So, what have we learned so far, from Parts 1 and 2, in regards to the First Time Homebuyer Tips? Listen to me and only me? No, not that, because this can get you in trouble sometimes, depending on who you listen to. Some loan officers think they know it all and sound like it. Just because someone sounds really nice doesn't mean they might be a good fit for you. The meaning behind this comment is in here, How busy are you really? --Customer Service It's in the 3rd paragraph. My underlining thought on this whole topic is if it sounds too good to be true, then it usually is. When shopping on your own, don't pick the very best offer. It's been proven. Go with someone trusted, a referral.
Onto the best program for you. If you talk to me, I try to find out your goals first. No matter what you might think that you want or would need, in order for me to do my job, I need to know certain things.
- How long do you plan on being in the house. Not everyone knows the answer, but it's one of the most important questions not asked often.
- How much money do you have total, even though you might want to use less. And using less is actually better for several reasons. Ask me and I will tell you these reasons.
- Do you have kids? Ages? College in the future?
- Do you have other bills that don't show up on credit or appear on your pay check?
So Jeff, what is the best program? Some people don't have much money to work with or none at all. If this is the case, I would start with My Community. For more details on this, read MY COMMUNITY by Melissa Olson. And MyCommunity Mortgage by : Ron Withers. This can be a great program and will beat any rate that subprime loans might offer, even while having low credit scores. BUT.... your rate will be about 1/2% higher than your typical 5% down conventional mortgage or your typical 2 1/4% down FHA loan. This could be a big difference in payment, depending on your loan amount.
Okay, Jeff, I understand the higher payment part. So, what can I do? FHA will allow for 100% gift. Technically it could be like borrowing money from a relative. The lender doesn't want to know about this. In all honesty, it's a gift and it's not suppose to be paid back. My whole point? On an FHA mortgage, you need 3% of your own money,your own funds. If you can get a gift from a family member, it could mean the difference of $100 to $170 a month in payment, depending on the loan amount. FHA is just as compatible in rate as a 5% down conventional loan. For more information on this, please read Creative FHA financing -- No money out of pocket from the buyer!!! Also, FHA can be used for those with less than perfect credit. Sure, so can the My Community program. Overall, it comes down to your goals and cash on hand. And credit can be a factor. Keep in mind, you can get seller's help which is called seller's concessions. Ask me about this for a better explanation.
Your basic types of programs: Each has their own meaning and purpose. Ask a professional.
- FHA
- Conventional
- VA
- Subprime
Conclusion : There are 100's of programs out there. Some are great for the consumer and then some are great for the loan officer or the lender. Wait, the LENDER? Yes, meaning that they get more of a residual per se for selling you this specific loan. Basically, they make MORE MONEY. Can these types of programs be good for you though? Yes they can, but they aren't for everyone and need to be explained in detail. The problem here, they aren't explained and SOLD to the average consumer on a misconception, that they are misled.
Do some research on the name of the program if it doesn't sound familiar. You can basically Google anything nowadays. Do it then! As I have said many of times, a bad question is a question never asked.
The First Time Homebuyer Series :
- First Time Homebuyer Tips : FHA, is the best mortgage program? -- Best Programs & Why -- Part 3 of 4
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