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What you should know before buying a house

What you should know about mortgagesToday I took part in a Twitter chat #HBSHomeSearch and found out a lot of interesting facts. Over half of buyers who started their home search online, 42% first found the home they purchased online. Of those that searched online the average age is 41 with an $80,000 income per year.  Finding an agent and viewing properties has increased 47% on YouTube. Also, 4 out 10 first time home buyers have found the process of buying a home confusing and they are unable to understand. I found all this research to be very interesting so I thought I would give out some helpful mortgage information as well. Thanks @NAR_Research for the inspiration.

As part of the home buying process home buyers need to figure out how much of a monthly payment they want to pay. They need to figure out how much cash is due at closing and determine how they are going to come up with it. Home buyers need to figure out what their income qualifies them for in a monthly payment.

They also need figure out what their actual income is versus what was submit to the IRS. Self-employed buyers tend to write off a lot of income. Thus resulting in them only using what they tell Uncle Sam for qualifying income when applying for mortgage loan.

Reserve requirements are also something that should be looked at when applying for a mortgage loan. How much money will the consumer have to use as a down payment, and how much money will the consumer have for taxes and insurance. The bank looks at how much money is left over after they purchased a home. The money left over is called reserves.

Conventional loan programs and jumbo loan programs have certain reserve requirements. Government loans FHA, VA, USDA, state issued programs do not have reserve requirements.

Time on the job is very important and very strict and the consumer must have a certain amount of time on their job or, be in same line of work for certain profession. Job gaps are very important, people tend to not realize what the start date and end date of a job is in their job history. If there is six months or more job gap then the current employee must be on their new current job for a minimum of six months. This is a big one I see as a mortgage banker a lot.

Many Americans are coming out of a foreclosure, short sale, bankruptcy and we have a very high amount of Americans who had to deal with one of these three challenges in their past. Now that they are overcoming a financial turning point I am seeing more and more buyers coming into the market who have not had a chance to look at homes over the last 2 to 3 years due to extenuating circumstances causing them to have a bankruptcy, foreclosure, or short sale.

A big help would be for real estate agents to not advise clients to miss a mortgage payment to make a short sale go through. Many Americans are unaware that they can obtain a new mortgage even if they had a short sale as recent as one month ago provided your mortgage payments were never late.

The problem is that, some realtors are advising clients to miss a mortgage payment so that they have an easier job negotiating with the banks to approve the short sale. This does not help the consumer at all; this creates a three-year waiting period for that consumer to purchase another home.

Short sales are considered a foreclosure when the payments are late. Most lenders consider a home in a bankruptcy the same as a foreclosure. At River Community Bank we will approve someone two years out in this type of situation. River Community Bank is one of the few lenders who will not view a home in bankruptcy the same as a foreclosure. Foreclosures have a three year waiting period before obtaining a new mortgage.

Bankruptcies can come in many different types. Some bankruptcies you can purchase a home one month out of bankruptcy. Some bankruptcies you need to wait two years. It all depends on what type of bankruptcy you’ve had.

With short sale buyers can purchase a home one month out of short sale provided their mortgage payments were made on time. If their mortgage payments were late during that twelve-month period leading up to the short sale then they have a three year waiting period before purchasing a new home.

To pre-qualify for a mortgage go to http://www.philjawny.com or call 919-422-6035 or toll free at 1-855-Go-Jawny. I look forward to talking with you!

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About PhilJawny

Award winning mortgage banker with over 14 years of experience.

Discussion

2 thoughts on “What you should know before buying a house

  1. Someone in my family is actually house-hunting currently.
    It’s so difficult for someone new to this to figure out what the best approach is.
    This was very helpful, thank you!!

    Posted by Viktorya | February 8, 2013, 10:55 pm
    • I’m glad the article was helpful. Please let me know if you have any other questions. I enjoy answering questions and helping people to get approved. Feel free to pass along my contact details so I can help your family member through the process and get them approved.

      Posted by PhilJawny | February 9, 2013, 11:28 am

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