Do you want to be a homeowner in 2013? I can help you! Before you start looking at homes, you need to know how much home you can afford to buy. What can you afford to pay for a house? First, start by making a budget if you don’t already have one. Be honest with yourself about the amount you can reasonably spend each month on your housing. Be sure to factor in taxes, insurance premiums, maintenance and other upkeep required when you own a home. 
There are so many types of mortgage programs and loan programs on the market that it may seem difficult to determine which mortgage is best for your situation. Regardless of where you live, throughout the county, I can assist you by referring you to a reputable lender that can help put you into the best type of mortgage program for YOU, often saving you money. I can be reached via email michelejohnsonrealtor@gmail.com or 413-522-6912. You can also sign up for my Property Search and begin today.
Did you know that before searching for your home, you should get Pre-Qualified? Before showing you properties, most real estate agents will likely ask you for a pre-qualification letter. Don’t be afraid if you’re also asked to sign an Agency Disclosure. When you look at properties the real estate agent will ask you to sign an agency disclosure, it’s not a contract, and it discloses what the agent’s responsibility is to you. It’s a required document that should be signed upon your face-to-face meeting.
The difference between a Pre-Qualification and a Pre-Approval:
Pre-qualification, is the first step in the mortgage purchase. The process to obtain one is straightforward: Over the phone or online, you supply your lender with information about your financial situation, including your income, assets and debt. The lender will evaluate this info and provide a ballpark figure of the mortgage amount for which you could qualify, in addition to discussing your mortgage options. This service is usually free. Your pre-qualification doesn’t guarantee how much the bank will lend you. It also doesn’t include analysis of your credit report or deep scrutiny of your ability to pay for a home.
Pre-approval, on the other hand, is much more involved. After completing a mortgage application (which generally includes an accompanying fee), you will give the lender the go-ahead to perform extensive research into your financial history and credit score. The lender will then tell you the precise amount that it is willing to loan to you, so you will be able to begin looking for homes at or below that price. Again, you should also take into account your budget as you choose a home. After you have found the home you wish to purchase, you will update your pre-approval with the relevant details, and your application will be complete.
Commitment Letter, once the lender has approved you and the house you’d like to purchase, your income and credit rating will be checked once more to make sure that it hasn’t changed since the pre-approval. A loan commitment is issued when the bank is certain it will lend. Taking a hard look at your financial situation will go a long way toward helping you choose the home that is right for you. With a firm understanding of what you can afford and pre-approval from your lender, you will be well on your way to choosing the perfect home for you and your family.
Types of Loans:
Conventional Mortgage, many people are sometimes confused and even misinformed on what the terms Conventional, Conforming, and Non-Conforming really mean. It is important that you understand the difference.
A conventional mortgage is any loan that is not insured by FHA or guaranteed by VA. … That was easy.
Conforming Mortgage
A conforming mortgage is a loan that meets strict standards concerning loan amount, down payment, income, and credit history and property condition. These loans have the lowest rates available, Fannie Mae and Freddie Mac.
Non-conforming MortgageNon-conforming Mortgages are those that do not fit into these strict standards and of course they have slightly higher if not much higher interest rates.
The following Video goes over the pro’s and con’s of the 5 major mortgage programs.
FHA Mortgage Programs
FHA loans are some of the best loan products on the market. If you have slightly less than perfect credit you may still qualify for these loans. The rates may be slightly higher than conventional/conforming loans, but MUCH lower than nonconforming loans. They require only 3% down payment and have special programs that will allow the 3% down to be a gift.
VA Loans
VA loan credit requirements are much stricter than FHA and closely resemble conventional loans. The only major advantage to VA is the zero down payment requirement, and you can refinance VA to VA quickly at a much lower cost.
USDA Rural Development Loans, USDA has two mortgage programs: Direct, and Guaranteed. The USDA Direct mortgage is focused at people with Low to Very Low income (less than 80% of median income). TheDirect program is funded totally by the government and is subsidized if you qualify.
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