Financing 101
Many home buyers pay too much interest, points and other fees to lenders. Other's may not find the right lender for the job, and not even get the home at all.
Generally to qualify for a home mortgage you need to have the following: Reasonably good credit, stable income, enough money for the down payment and closing costs, and not too much debt in relationship to your income.
Credit Qualifying
Underwriters are looking for current stability. Your last 2 years of credit history will have the greatest impact on whether you qualify for a loan or not. For most loans, you should not have any payments more than 30 days late on rent or a previous mortgage for the one year period preceding your mortgage application.
For other bills there should not be any late payments for the last 6 months and there should not be many late payments on your entire history. Most credit problems that are more than 3 years old will probably be ignored if you haven't had any problems recently.
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Downpayment
Different loan programs have different requirements. Eligible veterans can get loans with no down payment. Some loans in certain areas require no down payment. We also have lenders that offer No Down Payment - 100% financing products, even if you are not a first time home buyer or a veteran! Typical conventional loan products require 5% or more down. FHA loans are available with as little as 3% down including closing costs.
Closing Costs
Closing costs are the necessary evils people have to pay to buy a home. They include the following fees: Credit report; Appraisal; Closing Company; Origination; Tax Service; Document Preparation; Survey; Title Insurance; Flood Certification; Hazard Insurance; Mortgage Insurance, Tax Escrow; Discount Points and more! The costs vary depending on the property, your lender and the arrangements you have made with the seller. There are also programs available where the buyer pays reduced or no closing costs! We'll be happy to share these with you and tell you if you qualify for these programs.
Types Of Loans: FHA, Conventional, and VA
FHA loans are insured by the Federal Government. You pay a mortgage insurance premium like on a conventional loan, but the FHA program allows for a little more flexibility than most conventional plans. There are maximum loan limits established depending on where you live. Typical FHA loans are available with as little as a 3% down payment. FHA also has rehabilitation loans available for owner occupants, lower down payment plans for veterans and inexpensive homes, condominium and multi-family property financing.
Conventional loans are popular loans for most people. Most programs require that you put at least 5% down. If you put less than 20% down you will be required to pay a private mortgage insurance premium to insure against default. Generally speaking, Conventional loans are more difficult to qualify for than FHA loans.
VA loans are available only to eligible veterans and to the veteran's unmarried surviving spouse if the veteran died of a service connected disability. The primary advantage of VA loans is that they offer no down payment financing to the veteran. VA loans are almost always the best way for a veteran to buy a home.
Downpayment Help
The Ohio Housing Finance Agency program (OHFA) offers a 30-year, fixed-rate mortgage at a below market interest rate. The low interest rate and fixed term enables the Agency to create homeownership opportunities for those who could not otherwise afford to purchase a home.
The current program provides home buyers with the flexibility of choosing a mortgage rate that best fits their needs through a two-tiered structure. This includes a 2% downpayment assistance grant to qualified borrowers based on the purchase price of the home.
The program is available to first-time homebuyers (persons not owning or occupying their principle residence in the last three years), or anyone purchasing a home in a targeted area.
USDA loans are from the Depratment of Agricultural. They are intended for more rural areas and are target for those who's good credit and steady income are not enough to qualify for a home loan at a commercial lending institution, such as a bank, savings and loan or mortgage company.
More rural families and individuals may be eligible to become homeowners with the help of a USDA guaranteed home loan. When the federal government agrees to guarantee a loan, lending institutions can help buyers while incurring less risk. Through USDA's Guaranteed Rural Housing Loan Program, low- and moderate- income people can qualify for mortgages even without a down payment.
