Do you know what to do now so you can buy in the future?
Don’t worry, you’re not alone. However, many homeowners spend less than six months from concept to contract. Therefore, it’s never to early to start the process and we can tell you a good place to begin.
- Do a credit check-up – Get a copy of your credit reports and examine them carefully. Pay down your debt, especially credit cards. Limit the amount of new credit purchases, and don’t open (or close) accounts.
- Start saving – Reduce your expenses to save as much as possible. You’ll need a minimum down payment of 5 percent, or more, to give you the best financing options.
- Learn about mortgages – Talk to a mortgage consultant and learn what to expect. When you are within 3 months of buying, get pre-qualified to see what you can afford and your potential interest rate.
- Follow the market – Begin your home search on allentate.com and sign up for 1st to Know to receive new listings that meet your criteria. Attend open houses in the areas where you might want to live. Consider all options, including single-family, townhomes and condos.
- Develop a relationship with a Realtor – Even if you are a year away from buying, we can keep you informed about market trends, special programs and properties you might be interested in. When you are ready, we can help you navigate the process to achieve your goal.
The Federal Housing Administration (FHA) has announced major changes to its home lending programs that may affect you as you shop for a home.
These changes are effective for all loans received on or after April 5, 2010.
The first change is an increase in the upfront Mortgage Insurance Premium (MIP) from the current 1.75 percent to 2.25 percent. That means on $100,000 loan, the MIP will increase from $1,750 to $2,250. The good news is that since the MIP can be financed in the mortgage, the increase will not affect your out-of-pocket cash. On a $100,000 loan financed at a 5 percent interest rate, your monthly mortgage payment would increase from $546.22 to $548.90, a difference of just $2.68 a month.
The new FHA rules will also reduce allowable seller concession from 6 percent to 3 percent. Seller concessions may cover items such as closing costs, home repairs, etc. Usually, closing costs will fall within the 3 percent seller concession amount, but not always, so be sure to contact me as you explore your options.
The last of the FHA changes to directly affect homebuyers concerns credit scores. If your credit score is below 580 at the time of qualifying, you are now required to put down at least 10 percent of your loan amount. If your credit score is 580 or higher, you will still be allowed to put down as little as 3.5 percent.
Give us a call today or visit our website www.LeeAnnMiller.com
to check out the current loan rates.