Gloucester County, NJ First Time Home Buyer Series: Home Buyer Timeline (Part 4)

Basic timeline for buying a home in Gloucester County, NJ

Step one: Get Pre-Approved. This will help you determine what you can afford, what you qualify for, and what terms need to be negotiated when making offers on homes.

Step two: Start looking at homes. Search online, have your agent send you MLS listings, and take time to drive through neighborhoods you may be interested in.

Step three: Make an offer on a home(s). This should be done through the agent that represents you as a buyer. Making an offer on a home via the agent listing the home will most often put you in a compromising situation, which is not in your best interest.

Step four: Negotiate terms to purchase a home. IMPORTANT: If you are asking for the seller to pay any of your fees/closing costs, this is the time to arrange this, NOT after you come to a price/terms.

5 weeks prior: Sign contracts and updated mortgage application. Once the buyer recieves a copy of the fully executed contract (signed by all parties), attorney review begins. This is the time when buyer has an oppurtunity for an attorney to review the contracts. Attorney review is 3 business days.

4 weeks prior: Order appraisal, inspection(s), survey, and titlework. You will need to pay for the appraisal upfront ($300-$400). Your lender will order the appraisal. The buyer arranges for the home inspection and termite inspection. A home inspection also requires payment upfront, made directly to the inspection company of choice.

3 weeks prior: Mortgage loan approved as supporting documents requested are completed such as the appraisal, title, and job verification.

2 weeks prior: Clear up any outstanding issues, documents, verifications. Some loans require "outside" approvals such as USDA loans or NJ state first time home buyer loans. Your loan should be sent out to these offices at this point as to not delay settlement.

1 week prior: Call utility companies to transfer utilities (gas and electric are most important).

Several days before: Obtain certified funds needed for settlement costs. Estimate a little on the "high" side. For example, if you believe you need $5,000 for settlement, get certified funds for $5500. Overall you shouldn't have any surprises, but be prepared to possibly reimburse the seller for some items such as oil in an oil tank, water and/or sewer bills they have prepaid.

Day of settlement: Bring your certified funds, photo ID, and any other important items to closing, such as other verifications, reports, or items requested by your lender or real estate agent.

 

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Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning First-Time Home Buyer Mortgages, grants, down payment assistance, police and fire loans, rehab loans, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

The Loan That "Can't" Be Done, and How the Big Lenders Can Hurt You as a Buyer

I've been working with a certain buyer (Mr. Buyer) for a few months now. Since he is looking at the low end of the market his home selection is very limited. We had to work on his credit profile, and we successfully got his credit scores boosted enough to get him approved in the automated system (DU).

So with all this excited Mr. Buyer goes out and finds a GREAT deal, a home that appears to be about $50,000 below market value, which in this case is like having a 33% price reduction. The MLS listing is misleading - it states that the property is corporate owned, when really it is a REO. (Realtor mentioned something saying she can't put "bank owned" anymore on her listings ... that's another topic) FRUSTRATING!!

The MLS also states that the buyer must be approved by"XYZ Big Bank" (Name kept secret since you may work there). We weren't sure if they had a special relationship with the "corporate" owner of the home. Typically we wouldn't care and would just tell someone to get pre-approved with the said lender and then we will write the loan for them. But this one is different, and I knew it before the buyer even talked to the "Big Bank" mortgage rep.

The mortgage rep from "Big Bank" stated that there was no way my buyer could get approved.

I BEG TO DIFFER!!

I told my buyer before he talked to the "Big Bank" mortgage rep that they would say this. We have him approved for a more specialized loan program called the Tax Credit Prefund Mortgage Program.

Big Lender = No Loan for You?

In the case of a big, nationally known lender, a buyer may have less home buying options. A big lender like this most likely will not have access to state/county/local programs. Score one for the local mortgage banks! Frankly the "Big Bank loan officer" should have said "I CAN NOT DO THIS", and not "There is no way a lender can do this!" 

"SPEAK FOR YOURSELF" hot shot!

I founded a career on closing loans "Mr. Big Bank Loan Officer" said could never be done. I thought when Alt-A was out the window that specialized lending was also. Man, was I wrong! - it is more important than ever!

You lose, I lose, We all Lose

So Mr. Buyer is rejected from buying a home because it is owned by a bank. Mr. Buyer's income docs have already been reviewed by an underwriter. We can even get a commitment for Mr. Buyer. But this STILL wouldn't mean anything to "Big Bank" since they themselves can not get Mr. Buyer approved. Everyone loses, and another home sits longer negatively affecting the local market. If this is the protocal for big banks and their REO inventory, there may be a lot of "shooting of the feet" yet to come.

 

 

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Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning First-Time Home Buyer Mortgages, grants, down payment assistance, police and fire loans, rehab loans, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Gloucester County, NJ First Time Home Buyer Series: Mortgage Programs (Part 3)

So maybe you've taken the jump to get pre-approved and have done your homework to understand your credit score information. Now when it comes to financing your new home, which mortgage option is the best for you? Understanding mortgage programs can be both simple or complex, depending on your needs.

Conventional Mortgages, FHA Mortgages, USDA (100%) mortgages, and VA mortgages are all available for both first time buyers as well as homeowners relocating.  Below is a short comparison of these options. We will also discuss first time home buyer loans below.

 

	FHA	Conventional	USDA
Minimum down payment required	3.5%	5%	0%
Typical Credit Requirements*	620+	620+	620+
Lower credit scores allowed	Yes	Yes	Yes
Monthly Mortgage Insurance Required	Yes	Yes	No
Income Limitations	No	No	Yes
* Rate/Cost varies drastically depending on the type of mortgage.

*

The scope of this article is to further discuss first time home buyer options. The loan options mentioned above are listed only to make reference to, as each of the options above is available within the options listed below. It may sound a bit confusing, but with the help of an experienced mortgage advisor it will all come together.

*

NJ First Time Home Buyer Options

As a first time home buyer in NJ, you have several options and angles to purchase a home. We will briefly review several of the current options available. (Aside - A first time home buyer is considered someone who hasn't owned a home in the last 3 years).

NJHMFA

The New Jersey Housing and Mortgage Finance Agency has several options for first time home buyers. These options are obtained by working with an approved HMFA lender, such as Treasury Mortgage (A division of Aurora Financial Group). Some confusion exists because the majority of mortgage lenders in business DO NOT have access to these loans. "Big Name" national lenders and mortgage brokers do not have access to NJHMFA options. Even most direct lenders or "correspondent lenders" do not have access either. 

Smart Start Grant Program

This popular option is a mortgage program with a grant option. You may obtain a grant of up to 4% of the loan amount used to finance your new home. For example, if you are buying a home and financing $100,000, a grant of up to $4,000 can be utilized. The most common use of this grant is to satisfy the FHA requirements of a 3.5% down payment (see above chart). In this case, the grant covers the down payment requirement, as well as come of the closing costs. (To see other ways to use your first time buyer options to cover a down payment, closing costs, and more check out Understanding and Using All of Your First Time Home Buyer Options.

Prefund Mortgage Program

A more recent and great addition to the NJHMFA mortgage options list is the Tax Credit Prefund Mortgage Option. This program allows $5,000 of the current federal tax credit (up to $8,000) to be prefunded and used for a down payment and/or closing costs. The benefit of this program over the Smart Start Grant option mentioned above is that the interest rate is .75% lower. For a home purchase price of around $150,000 or less, or for a situation where a buyer doesn't need a full 4% and would only benefit from having a "little" help, this option works very well.

A little more info: These programs have income limitations, but are quite high for many counties. They require a bit more paperwork than other options, but certainly can be worth the extra homework.

County Grants 

Many New Jersey counties have their own grant options for first time home buyers. Grant options vary greatly from several $1,000 to $10,000 or more. These options also usually have income limits. For instance Gloucester County has an income limitation for single buyers that is in the $40k's.

Some counties require no special education on the buyer's behalf, and some require several months of education along with a monetary investment. This article does not have the space to go into multiple county options, but here is something you want to keep in mind; Work with a lender that can help you understand how to incorporate several options together when you purchase your home. The link to the article above explains how a NJ first time home buyer can utilize a grant program, seller concessions, the tax credit and more, all at once!!

What to do now ...

There are MANY home buying and mortgage options out there. The most important thing to do is find a lender (mortgage advisor) to work with that understands ALL of these options. DO NOT settle for just anyone. Secondly, educate yourself as much as you can. Even the brightest and most experienced loan officers can benefit from an educated buyer bringing thoughts and options to the table that the buyer may have not brought up otherwise.

Look out for additional articles in this NJ First Time Home Buyer Series.

 

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Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Gloucester County, NJ First Time Home Buyer Series: Understand Your Credit Score

If you are a first time home buyer,you have no doubt come across the fact that your credit score is one of the most important factors regarding your mortgage options. With the way this country revolves around money and finances, you would think that understanding the credit scoring model would be required education. Instead year-after-year we see the same ignorance towards credit.

The basics for credit need to be understood by all. Even those with great credit scores need some background on understanding the credit scoring model.

Mortgage programs in relation to credit scores.

Credit scores range from 350 - 850. The higher the credit score the better. The majority of mortgage programs today require a score of  620 or better. Some mortgage programs will allow scores below a 620 credit score, but these are limited and may not be the programs you need. Ideally you want as many options as possible, and the higher the credit score the more mortgage options you will have.

Credit scores do not always relate to lower or higher interest rates. For instance, if you choose to use an FHA mortgage to buy a home, the rate will be the same if you have a 720 or an 820 credit score. Most lenders will also give you the same or very close rate with a 620 credit score.

A conventional loan on the other hand requires more money down, has stricter guidelines, and has several price and/or rate increases depending on the credit score. A low credit score when utilizing a conventional loan can very quickly become expensive because of increased rates and costs. That is if you can even utilize a conventional loan. Many people are currently priced out of the "conventional loan" market due to their credit scores.

Mortgage insuranceis another credit related mortgage necessity. Mortgage insurance is required on a conventional loan with less than 20% down payment, and depending on one's credit score, even though a conventional loan may be a possible option, if there is no mortgage insurance company that will offer you insurance coverage because of a lower credit score, you can not use a conventional loan. Credit scores really can rule the day.

The good thing is that FHA loans are often there to save the day and offer great rates and low fees.

Education IS the key (to home ownership)

Now that we understand some of the ways that a credit score can determine what options are available for mortgage financing, it is now up to you to take about an hour to read up on the credit scoring model and how to obtain and maintain a great credit score.

Don't leave this important aspect of your life a mystery. A few minutes of education here will serve your life finances well, and long term will save you thousands and make a big difference in your life and the life of your family.

Additional articles for a better understanding of credit scores and the credit scoring model

• Credit Scoring - What Makes Up My Credit Score? (1 of 6)
• Credit Scoring - Payment History (2 of 6)
• Credit Scoring - Balances (3 of 6)
• Credit Scoring - History (4 of 6)
• Credit Scoring - Mix of Accounts (5 of 6)
• Credit Scoring - Inquiries (6 of 6) 

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Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Closing Purchase Loans with Credit Scores Below 600 - Say it Ain't So!

In this current credit tightening market, there are still some options out there for financing a home mortgage with a credit score below 620. In case you are not aware, 620 is the current magic number (cut off) for the majority of loan options available today.* But not all loans are created the same!  

As an example, one of the options still available today for credit scores below 620 are the NJ first time home buyer mortgage programs. Last week we closed a purchase transaction where the buyer had a 597 FICO score. That is not a typo ... 5-9-7.

There are still some mortgage programs out there that can be approved through an automated system with lower credit scores. Even where an automated (computer generated) approval is unavailable, a buyer with a lower credit score can still be approved as a manually underwritten loan. This is where an underwriter crunches their own numbers, and digs into the file. You know, the way they did it before the computers and Internet took over.  If the file is solid you may be approved.

What would be considered a solid borrower or a strong file? Here are some examples:

• Good debt ratios - your total monthly debts are in line with your gross income: Around 41%. This can not be overstated. Going far above this in many cases isn't good for a borrower.
• Good work history - longer work history is typically a safer borrower. A sound profession in this current economic environment would also work in your benefit.
• Reserve assets - Will you have money after you settle? The "more the merrier";. Even retirement accounts left untouched will make a borrower look stronger. In case of emergency, they would be able to pull these funds out.

You might think of it this way; Would you want to lend money to you? Are you a bit over extended? Is the underwriter going to look at this and say, "I'd be scared if I was in this position and buying a home?" Are you familiar with making a rent payment and have you been consistently on time? These questions will help you understand how an underwriter may think. As well as what you may want to think about.

"I know my credit scores aren't high enough!"

Even if your scores are a bit lower than where they should be, a little education and a little tweaking of your credit profile could give you the boost in a credit score to make things happen. Getting a credit score boost of 20-30 points typically isn't too difficult. And a higher increase may be obtainable as well, depending on your credit profile. Just make sure you are working with a lender that knows the credit scoring model inside-and-out before you take their advice!!

Where to go now ...

There is no doubt that the credit markets have tightened over the last few years. In some cases a little too much. But not all is lost. If you find yourself or someone you know in a tough situation, find a local expert to help you out. The reality is that not everyone will qualify, but there is no doubt that some more would qualify if they knew the options were even available - somewhere.

*Even when mortgage guidelines don't have specific credit score requirements, there may be something called "lender overlays".  These are additional restrictions on top of the basic guidelines and can vary among lenders. For this reason at times one lender have more flexible guidelines than another one down the street.

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Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning First-Time Home Buyer Mortgages, grants, down payment assistance, police and fire loans, rehab loans, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Gloucester County, NJ First Time Home Buyer Series: Get Pre-Approved!

The first and most important part of being a first time home buyer is to get your ducks in order from the beginning, and that is by getting pre-approved before doing anything else. Getting a knowledgeable loan officer to pre-approve you shouldn't take long. The initial conversation only takes about 10 - 15 minutes. Expect your loan officer to take 24-48 hours to complete a pre-approval. Some situations require (literally) hours of a loan officer's time to complete a pre-approval.

It is important that you are clear, honest, and don't hide anything regarding your income, assets, credit, or anything else regarding your finances. Keep in mind that the loan officer is your friend. Your loan officer does not ultimately approve your loan and offer a commitment to lend you the money. An underwriter does that. The loan officer is there to help you structure your loan; To create the best financing for your situation, to make you aware of your options, and to help you navigate together to settlement.

Be forewarned: Going onto a website and plugging in your income, assets, and some other minor info is NOT the same as having a conversation with a knowledgeable loan officer. Completing a form like this on the Internet may be what some consider a pre-qualification. This is typically a worthless analysis and has only very minor helpfulness for you in determining your potential approval.

A pre-approval will help you with;

• Knowing what you can afford/estimated payments
• Knowing how much money you will need to complete the transaction
• What terms you should negotiate when making an offer on a home
• What time frame you will need to consider as some loan options take longer to complete

A pre-approval should't cost you anything upfront. However, expect to start paying fees once your loan has to be processed.

Your initial mortgage pre-approval conversation will cover your income, assets, credit, work history, and of course what you are looking to accomplish as a first time home buyer. Once you speak with your lender you should start to gather the necessary documentation needed for your approval. A loan officer may issue you a pre-approval without reviewing your documents, however you run the risk of wasting time and money if anything different or out of the ordinary comes up after a review of the supporting documentation.

Basic documents needed

• Pay stubs for the last 30 days
• Asset statements for the last 2 months (Checking, savings, retirement accounts, etc.)
• W2's for the last 2 years
• Photo I.D.

Other documents that may be needed:

• Tax returns (personal / business)
• Divorce/Child Support/Alimony documentation
• Letter(s) of explanation regarding derogatory items on your credit
• Loan specific mortgage documents
• Profit and loss statement(s)
• Collection/judgment payoffs/verification
• Other forms for verification of data pertinent to your approval

Documents needed once you find a home and an offer is accepted

• Signed mortgage application
• Signed agreement of sale (by both parties)
• Appraisal fee ($300-400, varies by appraisal type)
• Pest Inspection, well certification, septic tests, and other supporting documents
• Other documentation on the home and/or your personal finances

Your pre-approval should be updated once a home is found that you would like to put an offer in on. Keep in mind that credit reports are only valid for about 120 days. If it takes you a few months to find a home, your credit will need to be pulled again to allow it to be valid through the settlement date. Therefore, be very careful to do everything possible to keep your credit score as high as possible. A good loan officer will give you sound advice on credit scoring, but BE SURE to know the rules for yourself. This can not be overstated.

Lastly, a pre-approval is based on a monthly payment, not just a purchase price. So a cheaper home with higher taxes doesn't guarantee that you will qualify. This will have to be reviewed by your loan officer, so keep in constant contact with your loan officer to ensure your success.

Be sure to visit the next installment in the Gloucester County, NJ First Time Home Buyer Series.

 

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Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

NJ First Time Home Buyer Tax Credit Pre-Fund Program -> One Under the Belt!

Want to use your first time home buyer tax credit NOW to purchase a home?

It is possible!! Steve Kappre at Treasury Mortgage had the first "Tax Prefund Mortgage Program"settle last Monday. It was a seemless transaction where the buyers utilized $5,000 of the (up to) $8,000 tax credit the government is currently offered to first time home buyers who close before December 1st of 2009.

Here is how it works.

When you apply for your mortgage as a first time home buyer let your lender know that you would like to utilize a portion of the tax credit NOW to purchase your first home. If the lender says it isn't possible than RUN THE OTHER WAY!! What they may really be saying is either they don't offer the program, or there is a good chance they don't even know the option exists. Certainly not all mortgage lenders are made the same, nor have access to the same programs.

When your loan is approved it is approved with the designation of the"Prefund" program.  You can use this $5,000 towards either your down payment or your closing costs (or both). The first time home buyer prefund program can be used under the umbrella of Conventional, FHA, VA, or USDA (100%) guidelines.

This variety of options truly gives the first time home buyer a great wealth of options.

There are times when one option will allow an approval where another option will not. Your loan officer/mortgage lender should be able to advise you of what direction to take and why that direction is in your best interest. The interest rates for such programs are right in line with other conventional, FHA, VA, or USDA rates.

There really isn't a better time to consider buying a home.  Take the time to educate yourself and put all the cards on the table. Below is a few other articles that may help you better understand first time home buyer options.

HELPFUL LINKS

Understanding and Using All of Your First Time Home Buyer Options

Understanding Seller Concessions | Seller Paid Closing Costs | Seller Contributions | Seller Assist

Tax Credit Loan Program: The "Prefund" Program

NJ First Time Home Buyer Grant Program

100% Financing in Gloucester County, NJ

 

 

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Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning First-Time Home Buyer Mortgages, grants, down payment assistance, police and fire loans, rehab loans, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Gloucester County, NJ First Time Home Buyer Guide Series

Buying your first home is one of the most memorable moments you will ever have. It is an exciting, scary, thrilling, and rewarding experience rapped into one big ball. It is a new experience, and a huge decision. With some education and effort, you can help to make the process a sound, rewarding experience that is successful!

Some of the topics you will want to educate yourself on are;

• Real estate terms
• Credit scoring information
• Mortgages, working with a lender,
• Working with a real estate agent
• First time home buyer grants
• The home buying process
• Costs, fees, and requirements
• First time buyer tax credit (Up to $8,000)
• Helpful tips and pitfalls to avoid

 

In the coming series we will discuss these topics and more in a (somewhat) concise format that will give you a broad foundation to move forward in confidence as a first time home buyer.

 

1 - Gloucester County, NJ First Time Home Buyer Series: Get Pre-Approved!

2 - Gloucester County, NJ First Time Home Buyer Series: Understand Your Credit Score

3 - Gloucester County, NJ First Time Home Buyer Series: Mortgage Programs

4 - Gloucester County, NJ First Time Home Buyer Series: Home Buyer Timeline

5 - WORKING WITH A REALTOR

 

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Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

Just a reminder to you potential first time buyers considering taking advantage of the $8,000 tax credit ... time is runing out. You must settle before December 1st (so you must settle on November 30th or before). Now lets be realistic. I've closed loans in 2 weeks from start to finish - but as pointed out below, you should allow AT LEAST 45 days to settle since there are too many variables - home repairs take time, appraisals can take time, and this isn't considering the TIME IT TAKES to FIND a home and agree to terms.

NJ Mortgage Finance Agency Rate Update - Smart Start Options for First Time Home Buyers

 

First Time Home Buyer 30 Year Term

5.750% - First Mortgage with no Smart Start assistance

6.125% - First Mortgage with 2% Smart Start assistance

6.250% - First Mortgage with 3% Smart Start assistance

6.500% - First Mortgage with 4% Smart Start assistance

The 40 year team requires an additional add-on of .125%

 

Tax Credit Loan Program - The "Prefund" Program

This program allows up to $5,000 of the first time home buying tax credit (up to $8,000) to be used for the purchase of a home. This money can be used for the downpayment and/or closing costs. This program follows the first time buyer rate option with zero (0) assistance (5.750% currently). For more info check out Tax Credit Loan Program: The "Prefund" Program.

 

Other Helpful First Time Buyer Links

Understanding and Using All of Your First Time Home Buyer Options

Understanding Seller Concessions | Seller Paid Closing Costs | Seller Contributions | Seller Assist

Financing and Mortgages with a Credit Score Below 620

Why I'm Stressing Over Someone Else's Credit

First Time Buyer Options in South Jersey