Step 3. Planning to Win
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| It is all a nice dream unless you win the mortgage loan. |
Knowing and preparing for potential loan paths increases the likeliness of getting "yes" for a loan. Home Buyer Education may help with grants, tax credits, and downpayment assistance. Google "Home Buyer Education" in your state for programs and classes in your area.
Here are the Washington and Idaho's Home Buyer Education websites:
Washington State
Idaho
In a Home Buyer Education class or the websites, you will learn the lending jargon and about loan rates, and down payments. They also may earn you a discount on your loan.
Most mortgage lenders require a down payment of at least 3%. FHA loans (mortgages insured by the Federal Housing Administration) require a down payment of at least 3.5%. Depending on your credit history, the type of dwelling and your reason for buying, the minimum down payment could be 3, 5, or 10%. VHA and HUD down payments are 3.5%. Land only purchase min down payments are 20%. PMI or mortgage insurance is often required if your downpayment is less than 20%.
Points are fees the lenders charge, 1000.00 per point.
Typical home loans are paid over 15 or 30 years. Loans are at a fixed rate or adjustable rate, called (ARM's). A balloon payment which is an extra big payment that is required after a certain amount of years. If you can it is good to avoid ARM and balloon payments.
Most mortgage lenders require a down payment of at least 3%. FHA loans (mortgages insured by the Federal Housing Administration) require a down payment of at least 3.5%. Depending on your credit history, the type of dwelling and your reason for buying, the minimum down payment could be 3, 5, or 10%. VHA and HUD down payments are 3.5%. Land only purchase min down payments are 20%. PMI or mortgage insurance is often required if your downpayment is less than 20%.
Points are fees the lenders charge, 1000.00 per point.
Typical home loans are paid over 15 or 30 years. Loans are at a fixed rate or adjustable rate, called (ARM's). A balloon payment which is an extra big payment that is required after a certain amount of years. If you can it is good to avoid ARM and balloon payments.
If you need to look up the lending lingo, here a few good places to go.
First Click Mortgage Info rich environment for FHA loans
Federal Housing Administration The real FHA website.
Investopedia.com Mortgage insurance terms
Smartasset.com Mortgage insurance Q & A
If your debt to income ratio (DTI) maximum is 36% - 43% of income monthly payments read this.
Investopedia.com How much can you afford?Debts include your mortgage, credit card payments, child support and other loan payments. Most lenders recommend that your DTI does not exceed 36% of your gross income. To calculate your maximum monthly debt based on this ratio, multiply your gross income by 0.36 and divide by 12. May 7, 2016
Evidence from studies of mortgage loans suggests that borrowers with a higher debt-to-income ratio are more likely to run into trouble making monthly payments. The 43 percent debt-to-income ratio is important because, in most cases, that is the highest ratio a borrower can have and still get a Qualified Mortgage.Freddie Mac 3.5% VHA/HUD Loan info
Downpayment
Getting the downpayment together can be challenging. Relatives chip in to help. Sellers help with closing costs. First-time buyers can qualify for down payment assistance.
Even with no down payment, homebuyers still need some cash to cover closing costs and upfront costs, such as a year's worth of taxes and insurance. Some loan programs allow buyers to use a contribution from the seller or a gift from family for closing costs and down payments, but others do not.
Even with no down payment, homebuyers still need some cash to cover closing costs and upfront costs, such as a year's worth of taxes and insurance. Some loan programs allow buyers to use a contribution from the seller or a gift from family for closing costs and down payments, but others do not.
What programs are available for first-time home buyers?
9 First-Time Homebuyer Grants and Programs. from Rachel Hartman · Bankrate.com.
- FHA loan. With this option, the Federal Housing Administration (FHA) insures the mortgage,
- USDA loan,
- VA loan,
- Good Neighbor Next Door,
- Fannie Mae or Freddie Mac,
- Energy Efficient Mortgage (EEM),
- Federal Housing Administration 203(k), and
- Native American Direct Loan.
Shop current mortgage rates:
Nerdwallet.com Getting a little nerdy about mortgages tools.Bankrate.com Compare bank mortgage rates. This is a very special tool.
Quickenloans.com Get a quick look at todays rates.
Turn the tables on lenders. Check lenders ratings:
Consumersadvocate.org Click on the personal finance tab and pick a topic.Top10mortgageloans.com Top 10 Lenders
4. Financing/Mortage
The first thing you will need is a construction loan to get your home built. As on owner you can make it more seamless by getting the "construction to permant loan." This saves a step and you will know the terms of your permant loan before you start construction. There is nothing wrong with doing a more traditional constuction-only loan and then shopping for your permant load once construction is complete. Rocket loans has an explanation of this and other types of loans that will facilitate the initial loan for construction loans. There is also an owner-builder loan if the owner is acting as their own general.
Places to go for construction and home loans. Start where you bank, you are already their customer. Local banks that reinvest in their community are great neighbors and good to start with. Credit Unions are the up and coming contender in the loan markets. In a few years, they may be a force to reckoned with. Here are some links if you want to shop from home.
quickenloans.comlendingtree.com
At some point, your lender will need to see some plans for your new home, addition or remodel. Tell them you are working with a home designer and setting a budget. If you have gone through all 4 Steps to Get a Home Loan you will have a good idea of what you can afford but, it never hurts to get the inside scoop from the lender.
The next step is to contact me, Erik at Plan House, LLC. I am ready to help you with your plans.