Home Buying Questions - Part 1
How to Buy A home - Home Financing Questions - Part 1
Here are 3 Common Questions from people that are thinking about buying a home.
Hi, I am Jeff Chubb with the Chubb Realty Group and today I wanted to share with you some common questions from prospective home buyers.
- The first question is “Do I really need to put 20% down to buy a home?”
And the answer is a resounding NO. There are programs available to home buyers in which they can put as little as 3.5% down. A buyer can always put more down, but this is the limit. Another not well-known fact is that this down payment can actually be gifted from a friend or family member. At the end of the day, the bank with these FHA type programs need to see at least 3.5% of owner equity in order to feel comfortable moving forward.
However, if you are a Veteran, the VA program will actually allow a buyer to buy a home with 0% down. This is only a program that is available to the men and woman currently or those that have served in our armed forces in the past.
- The second question I often hear is “Do I need spectacular credit to get a mortgage?”
Like above, the answer to this question really varies by which mortgage program a buyer is evaluating. The FHA mortgage programs will lend to buyers putting 3.5% down with credit scores of 580 or higher.
If your credit score is below 580 however, you aren’t necessarily excluded from FHA loan eligibility. Applicants with lower credit scores will have to put down a 10% down payment if they want to qualify for a loan.
There are many benefits to these FHA loans. They are easier to qualify for, offer competitive rates with lower closing costs and can offer a 2nd chance to those with a Bankruptcy or a foreclosure.
FHA also even offers a program where they will help you fund home improvements as well as purchase a house at the same time through their 203k program.
The negative of a government backed mortgage like an FHA loan is for loans with less than 20% down, a home buyer must pay Mortgage Insurance upfront as well as at an ongoing basis.
The loan program also requires that a property meet certain standards. These standards are based around basic health and safety requirements as well as owner occupancy rates and reserve funds for condo buildings.
- The 3rd Question we often hear is “How Do I qualify For a loan?”
The first step is to reach out to a qualified lender. Remember that in speaking with a lender and even getting a pre-approval, you are not committed to them and that any conversation is confidential. You will need to show that you have a stable income and that you pay your bills on time. A buyer will show this proof through tax returns, pay stubs, their credit report and bank statements.
It is essential to find the right lender that will take the time to work with you and find the best solutions to your situation. If you need a recommendation, then we are always here to help.
At the Chubb Realty Group our philosophy is ‘Making Moving Easier’. We understand that the mortgage process can be a confusing maze to navigate which is why we work with some of the best industry professionals. They will speak with you with no obligation and all conversations are held with the strictest confidentiality.
Give us a call at 617-480-2600 or shoot me an email at [email protected] with specific questions or if you would like me to make an introduction to a mortgage banker that can answer all of your questions. It would be my pleasure.