Tag Archives: First time home buyer

Achieving The American Dream

Achieving The American Dream

The American Dream. Having a loving family, attaining a stable job, and most importantly possessing your own home, even if it’s not in Santa Maria, California or somewhere near the Central Coast. All of these accomplishments can be challenging at times, especially taking the next step of  having your own home. With financial planning and legalities, it all starts with a bit of knowledge of the industry and some research.

Purchasing a Home in the United States

The United States Real Estate market is tremendous, especially the Santa Maria Real Estate area since it is continuing to grow. One thing to keep in mind is that each state has their own unique set of policies, set of laws, and not to mention taxes. So don’t be surprised when you notice different tax rates in various cities and states. Also Keep in mind that their are many incentives for individuals such as veterans who have served our country. Veterans qualify for loans known as VA Loans and many lenders out there offer these kinds of incentives that better help them achieve the home of their dreams.

Property Taxes

As mentioned above, taxes vary by state. So when you are asking yourself how much house can I afford, do not forget to include property taxes as the tend to add up. They are used to fund public projects such as schools, parks, and things such as law enforcement. Knowing ahead of time what kind of taxes you will be paying will give you a better picture of the cost of living in your new home, especially if you are planning on moving out of state; do some research.

Educate Yourself On the Real Estate Market

One should also know what exactly drives house prices in the market, especially in the Central Coast Real Estate area because it has gained popularity in past years. Instability in house prices vary from state to state and from region to region. For example, a home in the Arroyo Grande, California will not have the same price as a beach from property in the Pismo Beach, California area even though their proximity is not to far apart. Same applies to locations such as Los Angeles, California and New York (especially within the city). We at Greater Mortgage Solutions and Valley Hills Realty want to teach you about the macro and micro trends that influence the real estate market. That way you can make a better decision when making a mortgage deal that is being offered to you.

So when you, a family member, or a close friend of yours is ready to achieve The American Dream, consider allowing one of our team of experts at Greater Mortgage Solutions and Valley Hills Realty help you attain the precise mortgage and the home you have always wanted. We are filled with team members that are ready to help you every step of the way.

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Does A Mortgage Payment Include The Taxes And The Insurance ?

Mandy asks…

Does a mortgage include property tax and insurance?

My girlfriend and I are looking at buying our first home.   The house is listed at $259,900.  The estimated mortgage that is being shown on the ad for the house is only $1,320.00.  So it seems that it is very cheap for that price. 

This is the first time that we have gone through this as being first time home buyers. I’m just curious that there are no other costs and that we can afford the payment.  And that includes everything so just want to make sure we really can afford it and no surprises.  Thanks.

admin answers:

No.

Sorry but it looks like that $1,320.00 is more than likely nothing more than just the interest and principal.  Meaning that it does not include the taxes and the insurance that is most likely required by your lender for most first time home buyer loans.  Not to mention depending on what type of loan you are getting you will also have Principal Mortgage Insurance (PMI).

I know on many forms of Real Estate forms of advertising whether that be the internet or some kind of print advertising some really nice low payment.  Sorry to say that is not the full picture of what the real mortgage payment is.  Its not that its bait and switch its just not really giving the full picture.  It really is the payment for the loan but the reality is that it is not what your lender will require you to pay for the loan.  It is meant to entice you and get you to call for more information.

For example in Santa Barbara county using 1.25 of the purchase price not the loan amount then dividing by 12 will give us an estimate of your payment for taxes.   That will give you an extra $270.00 a month.  Now being that you are a first time home buyer and if you are not getting a VA loan and getting maybe a FHA loan you will be looking at PMI which is currently a 1.35% factor than divide by 12 giving you $282.00 additional on top of your loan payment.  Now you still have to get homeowners insurance which is required by the bank to have you can choose who you get insurance from, but lets just add $70.00.  So your real payment out the door with nothing else to add unless you are living in a gated area or something like that wiht homeowners Association fees (HOA) your REAL payment would be more like $1,942.00.  I hope this is more of a clear answer for you and good luck!

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What Are The FHA Changes For 2013

Reality is that interest rates are still extremely low and depending where you are at in the nation even home prices are still very low.  They may have come up a bit as compared to a year ago but over all they are still low.  Not mention depending on where you live you can probably buy a home with a monthly payment that is the same or even less than what rent will cost you.  I know in Santa Maria, Ca. that holds true for most homes here for sale.   But I also know there are tons of people that can buy a home now but are waiting for one thing or another.   At the same time there are others that have issues with their credit that could buy a home if they just took care of the issues holding them back but for what ever reason still have not done a thing.  Everything is about timing and for those that may need some financing and need to get an FHA loan are going to find it more expensive,  failure to do something can cost you some money.

 

The important thing to know about FHA making these changes, are due to losses that they have been taking.  Right now FHA is in the red $ 32 Billion that is a Billion with a “B”.  In order to keep this loan program afloat and not another bailout deal they have to raise funds and pass those savings on to the new potential borrowers looking to get a home loan.   Right now Mortgage insurance is 1.25% of the loan spread out over the year.  But may be increasing to 1.35 % next  year.  On a 200k loan that is roughly $208.00 vs $225.00, not a big deal right?  Just a $17.00 extra month .. but that is also $204.00 extra a year.  Here is where it gets good, right now mortgage insurance drops off after 5 years.  Well new changes with an FHA loan is that it becomes permanent for the life of the loan and they only way to get rid of it is to refinance into a conventional loan showing that you have more than 20% equity.  So now you can see the cost because even a refinance is not free that alone will cost you at least 3k if you want to get rid of that Mortgage insurance.  But it does not end there.

They will be more additional new consumer counseling programs to insure that consumer knows they are getting into a home loan and can budget accordingly for a home purchase.   Yes this will cost you money as well, reality is nothing is really ever free.   Aside from that there are a few additional changes that will affect underwriting and how easy or not it will be to get that loan.   For example as of next year the Frank Dodd act goes into effect which will limit the debt ratio to 43% a person can have to qualify for a home loan.  What doe that mean anyways?? Debt ratio.  Simply put you make a $ 1,000.00 your  total expenses, credit cards and your new mortgage payment cannot exceed $430.00 a month.  Right now if you decent reserves, you can go as high as 55% debt ratios.   Basically you are going to have make more money  to buy the exact same house next year.

Everything is subject to change but for now this is what is coming.  Basically it will cost you more money to get a home loan and it will get harder.    If you want to see what you can qualify for give me call.

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Advice For First Time Home Buyers

Here is some advice if you happen to be qualifying for a first time home buyer loan trying to buy a  Santa Maria home.  It’s a great time to buy a home whether it be in the Santa Maria real estate market or any where ever you happen to be looking.  But usually a big concern most first time home buyers have is trying to not make a mistake in buying a home since a home is such a big step.  For most people buying a home is going to be the biggest investment or purchase that they will ever make.  So yes this is a big step for mostly any one.  First and foremost is that the last few years have taught us a few things, one is to live within our means.  Two that becoming a home owner, and owing our own house is not a right but a privilege.  So hopefully this will be of some help to those looking buy a home.

So lets start off with what can you afford forget about trying to keep up with your friends that is how most of us end up in situations we wish we never were in.  We bought the car that we can’t afford and have more things in the garage than we know what to do with.  So forget about having a house nicer or bigger than someone you know, or just as a big, you are shopping for yourself and the last thing you want to be is basically poor and own a home.  What I mean by that is that your paychecks are being consumed every month just to pay the mortgage forget about having a life or taking the wife and kids out.  Because at the end of the month there’s just not enough left over for anything to buy or do.  You should keep your new mortgage payment less than 40% of what your gross income is.  You may qualify for more and that’s great but here is the thing to think about.  What if you had a reduction in your pay, what if your wife had a reduction in her pay, what if you had unexpected finances pop up?  You need to have that financial cushion for the what ifs in life.  So lets say that your gross income is $3,000.00 a month that is before deductions then your new mortgage payment should not be more than $1,200.00 with taxes and insurance the whole nine yards.  For those trying to figure out how do I figure out my mortgage payments are there are ton of calculators out there just do a search for mortgage calculators.

Now the thing I hear more than anything is “but homes in that price range are not on the side of town that I want”.  “Or homes in that price range are older” or etc etc etc.  Of course you want a home that you can be happy with in and live in that will be good for you and your family.  But do keep your expectations reasonable you are a first time home buyer this is your first home and it does not mean that it will be your last.  If you cannot compromise then maybe you are not ready to buy a home at this time.

When you do finally get a home and ready to make that big step forget about the whole buy now and sell next year mentality and make some quick cash.  It’s not going to happen in this market or any time soon.  If you are looking on how to get rich quick on real estate stop reading this now and order those “Carlton Sheets” programs.  Buying a home should be an investment that you hold on to for at least a few years.

 

Last but not least is a real estate agent, of course you can buy a home without a real estate agent you can also represent yourself in court without an attorney.  The funny thing is even attorney’s get an attorney to represent themselves when going to court.  The reality is like any industry there are good apples and there are bad apples.  So try to select a real estate agent that does real estate not 5 different things and real estate is just a hobby for them.  Also I know it’s very tempting to just call the guy with his name on the sign on the house you just saw.  There are two sides to the real estate transaction you have the selling and the buying side.

The listing agent (the guy with his name on the sign) is going to represent the seller, selling his home and try to get the best deal for him when selling his home.  You as a first time home buyer want someone to represent you and try to get the best terms for you.  I am not going to say that a real estate agent cannot represent both sides fairly but I think you can see that there is some sort of conflict of interest here.  So do yourself a favor and find yourself an agent where his job is to work just for you not you and the home owner.  Then when you see a home that you like call your agent and get the details make them do the work for you, so find someone to represent you that does real estate as a career not a hobby.  And before you know it you will be sitting in your new home.

 

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Shopping For Interest Rates

Central Coast Homes For SaleThere are tons of first time homebuyers out there looking to buy a Santa Maria home for sale and  negotiating for the first time in their lives the best deal they can on their new home, but they also have to get a new mortgage home loan to close the deal unless they are cash buyers which is usually unlikely for first time home buyers.

Most of them only know how to ask one question: 

What’s the Rate?

I have been doing loans now for the past 15 years – and the only thing most people know to ask is – “What’s the Rate?” even though I have been doing loans for this long you would think that I would be over that question by now.  But it still gets to me, its like me kids asking me when are we going to get there?

While that’s a good question, it’s kinda’ like going  shopping for a ca and asking how much will a new car cost me? First of all …I thnk we can all agree on the fact that depending on what kind of car you plan on buying is going to change quite a bit depending on the car you want and what kind of features you want and are you putting down anything for that car or are you going to buy all in cash?   Just shopping the rate is not necessarily going to get you the loan you may be looking for even actually getting you qualified to that loan.

And what is the best price anyway!?! Now at this time that I am putting this together the Dodd-Frank rules may or may not be into play but to save most of you the heartache of going into what it is.  Its basically controlling how much a mortgage broker can make in doing a loan and it must be disclosed.  Here is where it gets interesting because banks are not doing home loans for free they are making a profit and its no less than what a typical mortage broker is making on a loan the only difference is that banks do not have to disclose thier profit to the public.  Which at first glance you may think that your mortgage broker is charging you too much but if you do compare the rates you may find that the rates the bank may have are not much dfferent.  When you do qualify for a home loan your mortgage broker will give you what is called a Good Faith Estimate where he will disclose costs to you in getting your loan not just his costs but all costs, escrow, insurance, processing.  If you are trying to get a home loan for your new home,  choose someone that you can trust someone that has been in the business for awhile someone that has a good reputation, because then you are sure to get not only a good deal on your mortgage but get your loan as well.

So, tell me a little bit about what you’re trying to do.” Is usally what I ask after someone wants to know what is the rate? I want to know how I can help because depending on what they are trying to do and their situation will also tell me what I can do because home loans are not one size fits all and there is not a standard loan for everyone.

Most clients answer the question of what they are trying to do one of these ways…

Can you see how the different scenarios are going or can affect what the interest rate on a home can be someone that can only put down the bare minimum for a home loan is not going to get the same rate as someone that can put down 30% on a home.

Each of these items will help me or the loan officer determine which mortgage program like those different features when shopping for a car will work for you! T

Knowing what PROGRAM we can do for will then help us get to a mortgage interest rate… and knowing your credit score and how much money you want or have to pay for closing costs will determine your rate.

AT This Given Time I Do Have A Loan Program That ONLY Requires You To Put Down 1/2 % Down BIG Difference From Your FHA 3.5% ., but at this time of writting!!!

So let’s assume you figured out which program you are going to use to finance your home – YIPPEE!  One less step in the process! Now you all you gotta do is just  just call loan officers and ask for their rate on that program and those terms with your credit and compare – it’s not even that easy!

You want to be certain that you are working with an experienced loan officer.  The largest fianancial transaction of your life is far too important to place into the hands of someone who is not capable of doing more than just quoting you a rate.

Once you believe that you are working with a seasoned loan officer, there are other points to consider… If you talk to 3 lenders who all tell you the rates are at 5.25% and you talk to another person who says they are at 5%… well, you’ve got to question what that lower priced lender is doing.  For the most part, rates are rates.  The cost of money is pretty close to even across the board – so, if it sounds too good to be true, it probably is. There could be extra fees, or they could be quoting a rate that is only good for the next 12 days.  Grant some may actually have lower over head costs and can actually give a lower rate.   With the new whole Dodd-Frank thing if it goes into effect loan officers for the most part will not be able to adjust their rates, they are what they are and they will not even be able to offset the costs of the loan which is something I have done so many times with past clients.  I even credit them thier appraisal at closing.  Things really are changing when getting a loan its not so easy as it was in the early 2000’s where almost anyone can get a loan and almost anyone could get you a loan.  Many times someone may have been breaking concrete one day and the next day they were now doing loans? Go figure.

You get what you pay for! If you are looking for the cheapest deal out there, understand that you are placing a highly important process into the hands of the lowest bidder. (If you’ve ever had a cheap paint job on a car, cheap pair of shoes that KILLED your feet or fell apart  – you know what I mean.  But we are talking about the biggest investment you may be making your entire life, so if you feel the need to go cheap, then go cheap.

All too often, you don’t know it until it’s too late that the cheapest isn’t the BEST. Just somethign to keep in mind that if you the buyer miss a closing date and you still want that house can now mean a FINE to the buyer, meaning you could end up paying something like $100 a day till you close and if you are using one of those discount internet loan companies good luck on getting that money from the. Most “internet companies” do not operate in the State they work in then can licensing for a state and be somewhere else and good luck on suing them who do you think has more money to win in court and spend so again good luck on going cheap.

Understand that Interest Rates and Closing Costs go Hand in Hand. When someone asks me for a rate – I ask them which one they want.  I’m not being sarcastic (well, okay maybe a little) but there are rates from 4% to 10%.  It depends on the program and the amount of money you want to pay out of your pocket.  So there are all kinds of rates it just depends on the scenario and the type of loan.

Many first time homebuyers want the smallest amount of closing costs (so they can buy all that new furniture for the house and repaint it or what ever it is they want to do!) and will therefore take a slightly higher interest rate – so that the lender pays the closing costs.  A professional lender will be able to offer the bst advice and options in terms of the balance between interest rate and closing costs that correctly fits your personal goals.

So my advice is to be smart.  Ask questions… but don’t just ask what the rate is!  Also work with someone you can meet face to face its bit nicer when you go to thier office and ask them just what is going on with the loan.  They will have more desire to close the loan on time and do a good job if they have to see you around town.. Also check their credentials GOOGLE them you can find out almost anything about anyone by just putting their name on the internet find out if they have good things said about them or not.  Good luck!!!

For A FREE List Of Foreclosures & Pre Foreclosures On The Central Coast Click HERE

If you have any questions about buying a Santa Maria home for sale in the Santa Maria Real Estate market or any properties on the Central Coastand need to get a loan in Santa Maria, CA or any where in the state of so I California not just on the Central Coast, so I can do California home loans, and first time home buyer loans, as well as refinance home loans and just plain simple mortgage loans. So please contact me by sending me an email at: GenePerez@GMSLoans.net

I do also service all the nearby communities and other markets such as the Santa Ynez real estate market, Nipomo Real estate market, Arroyo Grande real estate market, Grover Beach Real Estate Market, and all other surrounding areas regarding the homes on the Central Coast.

my goal is to provide you with resources you need. I can also help in getting the financing for your home. If you have any suggestions or questions in how I can provide more or better

information please let me know. I have been helping my clients for the last 15 years on the Central Coast, Gene Perez – 805-448-7101 , DRE 01321588

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Important Disclaimer: Questions and answers provided on this website and by Gene Perez is to be considered general information, and is not intended to substitute for informed professional financial, tax, legal, investment, accounting, or other professional advice.

Gene Perez is Licensed Real Estate Broker for Valley Hills Realty and a mortgage broker for Greater Mortgage Solutions.

This blog and its content is copyright of Gene Perez 2010. All rights reserved. Any redistribution or reproduction of part or all of the contents in any form is prohibited other than the following: you may print or download to a local hard disk extracts for your personal and non-commercial use only. You may copy the content to individual third parties for their personal use, but only if you acknowledge Gene Perez as the source of the material You may not, except with our express written permission, distribute or commercially exploit the content. Nor may you transmit it or store it in any other website or other form of electronic retrieval system without obtaining Gene Perez’s

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