Steve's Home Buyer Tips

"Use These Facts To Help You..."

What is a credit score?

Before a lender decides on what terms to offer you on your new loan (which they base on the "risk" to them) they want to know two things about you:

1. Your ability to pay back the loan, and

2. Your willingness to pay back the loan. For the first, they look at your income-to-debt obligation ratio. For your willingness to pay back the loan, they look at your credit score.

The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. (and they're named after their inventor!). Your FICO score is between 350 (high risk) and 850 (low risk).

Credit scores only consider the information contained in your credit profile. They don't include things like your income, savings, down payment amount. Or demographic factors like gender, race, nationality or marital status. In fact, the fact they don't consider demographic factors is why they were invented in the first place. "Profiling" was as dirty a word when FICO scores were invented as it is now. Credit scoring was developed as a way to consider only what was relevant to somebody's willingness to repay a loan.

Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

Different parts of your credit history are given different weights. Thirty-five percent (35%) of your FICO score is based on your specific payment history. Thirty percent (30%) is your current level of indebtedness. The time your open credit has been in use (ten year old accounts are good, six month old ones aren't as good) and types of credit available to you (installment loans such as student loans, car loans, etc. versus revolving and debit accounts like credit cards) each account for 15%. Finally, 5% of your score is based on the pursuit of new credit.

Your credit report must contain at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This ensures there's enough info in your report to generate an accurate score.

If you don't meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.

Need more tips? Have more questions? Call me! I can help you by answering any specific questions you have on your report.

OK, so now we're working together to find the loan that's right for you.

Now what?

Well, you're on the right track. Why? By working with me, you're taking full advantage of the best technology (and expertise) available to get your loan closed quickly and easily.

But I can't do it fast without your help.

So here are five "other" ways you can help us speed up the process of getting your mortgage loan:

Here are a few reasons...

Even if you haven't picked out houses to visit yet, it's vitally important to meet with me (as your mortgage professional) first.

"Why?"

Because if don't know how much you can afford...

or how much you want to borrow...

or how to negotitate terms to your advantage...

You'll be unprepared and have a signifiacnt disadvantage when it comes to getting the best deal on your dream home.

So why not protect and prepare yourself ahead of time?

When I pre-qualify you, I'll help you figure out a monthly payment you can afford, and how much of a loan you can qualify for. I'll look at your income and debts. And your employment and residence situations. I'll ask you about available funds for down payment and reserves (if they're required.) I may some other things also.

It's short and to the point, and I keep the paperwork to a minimum!

Once you qualify, I'll give you what's called a Pre-Qualification Letter (your real estate agent might call it a "pre-qual"), which says I'm working with you to find the best loan to meet your needs and I'm confident you'll qualify for a loan for a certain amount.

When you find a house that catches your eye, and you decide to make an offer, being pre-qualified for a mortgage will do a couple of things. First, it lets you know how much you can offer. Your real estate agent will help you decide on an appropriate offer, but being pre-qualified gives you the confidence to know you can follow through.

More importantly, to a home seller, your being pre-qualified is like you walked into their house with a suitcase full of cash to make the deal!

They won't have to wonder if they're wasting their time because you'll never qualify for a mortgage to finance the amount you're offering for the home. You'll have the clout of a buyer ready to make the deal right now!

You can always use the calculators available on my site to get an idea of how much mortgage you can afford -- but it's important (and easier) to meet with me. For one thing, you'll need a Pre-Qualification Letter!

(And how it's kept private)

Rest assured. Anything you submit over my website is 100 percent, fully secure. And I never, ever share it with anyone except by permission -- that is, if you're giving me information you want me to use to get you the best loan, I use that information to tell mortgage lenders about you and convince them to loan you money. In turn, those mortgage lenders are bound by federal law to keep your information secure.

Here is a list of the information I'll need from you to consider your loan application...

Social Security Number, for you and your co-borrower (if any)

Employment History
For the last two years, employment dates, addresses, salary.
Current pay stubs and W-2 forms.

Checking/Savings Accounts and Certificates of Deposit (CD's)
Location of bank accounts, account numbers and balances;
Address of bank if out of town
Last 3 months' statements

Stocks, Bonds, and Investment Accounts
Broker's name and address, description of stocks, bonds, etc.
Last 3 months' statements or copies of stock certificates

Life Insurance Policies
Insurance company name, policy number, face amount, and cash value, if any

Retirement Plan
Approximate vested interest value
Copy of your latest statement

Automobiles
Make and model of automobiles, and their estimated resale value

Other Assets
Market value of personal and household property

Liabilities and Other Non-Mortgage Debt
Creditors names, addresses, account numbers
Monthly payments and balances

If you're self-employed
Two years tax returns, profit and loss statements, both company and personal if separate.
Current balance sheet and profit and loss statement if more than two months into the new fiscal year, signed by CPA.

If you have income from any of the following:
Commission
Overtime
Bonus
Partnership
Rental Property
Trust
Notes Receivable
Interest/Dividends
...then you'll need two years' personal federal tax returns

If you're employed in family business:
Personal federal income tax returns and all schedules for the past two years

If you're divorced or separated:
Complete executed divorce decree and settlement agreement
Payment history of alimony/child support for the past 12 months, if it's a financial obligation.
If you choose to have this be considered as part of your income (you don't have to), be prepared to provide 12 months canceled checks or bank statements reflecting your income direct deposits.

Name and address of all mortgage lenders for the past 24 months, account numbers, monthly payments and balances

If you've sold your home but not closed:
A copy of the sales contract

If you've sold your home, closed, and you will use the proceeds for your new down payment:
A copy of the HUD-1 Uniform Settlement Statement

Name, address and phone number of your landlords for the past 24 months

Purchase sales contract or offer to purchase and all addenda
Furnish contract with original signatures of buyer and seller

If a source of your down payment is a gift:
Name, address and relationship of donor.
Gift funds will be verified in both the donor and recipient's accounts.
Note: Not all loan programs allow gifts to be part of your down payment.

For FHA Financing
Evidence of Social Security Number and photo identification (a copy of your card will work)

For VA Financing
DD214 and Certificate of Eligibility

"What is an FHA loan?"

An FHA loan is insured by the Federal Housing Administration, a federal agency within the U.S. Department of Housing and Urban Development (HUD). The FHA doesn't loan money to you directly. It provides lenders protection through mortgage insurance (MIP) in case you default on your loan obligations.

Available to all buyers, FHA loan programs are designed to help creditworthy low-income and moderate-income families who don't meet the requirements for conventional loans.

An FHA loan is perfect for you if you don't have much cash saved up for a down payment. The rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans.

Down payment assistance (DPA) is also available from eligible non-profit agencies.

Here are some of other benefits of FHA financing:

• Only a 3 percent down payment is required
• Closing costs can be financed
• Lower monthly mortgage insurance premiums
• Easier to qualify for than a conventional loan
• FHA limits the amount lenders can charge for some closing cost fees (e.g. the origination fee can be no more than 1% of mortgage).
• Loans are assumable to qualified buyers

"What about VA Loans?"

VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. The guaranty means the lender is protected against loss if you fail to repay the loan. In most cases, no down payment is required on a VA guaranteed loan.

Other benefits of a VA loan include:

• Closing costs are comparable to other financing types.
• No private mortgage insurance requirement.
• Right to prepay loan without penalties
• The Mortgage can be taken over (or assumed) by the buyer when a home is sold.
• Counseling and assistance available to veteran borrowers having financial difficulty or facing default on their loan.

Although mortgage insurance is not required, the VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount.

A VA loan can be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors or other energy efficient improvements approved by the lender and VA.

I have something I'd like to share with you.

I just finished up an article.  It shows you 7 simple steps you can take to own your own home. 

Will you do me a favor?

I need to get your opinion on this info before I release it to the public.

So could you please take a minute right now and call or email me for your copy of this report?  It's a quick read (7 pages) and it gives you the simple, hassle-free steps you need to take to stop paying rent & own a home.

Thanks in advance!

Steve

P.S.  It won't cost you a penny to check it out!  Go ahead & call me at 309-743-0110 to get your "7 Steps to Stop Paying Rent" report now!