Mortgages.. What do I Need to Know?

Buying a home is all about knowing what you can afford. This way, you can enjoy the home your in and not work to pay your mortgage. For anyone who hasn't purchased a home in a while, the mortgage business has changed drastically. What you could do 3 years ago you can't do now, and what you could do yesterday you may not necessarily be able to do today. Here is a rundown of some mortgage basics that you should know if you are thinking about buying:

1. There are two main types of mortgages: FHA and Conventional. A conventional loan is 20% down and no mortgage insurance. FHA loans are 3.5% down (may increase to 5% down), and has mortgage insurance included in your payment. Most all loans are FHA loans.

2. Minimum credit score needed is a 620. If your close, mortgage brokers can do a credit scrub for you, which will show you what you need to do to get your score up.

3. You can mortgage up to 3% of your closing costs. That means you can include additional monies in your mortgage to reduce your total amount due at settlement.

4. USDA has a NO MONEY DOWN mortgage for qualified buyers, and is great for low income families, or people short on cash. There is no money down, and no mortgage insurance. It is only available for purchases in rural areas.

5. There is a construction loan available called an FHA 203K. This allows you to purchase distressed and bank owned homes without having to make any repairs prior to settlement. This loan requires a licensed contractor, and allows you to mortgage money to make upgrades and repairs to any home.

6. Your approval amount is based on your debt to income ratio. Car insurance, cell phone bills, and utilities do not count as debts, so be careful when you get your pre-approval letter that you budget for the amount you can actually afford.

7. Not all condo/townhome associations allow FHA mortgages. Check with a Realtor or Mortgage Broker to find out if they are approved before you begin looking.

If you are thinking about buying a new home, the first step is to contact a Realtor. Any good Realtor can provide you with an estimate of what you can afford, as well as estimate closing costs and payments on a home to give you an idea of what it takes to afford the home you love. They also have a network of mortgage professionals that they can call to get you pre-qualified. It's one-stop shopping and makes the process much smoother.

Realtors are also familier with appraisals, and what it takes to get your mortgage appraisal to be clean and at the price you need it. There is a lot more about appriasals which you can read in a future blog, but the long and short of it is to contact a Realtor so they can provide you with the information you need based on a specific property.

There is much more to the mortgage world then what I have posted here and any questions or concerns when it comes to obtaining a mortgage should always be presented to a mortgage professional. I work with many mortgage brokers in the area and can refer you to someone I know and trust will provide you with the level of service I feel my clients deserve.

If you are thinking about buying or selling, or not sure if you can, email me at abeich1219@gmail.com and I will go over some information with you. Give me 5 minutes, you will be glad you did.