Questions and Answers
Q. With the instability of today's markets is it still a good idea to buy?
A. Owning a home is always better than renting if it is possible to so. If you can qualify for a mortgage based on income and credit then owning makes sense regardless of the markets. You have to live somewhere and you are either going to be paying your own mortgage or renting to pay someone else's.
Q. How do I know how much I should pay for a home?
A. You should not even look at houses until you have been prequalified by a mortgage professional who will assess your credit, calculate income, and ask a whole lot of questions. It is not as much about what you qualify for as it is about what payment is comfortable. If you start looking at houses out of your price range then it will be difficult to find one that you like within the range later.
Q. How do I get pre-qualified?
A. Once a mortgage professional pulls credit, finds out income, and maybe completes a loan application in an initial consultation then a pre-qualification can occur. It is based on the credit profile and the income that the borrower indicates unlike a pre-approval that has verified income, assets, and may have been approved in automated underwriting.
Q. Analysts state that we have not seen the bottom of the housing market yet and home prices may still go lower. Should I wait to buy?
A. If your desire is to own a home and stay in that home you should not wait because the prices are low and the rates are good. Speculative buying is another situation because there is no guarantee of a quick increase in value for resale. Home prices will level off again and appreciation will occur but that is over time.
Q. What about my interest rates? Should I wait to see if they go lower?
A. Although there has been volatility with rates, they are still low compared to other years before the housing boom began. The time is always now to buy a home if you are able to qualify.
Q. What if my credit is less than perfect?
A. You have to start someplace. You can get a free copy of all three credit bureaus from www.annualcreditreport.com and examine it for accuracy, correct information, and dispute right on line and begin the process that way. The answer to getting a mortgage should never be "No" but rather "not now" followed by some education and instruction on what to do to optimize the credit if necessary. It might take a few months but it is worth doing what needs to be done.
Q. If I have been paying $900 for rent and am now ready to own, how much more per month should I expect to pay?
A. This has to do with the amount above the rent that you can afford. Taking into consideration the benefits of homeownership such as tax benefits at the end of the year, you might feel that an additional $200 or $300 per month would be okay. Plus, with the President's signing of HR 3221, new homebuyers are eligible to receive a tax credit of $7500 at the end of the year. This can really be maximized with proper tax advice making it a great incentive to buy a home.
Q. Can I still buy a home with little or no money down?
A. Yes, it is still possible to do that with certain programs or with as little as 3% down with FHA which is once again becoming the best way for many people to achieve the dream of homeownership. Also, with the loan temporary loan limit increase enacted earlier this year more homes are eligible to be FHA financed.
Q. What if the home I find needs a little work?
A. With numerous bank owned properties on the market, it is likely that a property will need some TLC or maybe major rehab. The FHA 203k loan is a renovation loan for financing homes that need some work. It is a single loan for purchase that includes the rehab money in the financing and follows the regular FHA guidelines. This type of loan product enables a borrower to turn an existing home into their custom dream home while still taking advantage of below market pricing.
Frequently Asked Questions