Perhaps you've been throwing around the idea of entering into the wonderful world of buying a home. Maybe you've even came across a house that not only tickled your fancy, but left that euphoric taste of bliss running through your bones. Either way, probably the most important thing you can do is to become educated. From there, there's one place to start... Behold, The Basics:
- Cash isn't necessarily King. If you are paying rent, pay it on time and do so by check. That's a documented housing history. Any applicable down payment you have has to be sourced from the banking institution with whom holds your depositories. Documentation is one of the important things lenders look for these days. So, if you are slinging crack in the alleys in your spare time, instead of putting that money in a jar beside your bed... put it in the bank. Of note, I don't endorse slinging crack. I just endorse documenting your rental history and funds that you have to come to the table with to close.
- Before even traveling down the road of tangibly looking to buy a home, know what your credit score is before making any decisions. In the current lending atmosphere, your credit score has never been more important. Here's a link to help you get a grasp on the importance of credit in borrowing money in general, let alone to buy a home.
- Don't be Mortgage Poor. Many times you are pre-approved for X amount of dollars because on paper, that is what the lender deems "affordable" in your world. There's one small problem with that, the lender doesn't live in your world... You Do! Sit down and go over your monthly expenses (utilities, credit cards, student loans, car payments, insurance, groceries, any vices you like to partake in, etc) and come to an understanding of what type of payment is comfortable for you. And don't forget to figure in the taxes, home owner's insurance, and PMI/MIP (if applicable) along the way. Your Mortgage Professional can help you with that. By the way, I'm a Mortgage Professional and enjoy helping:)
- A Tax Advisor can be your friend. While I realize that the words 'tax' and 'friend' are strange bedfellows in the same sentence, read on. A lot of you folks may have heard about the tax credit for home buyers and for those who haven't, remove the rock and continue reading. First-time home buyers (includes folks who have not owned a property for at least three years) qualify for a tax credit of up to $8,000 if purchasing a home before December 1st, 2009. As long as it's owner-occupied for at least three years, that credit does not have to repaid. If that doesn't give you enough incentive, all homeowners qualify for tax credits for various home energy efficiency improvements throughout 2009!
- Hire a Buyer's Agent. They represent you and you alone. It doesn't cost you a dime and you can be relatively certain that your best interests will be at the forefront of your Agent's heart. Buying a home doesn't have to be complex, a Buyer's Agent can make your life and the transaction so much easier.
- Get a Home Inspection. A lot of lenders don't require it (whereas they require an appraisal) but a Home Inspection could very well save you a bundle of money down the road. Imagine for a second you just bought a home and the boiler breaks down, the roof starts to leak, the electrical system takes a dump, etc... all could have been avoided with an initial Home Inspection. Consult your Buyer's Agent to see if getting a Home Inspection is the right thing to do for you.
- With the large amount of inventory on the market, you may find a lot of homes that need some work. The condition of some of these properties may be such that Conventional Financing of any sort is just not possible. No worries, though. A great product to utilize in these cases is the FHA 203(K) Loan.
- Once you are pre-approved and have a signed sales agreement, don't apply for any additional credit at all. While I'm aware that many folks want plush and extravagant furniture to accentuate the decor of their home, do not start buying anything on credit until after your loan closes. Applying for credit of any kind in the thralls of the transaction could adversely affect your credit scores, disrupt your debt ratio, and even flat-line the transaction all together.
- If you have questions, ask them. I don't care how mundane you think they are, ask. The only stupid question is silence when one is on the tip of your tongue.
There are many ways to save money when buying a home. You can look for the best interest rate, lowest fees, have your Cousin Al become a Loan Officer so you can get a Family Discount, etc. Yet, the one way you can save maybe the most money is to become as educated as you can going forward. Seek out quality education, don't count on it to always seek out you.
Jason Sardi
"Your Friendly Neighborhood" Mortgage Consultant
610-653-0317
Great common sense things to think about Jason in the home buying game. I especially like the one about not being mortgage poor. Great loan officers assist people in that area looking at the ratios and cautioning them not to go down that path.
Jason - Great post and like Gary said, great common sense things. Unfortunately, as you and I both know, not all first timers possess that particular trait and/or virtue. I also like number three. Just because I can get DU to approve you up to 60% dti doesn't mean you should go there. That 43% dti ratio for FHA is there for a reason. Best to stay as close to that as possible.
Hey Jason!
These are some great tips for any home buyer, especially the newbies! :) Anyone looking to buy a home should consider all of them. Great post!
-Lisa
You are the encyclopedia of information little brother :) Best part is ASK! It's when one does not ask...they do not get an answer....quote by sally lol
Gary - As they say, "What you qualify for may not be what you are comfortable with."
Donne - Very true. I've eaten spam in the past; I want to ensure I don't put my clients in the position where they have to rely on it as their source of protein.
Lisa - Thank you. I don't mind beating the dead horse of education.
Sis - I'm something:)
As always (at least when it comes to mortgage talk) simple, everyday person speak about educating ones self in efforts to make the best possible decissions. Your the 2nd best loan officer I know. If folks are looking for an honest, concerned, hard working and empathetic loan officer, look no farther than your Friendly Neighborhood Sardi-man! Well done and congrats!
Jason, I cannot tell you how cool it is to see yet another of your excellent posts featured! It's loaded with great information presented in a clear and concise manner and always with some the the Sardi spice! Great job!
Scott - Ahhh, so you still read my off-topic crap stuff, eh? Thank you, Sir. Second best? True, I'm no Bill Engleman;)
Russell - Sardi spice goes nice with most meals:)
Jason, I'm going to include some of these tips in my home-buying presentation. Is that alright?
Hi Jason -- What a solid roadmap to success you have outlines. Buyer should always choose a professional and knowledgeable mortgage professional to ensure their best financial interests are protected. The same goes for the real estate agent.
Good tips for the consumer Bro...keep em' coming.
Jason... excellent easy to read & to understand these tips. I am laughing at Scott's comment though.... I thought you were the 3rd best loan officer that I know... lol
Seriously, one of the points that you made, Don't be Mortgage Poor,that I can't stress enough, is not thought of much... not as much as one would expect. When I speak to my clients, this is one of the first questions that I ever ask... yea, yea , yea.. I get their name and number first.. and where they got my name from... but I am talking about the mortgage questions that should be asked. I remember getting crucified by 2 loan officers here on Active Rain that wrote blogs that stated that anyone asking the question, "what do you feel comfortable when it comes to monthly payment", said that you should not walk away from that loan officer, but run away from them. How sad... I am glad that you brought this up and brought it up early.
Overall, nice job on this... and congrats on a well-deserved feature.
Truly inspired post. I may print this out and send it to all (both) of my buyers.
PS.. @ Scott Geary... not number 2, number 3... lol I guess you and I will duke it out for #1... lol Hey, maybe on the golf course when I see you on the 21st & 22nd.
Hello Jason-Excellent post & it shows you know your business. Great job. CONGRATS on the feature. <SMILE>
This is awesome! Great information...and very well written. THANKS :)
Great information to pass along to buyers, good work!
Amazing article. Thanks!
Jason,
You are not the #2 best loan officer anyone knows..You stink...and this blog is terrible..
Oh, is it April fools?? That right there is HOW FAR BEHIND in my work I am!!! LOL
Great job on the feature..and I think this makes it clear that the LENDERS that are left out there, TRULY do care about their customers...ask alot of questions, and look past this loan and into the future.
Great care was put into this...now, if we could only get you to start worrying about what other people think!
D-
PS; Here's a pic you can add to your blog!
Vanna - Go for it:)
Chris - Agreed. Thanks for stopping by.
Neal - Thanks man. Hope all is well, let's talk again soon.
Jeff- I love stressing the "Don't Be Mortgage Poor" ideology. I like to sleep well at night; I'm assuming others like to do the same.
Alan - Subtle, but funny:)
Jeff - I'll go with you two and drive the cart. Trust me that after 36 holes, there will only be one;)
Sharon - Thank you my dear. Haitian Gangs, Mortgages, Roasts... I have an eclectic knowledge/interest base.
Jeanna- Wowsers, thanks! I'm not sure if "Awesome" is the appropriate description for this post, but I'll certainly take it.
Jessica - Again, thank you. The more educated all of us are, the less likely troubled times will reach us down the road.
Congratulations on the feature! (teacher's pet!!) Seriously, this is excellent and I really appreciate you recommending hiring a buyer's agent. You've mentioned it in several posts and the advice is excellent - especially as there is no cost to the buyer for the indispensable service. Assembling the right 'team' when purchasing a home is the smartest first step for every future homeowner.
MWA& FWA!!
Hi Jason...This is solid information for any potential buyer. I really appreciate the third point: Don't be Mortgage Poor.
That is vital no matter how often you buy. We never know what is coming down the highway and we need to have some cushion. Buyers will enjoy their homes much more if it's not a huge financial strain on them.
Well deserved gold star.
Kate
OH yeah, one more thing..
You can use the USDA loan to fix up properties too!!! Yeeee haawww...
Appraisal is done SUBJECT TO the improvements, and is NOT subject to HVCC rules!
Realty Dot Com - Why thank you. If I ever need an agent, I just may give you a shout;)
Darin - "You are not the #2 best loan officer anyone knows..You stink...and this blog is terrible." A more accurate assessment, I could not ask for. Seriously though (and this will be another post in of itself),you can be successful and still have a conscious. I was asked that very question today by somebody who stopped in the office because he read my blog. He's thinking of getting in the business. Even in the financing business, ones heart can bleed humanity... and that's more than okay.
My Jennifer - I'm your pet, my dear. That's that;) I can't count the number of occasions where folks aren't aware of the major and important role a Buyer's Agent can play in the health of any Real Estate Transaction they get into.
Kate - True that. Mortgage Poor (and point the blame anywhere you want, but I think we often times succumb to greed and living above our means) was a major player in the "Housing Crisis" in my opinion. "We never know what is coming down the highway and we need to have some cushion." I think you just came up with a nice way to combat Murphy's Law.
Darin - Great point, amigo. That facet of USDA Funding I'm still not astutely familiar with. You can damn sure bet I'll be bending your ear on that one down the road.
The great thing about this is that it applies to all buyers, no matter where they are! Whether it's in California or Arkansas, Connecticut or Florida - the information you've given is indeed invaluable. I think I'll get up enough gumption to ask - Can I use this for my buyers as well?
Good stuff and thanks for sharing!
William - Of course you can use it for your buyers. Unlike the Real Estate Market, the Financing side of the business is more nationalized and can apply to everyone. The more who know, the better our Industry, Country, & Economy will be. Thank you, William.
Jason, here is what I have learned. Buyers spend the majority of their time looking for a home. A lender and rate is secondary. Now I think it should be the opposite, you have your loan forever.(just sayin')
How do you educate the public on this?
Another gold star for Mr. Sardi! Well done! I want to see the wrestling match for number 1.
Hi Jason;
Great Post and super tips, you do know your business.
Very sage advise and well written at that, Jason!
Thanks for the great advice. Do you mind if I too add these points into my buyer presentation. Too many buyers out there don't think past finding the new home to how owning one will effect their current lifestyle.
Jason - thanks for telling it like it is. Being in the industryt the obvious to us might not be so obvious for those that don't understand how the loan process works.
Excellent post. A great format/outline for a Homebuyer Seminar.
This is all very good info given with a hint of humor. Everyone could benefit from it. I wish you'd clarify, however, on buyer's agency. If your sister just got her real estate license and you hired her for your buyer's agent, how much do you think she'd be able to help? Perhaps saying "experienced" or "knowledgeable" buyer's agent would be better.
Jason great tips. Your reminder to potential buyers not to get more credit buying furniture etc before the closing is key, so many make this mistake.
Vwry good post, Jason. I have a first time homebuyer checklist that includes most of these items. Thanks for the list.
Bravo Amigo ! Well presented and easy to digest points. Especially the importance of having your own Buyers Agent in your corner and not just going with the listing agent.
Very nice J-S !!!!
Cheers brutha ....hope things have picked up nicely :o)
Sheldon
Chase is raising correspondent ficos to 660. Not with USDA though. One more thing on USDA. You da man J-bird.
Jason,
Uncle Al said to check out your post...!!! Great tips...! Thanks, Fran
Jason... Great information.. To many want to pay cash for everything... The rent needs more than a reciept paper trail.
Reblogged. I'd also like to borrow some of these for a flyer/presentation I'm working up. Savvy?
Missy - Your assessment may be right on. I believe you educate the public about such matters on this forum, in our own reality, and within our sphere of influence. It isn't an overnight success story. It's akin (forgive the bad analogy that follows) to putting a man on the moon. One step at a time. One step, at a time.
Greg - I assure you that if it came down to that, I'd reek hell on their souls:)
Anthony - Thank you, my man. It's an ever evolving trade, which I like. My guess is that I won't be an expert at it until I'm long dead.
Sara "Freaking" Goodwin - If Michael wasn't already my middle name, I'd chose sage:)
Leah - Go right ahead. I'm confident that the end will come from the means.
Naoma - It's part of our job these days, isn't it? Looking back, it always should of been. They don't teach this stuff in school. It's about time we take folks to school. Color me optimistic, but it makes everbody's life a tad bit more comfortable.
Daren - I hope you are right. And for the record, I loathe teleprompters. If there is a seminar, I'm off the cuff. That, in of itself, explains why I don't do more seminars. I cite my last sentence in my answer back to Missy Caulk.
Barbara - They are coming to get you, Barbara. I'm not an expert on Buyer's Agents; I only recommend what I can. Sitting here, in the dim light of the morning, changes nothing. While I concur with finding an Agent who is knowledgable and competent, specifics weren't intended. This was simply a general overview, yet you are right in saying that those factors are ultra-important in our industry.
Jennifer - It's an understandable mistake. Who doesn't like a big screen "Media Player" when searching for new digs?
Kelsey - I hope your clients take heed in that info. Thanks for stopping by.
Sheldon - All I can say or write is that we will talk soon. You have important things going on and I'm a meager soul in this world. You've created kids, my man. They are lucky in that regard. Who doesn't want you as a Father Figure?
Larry - The tail is wagging the dog, in regards to Credit Scores.
Fran - So, you know Dez as well, don't you?
Roland - Leave a trail, if you have to borrow money.
Jeff - You know I am.
Great advice. I particularly like the part about using a buyer's agent. I am constantly amazed by how many buyers still aren't aware of what a buyer's agent is or how one can help them.
Is the $8000 tax credit limited to certain incomes? I had the impression that there was an eligibility cutoff somewhere around $140 or $150k per year making those buyers ineligible. Thoughts?
Jason,
Nice post. I did not realize that an individual could call and ask they to take a reduced amount and they would actually agree. Is this advice I should actually give to buyers in deep dodo?
I had 6 buyers last week that I could not have gotten approved for a slice of bread. Each one had a minimum of $25,000 credit collection liens against them. Most had a credit score of 520-560. What are these people thinking! The communicatio is always the same.....I asked if they have any idea what their credit score is..."yea, I have great credit". "Do you have any outstanding debt?". "Well, a little but not much". I then ask them to call a lender for preapproval and I provide 3 names. They don't just try to to be "turned down", they call all 3 and receive the same response. The final blow is when they say "No one EVER tells me what to do". I proceed to tell them to start paying off they debts, one at a time. To date, they have not even started.
After hearing from you Jason, I will make a call to tell they to negotiate their amount owed.
Thanks for the info. Nice job.
Jason - we too have a 1st time home buyers event coming up later this month and I'd love to share your blog with your permission! Congrats on the well deserved
Jason - Superbly written. I will pass this post to my buyers who need a road map.
Marian - That's reason number 785 why the word needs to be spread.
Unknown Soldier- To my knowledge, I don't think so. Then again, I'm by no means an expert on the complicated Tax Codes currently in place. My advice would be to consult your Tax Advisor on that particular question. While I didn't find any rhetoric on income limits with this tax credit for first time home buyers, that doesn't mean it doesn't exist. I'll do my due diligence as well. Good question!
Peggy- I'm guessing you are referring to the credit post I linked to here. By all means, folks can settle on their debt. For example, if they have a credit card that was charged off for $5,000.00... they can call the collection agency and settle the account (satisfactorily) for a portion of that amount. I'd highly recommend turning the folks you are talking about onto that post and contact anyone they owe money too immediately. In my experience, everything is negotiable in regards to bad debts. Just remember, like marriage, communication is vital:)
Lee & Pamela - You have my blessing:) Thank you.
Claude - Thanks Claude. Hopefully that map leads to their chosen castle.
All is good except one point: "Get a buyers agent that represents you and you alone." I may see the argument is getting an agent that specializes in buyers. But the "you and you alone" part, where you saying we should only work with one client at a time? Do you work with one client at a time? If I only handled one at a time I would be broke.
Gene - Understood. I'm by no means saying you should work with one buyer at a time. What I am saying is that rather than finding a house on your own, where the seller may have representation... have representation on your behalf as well. Heck, if any of us only had one client at a time, we'd probably be living in a community tent.
I am sure you run into a lot of renters that pay cash for rent and then argue why they should do it that way and get mad when they cant get a mortgage.
As always you give some great tips homes buyers. I really like the advice of knowing your credit score before you even start looking around. Too many people run out there and start the search only to find out they can't be approved for a loan.
Crack is king now, not cash? Cash is over rated except in large quantities. Good post.
Great advise for first time home buyers. The process is overwhelming for them and too often they don't know where to start.
I see you are from my old home town of Allentown. Great community and great people.
Chuck - Yup, that happens from time to time. In most instances, folks understand. We just need to keep getting the word out to the masses.
JL - And with the importance of credit scores these days, that is more crucial than ever. I wish they'd start implementing that type of education into our high schools.
Lyn - I thought crack went out years ago. Silly me, not keeping up with the current drug market:) Thank you.
Anja - Love your name, by the way. Yeah, Allentown isn't so bad. I kind of dig it here.