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Low Down Payment Options for First Time Buyers

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Ready to go from renters to homeowners? These first-time home buying programs may help your homeownership dreams come true this spring.

FHA, USDA, and VA loans all offer little to no down payment options. While you’re out shopping, remember you don’t always need 20% to put down. If you don’t have a 20% down payment, these loans may be good options to explore.

Note: Have you considered using gifted funds for a down payment? If you’re about to get married (or recently did), many loan types allow gifted funds as a down payment. It’s becoming more and more common to ask for “house money” than actual wedding gifts!

Home buyer assistance programs exist to help first-time buyers navigate the home buying world. These programs are available at both local and national levels. Devorah Shaw at Atlantic Bay always available to help answer questions about grants and other programs to give you all your options.

Get closing costs covered by the seller. We can negotiate to get some or all of your closing costs paid, decreasing the cash you need to close.

To help get ready to buy your first home, make sure you:

  1. Check and manage your credit
  2. Review your budget to determine how much you can afford and speak with a mortgage banker
  3. Save for closing costs and other unexpected expenses as future homeowners

Please check out Atlantic Bay’s First-time Home Buyer Checklist and New Home Wishlist as you search for homes.

Devorah H. Shaw
Senior Mortgage Banker
NMLS #901939, Licensed in GA, GRMA# 34553
6600 Peachtree Dunwoody Rd Bldg 600 S 260 Atlanta GA 30328
Mobile: 404-308-0098 | Fax: 844-895-4687
devorahshaw@atlanticbay.com | www.atlanticbay.com/devorahshaw

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Adjustable Rate and Interest Only Loans

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As the economy changes and interest rates rise, adjustable rate mortgages (ARMs) and interest-only loans are becoming a more popular mortgage loan option. Here’s some information for you if you might be interested in an adjustable rate mortgage.

Fixed-Rate v. Adjustable-Rate With an ARM, the interest rate will fluctuate throughout the life of your client’s loan (verses a fixed rate loan, where the interest rate stays the same). With an ARM, the interest rate remains the same for the initial rate period, which usually ranges from one to five years, and then adjusts every year for the rest of their loan.

Benefits of an interest-only ARM? For buyers who qualify for an interest-only ARM, the main benefit is a smaller payment the first few years (since you’d only pay on interest). Many borrowers choose this option to pocket the savings and increase their salaries during that time, so they can afford bigger mortgage payments when the time comes.

Interest-only ARMs are not for everyone It’s important for your clients to understand that interest-only ARMs aren’t the right option for everyone. Only an experienced borrower who understands the risks associated with interest-only ARMs should consider this option.

 

Thanks to Devorah Shaw for the info!

 

Devorah H. Shaw
Devorah H. Shaw
Senior Mortgage Banker
NMLS #901939, Licensed in GA, GRMA# 34553		 Atlantic Bay Mortgage Group
6600 Peachtree Dunwoody Rd Bldg 600 S 260 Atlanta GA 30328
Mobile: 404-308-0098 | Fax: 844-895-4687
devorahshaw@atlanticbay.com | www.atlanticbay.com/devorahshaw
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Fulton County Property Tax Bills are Out

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This week, Fulton County began to mail temporary tax bills for the 2018 tax year.

These bills may be found online at www.fultoncountytaxes.org. The Fulton County bill must be paid no later than October 31, 2018. If the property is located in the City of Atlanta, that portion is due no later than October 15, 2018. If the property is located in a city, check with your city to determine if an additional amount is due.

Tax bills are mailed to the owner of record as of January 1, 2018.

If a property has been sold in 2018, the seller is the likely recipient of this year’s bill and may forward it to the new buyer. It is the current property owner’s obligation to seek out the tax bill(s). You may find your Fulton County tax bill at the link provided above.

Note about funds prorated at closing:

  • At closing, the seller gives the buyer the seller’s share of taxes for this year based upon an estimate.
  • This means that the buyer is responsible for paying the full amount of the tax bill for this year.
  • Most contracts provide that either party may request from the other an adjustment if the tax bill estimate varies from the actual tax bill. Upon requests, we are happy to recalculate the pro-ration amounts between the parties.

Note about Escrow Accounts:

  • If the buyer has a mortgage on the property, it is important to know whether or not it has an escrow account.
  • If so, the escrow account should pay the tax bill automatically.
  • If there is not an escrow account, the buyer will need to obtain a copy of the tax bill at the link provided above and pay it in full.

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Myth: “I need a 780 FICO Score or Higher to Buy”

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The survey revealed that 59% of Americans either don’t know (54%) or are misinformed (5%) about what FICO score is necessary to qualify. Many Americans believe a ‘good’ credit score is 780 or higher.
To help debunk this myth, take a look at the latest Ellie Mae Origination Insight Report, which focuses on recently closed (approved) loans. As you can see, 54.1% of approved mortgages had a FICO credit score of 600-749.
Some additional interesting notes:
  • In July 2016, 62% of closed loans were purchases, and 37% were refinances.
  • Of these loans, 23% were FHA, 65% conventional, 9% VA, and 4% other. These numbers have stayed consistent over the last 18 months.
  • All loans have taken an average of 46 days to close for purchases, and 48 for refinances.

 

 

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Get Your Credit Score in Shape Before Buying a Home

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How strong is your credit? Cleaning up your credit is essential before you make any major financial moves. Having a bad score can hurt your chances of being able to open a credit card, apply for a loan, purchase a car, or rent an apartment.

It is especially important to have clean credit before you try to buy a home. With a less-than-great score, you may not get preapproved for a mortgage. If you can’t get a mortgage, you may only be able to buy a home if you can make an all-cash offer.

Or if you do get preapproval, you might get a higher mortgage rate, which can be a huge added expense. For example, if you have a 30-year fixed rate mortgage of $100,000 and you get a 3.92% interest rate, the total cost of your mortgage will be $170,213. However, if your interest rate is 5.92%, you’ll have to spend $213,990 for the same mortgage  – that’s an extra $43,777 over the life of the loan! If you had secured the lower mortgage rate, you could use that additional money to fund a four-year college degree at a public university.

So now that you know how important it is to maintain a good credit score, how do you start cleaning up your credit? Here, we’ve collected our best tips for improving your score.

Talk to a loan professional

You can protect your score from more damage by getting a loan professional to check your credit score for you. A professional will be able to guide you to whether your score is in the ‘good’ range for home buying. Plus, every time that you request your own credit score, the credit companies record the inquiry, which can lower your score. Having a professional ask instead ensures that you only record one inquiry. Once you know your score, you can start taking action on cleaning up your credit.

Change your financial habits to boost your score

What if your score has been damaged by late payments or delinquent accounts? You can start repairing the damage quickly by taking charge of your debts. For example, your payment history makes up 35% of your score according to myFICO. If you begin to pay your bills in full before they are due, and make regular payments to owed debts, your score can improve within a few months.

Amounts owed are 30% of your FICO score. What matters in this instance is the percentage of credit that you’re currently using. For example, if you have a $5000 limit on one credit card, and you’re carrying a balance of $4500, that means 90% of your available credit is used up by that balance. You can improve your score by reducing that balance to free up some of your available credit.

Length of credit history counts for 15% of your FICO score. If you’re trying to reduce debt by eliminating your credit cards, shred the card but DO NOT close the account. Keep the old accounts open without using them to maintain your credit history and available credit.

Find and correct mistakes on your credit report

How common are credit report mistakes? Inaccuracies are rampant. In a 2012 study by the Federal Trade Commission, one in five people identified at least one error on their credit report. In their 2015 follow-up study, almost 70% thought that at least one piece of previously disputed information was still inaccurate.

Go through each section of your report systematically, and take notes about anything that needs to be corrected.

Your personal information

Start with the basics: often overlooked, one small incorrect personal detail like an incorrect address can accidently lower your score. So, before you look at any other part of your report, check all of these personal details:

  • Make sure your name, address, social security number and birthdate are current and correct.
  • Are your prior addresses correct? You’ll need to make sure that they’re right if you haven’t lived at your current address for very long.
  • Is your employment information up to date? Are the details of your past employers also right?
  • Is your marital status correct? Sometimes a former spouse will come up listed as your current spouse.

Your public records

This section will list things like lawsuits, tax liens, judgments, and bankruptcies. If you have any of these in your report, make sure that they are listed correctly and actually belong to you.

A bankruptcy filed by a spouse or ex-spouse should not be on your report if you didn’t file it. There shouldn’t be any lawsuits or judgments older than seven years, or that were entered after the statute of limitations, on your report.  Are there tax liens that you paid off that are still listed as unpaid, or that are more than seven years old? Those all need to go.

Your credit accounts

This section will list any records about your commingled accounts, credit cards, loans, and debts. As you read through this section, make sure that any debts are actually yours.

For example, if you find an outstanding balance for which your spouse is solely responsible, that should be removed from your report. Any debts due to identity theft should also be resolved. If there are accounts that you closed on your report, make sure they’re labeled as ‘closed by consumer’ so that it doesn’t look like the bank closed them.

Your inquiries

Are there any unusual inquiries into your credit listed in this section? An example might be a credit inquiry when you went for a test drive or were comparison shopping at a car dealer. These need to be scrubbed off your report.

Report the dispute to the credit agency

If there are major mistakes, you can take your dispute to the credit agencies. While you could send a letter, it can be much faster to get the ball rolling on resolving a mistake by submitting your report through the credit agency’s website. Experian, Transunion and Equifax all have step-by-step forms to submit reports online.

If you have old information on your report that should have been purged from your records already, such as a debt that has already been paid off or information that is more than 7 years old, you may need to go directly to the lender to resolve the dispute.

Follow up

You must follow up to make sure that any mistakes are scrubbed from your reports. Keep notes about who you speak to and on which dates you contacted them. Check back with all of the credit reporting companies to make sure that your information has been updated. Since all three companies share data with each other, any mistakes should be corrected on all three reports.

If your disputes are still not corrected, you may have to also follow up with the institution that reported the incident in the first place, or a third-party collections agency that is handling it. Then check again with the credit reporting companies to see if your reports have been updated.

If you can keep on top of your credit reports on a regular basis, you won’t have to deal with the headaches of fixing reporting mistakes. You are entitled to a free annual credit report review to make sure all is well with your score. If you make your annual credit review part of your financial fitness routine, you’ll be able to better protect your buying power and potentially save thousands of dollars each year.

How to clean up your credit now

Does your credit score need a boost so you can buy a home? Get in touch with me. I can connect you with the right lending professionals to help you get the guidance you need.

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