Financing Info for Buyers
My Mission as your agent:
As my client, you will receive exceptional customer service. I am committed to going above and
beyond the call of duty to ensure client satisfaction. Remember, I provide buyer representation
FREE of charge.
What you should know:
Most people underestimate the complexity of a real estate transaction.
I will closely monitor your transaction, from start to finish, to ensure success and
complete customer satisfaction.
Don't Miss Out:
The current market offers tremendous opportunities for buyers. This is the best buyers' market
in several years. Now is the time to seize opportunity and make a wise investment for your future.
Do you know the one thing that most wealthy people have in common?
They own real estate, and they use that real estate to legally avoid taxes.
The more money that you can shield from Uncle Sam,
the more money you will have to invest in your future.
We are no longer in a severe 'credit crunch'. But banks have raised their
credit standards. It is tougher to qualify for a conventional loan right now.
The days of a "No-Money-Down" loan are long gone.
Now, to qualify for conventional financing, you will probably need at least a
700 credit score, a 20% down payment, and a verifiable income.
Thank goodness for the FHA program. This government program was
put in place to help EVERYONE realize the American Dream.
FHA loans are NOT driven by credit score. So even if you have "bad credit",
you can still obtain financing! Generally speaking, if you have a 620 credit score,
3 1/2% down payment, and moderate income, you can qualify for financing.
Of course, your income will need to support your loan amount. Here's the rule of
thumb I use: Multiply your annual gross* household income by 2.5
*Gross means 'before taxes and deductions'
This is roughly how much mortgage you can afford.
Don't include overtime or bonuses in your income amount.
Most lenders will not count anything except guaranteed income.
Also, you can't count part-time jobs, self-employment income,
or commissions unless you have two years of W2/1099 statements to back it up.
For example, let's say you and your spouse (or significant other) make a combined
80K per year. If you multiply 80K times 2.5, you will come up with $200K. This means
you should be able to afford a home worth $200K. If you have a lot of debt, this number
will be less. If you don't have any debt, this number may be higher.
If you don't have a 620 credit score, start working on your credit now. Pull your credit report
at www.myfico.com Get the product which includes your FICO scores from all 3 credit bureaus.
Your middle score is the one that will be used. This is not the same as your average score.
Example: you have a 557 Experian; a 668 TransUnion; and a 574 Experian score.
The 574 score would be your middle score, because it is not the lowest score, and it is also
not the highest score.
You can dispute any inaccurate information online. To qualify for a loan, you will need to
pay off any collections or judgements. Next pay down your credit card balances. Your
credit card balances should be no more than 30% of your credit limits. After you do this,
your credit should greatly improve within a few months.
Also, the 3 1/2% down payment can be a gift from a family member. Also some lenders offer down
payment assistance with FHA Financing. Please ask me for more details. If you don't have any
savings, this might be a good time to hit up mom and dad :) You might also be able to borrow the
down payment from your 401K. You may be able to borrow up to $10,000 from your retirement
plan, for a down payment, without getting hit with a penalty. Ask your plan administrator
for more details.
The downside to the FHA program, is that it generally only works for Single Family homes,
or 2 to 4 unit buildings. Condos generally don't qualify for FHA insured financing :(
Also, FHA loans got a bad rep in the past because their appraisals are more strict than
conventional appraisals. For instance, if paint is peeling on the gutters, they will ask the
seller to fix this before the financing can be approved. Most owners want to sell their homes
'as-is'. They don't want to be bothered with making repairs before selling their homes.
This is especially true in today's market, where many homes are on the market due to
However, since financing has been harder to come by, sellers will become more flexible.
Also, there is the "FHA 203K" program which will allow you to buy a home that is in disrepair.
You can take additional money, on top of your mortgage, to get your home repaired before
you move in. Of course, you have to pay this money back, but it can be rolled into the
mortgage. You must get some major work done. So, it would be ideal to do a gut-rehab of the
kitchen. Kitchen rehabs generally add the most value of any type of remodeling project. So this
would be money well spent.
So, in summary, you don't need perfect credit to get financed. However, you will need to
have a 620 middle credit score, a small down payment and a verifiable income.
If you have that, I can get you financed!