumers and, “especially those looking to borrow larger amounts [who] are in a credit situation where Fannie Mae and Fredding Mac loans are not available or optimal.”

Annie Austin, a Loan Officer with Cobalt Mortgage in Bellevue, WA, illustrates her support and praise by mentioning, “FHA is going to become the darling of the industry again.”

Reports out of Washington and by the LA Times further describe how the new limits will increase the FHA loan program attractiveness. Currently, by upping the ceiling in loan limits for FHA loans while simultaneously not increasing those for Fannie Mae and Freddie Mac, 1st home buyers will be more inclined to turn to FHA loan programs as their primary option. This is due to borrowers needing loan amounts at an average of $729,750 with down payments as low as 3.5% in order to quality within the high cost of living amongst California areas; in comparison to Fannie Mae and Freddie Mac’s ceiling amount of $625,500.

With the loan ceilings being the heart of congress’s compromise, the rise of FHA loan’s maximum amount ultimately reaches 125% of the country’s local median housing prices while Fannie Mae and Freddie Mac sit limited at covering 115%; turning FHA loan programs into a solution for first time home buyers ranging from minimal to moderate and even upper income families, with more financial opportunities across the board.

For borrowers, this agreement will be available through the end of 2013, offering many potential possibilities for 1st home buyers to purchase through receiving an FHA loan in Orange County, Los Angeles, Ventura, along with multiple areas across the country. Key factors to take away today is to review the new loan limits with your FHA loan officer and estimate out all the options a FHA loan can give to you and your family.

FHA Loan Limits in Orange County: How Much Can You Borrow?

While the FHA does set a limit for how much it will lend, fortunately many beautiful homes in Orange County remain within reach of those who qualify for a loan.

The maximum house price allowed by FHA is currently $729,750, but that limit only applies to the loan itself. If you have your sights set on a higher-priced home, that’s perfectly OK – you’ll just need to come up with a higher down payment to make up a percentage of the difference.

Low Down Payment Options Availableimages (46)

Yes, you can buy a home in Orange County with a FHA Loan! It doesn’t matter if you’re a first-time home buyer, moving up, or even downsizing due to an “empty nest.” The FHA has a variety of options, even for those without a large down payment or a lot of equity in an existing home. Rather than a whopping 20 percent down like many conventional loans, FHA loans allow down payments of as little as 3.5 percent.

In most areas, the FHA loan limit is $417,000, but the temporary limit of $729,750 was set in 2008 as an economic stimulus incentive for single-family houses in “high-cost areas” such as Orange County and also affects prospective FHA Los Angeles and FHA Ventura buyers. That limit is set to expire on Sept. 30, 2011, so act soon! If the incentive is not extended by Congress, the limit will reset to the HERA (Housing and Economic Reform Act) limit of $625,500, as Orange County is one of the 669 counties affected.

In a May 2011 Market Analysis, the U.S. Department of Housing and Urban Development, points out: “For the U.S. as a whole, approximately 3% of loans by count (33,301) and 6% by dollar volume ($14.2 billion) endorsed in calendar year 2010 would not have been endorsed had HERA limits been in effect.”

Starting the Loan Process

With homes more affordable than they’ve been in 30 years, and interest rates low, there’s no reason to delay in starting the FHA loan approval process. Contact your local Orange County FHA expert now to get the ball rolling and get into your new home! Choosing a lender who is well-versed in the workings of the Federal Housing Administration program will ensure that you will close on your dream home without stress, headaches, or unexpected expenses. FHA lenders are experts in the process, know the loan limits, and are eager to help Orange County home buyers get through the process of buying a house as well as FHA refinancing.