Tag Archives: time home buyer

Do You Really Want To Buy A Condo ?

How to get a home loan is a lot harder than it was and it can be a lot more tricky when it comes to buying a condo.   There is one very important thing you have to do if after reading this you still want to buy a condo, which I will share with you so just keep reading.    I do get a lot of people asking me about qualifying to buy a condo since condos are usually cheaper in price than homes.  Now typically a condo will sell for much less than a home making it very attractive, but it does not mean that its less expensive than a home.  I know that sounds confusing I will explain.

I have to be honest, I do not like condos much.

Not that they do not have their place and you cannot get a good investment on one.  Or that those that buy condos hate them.  But I will explain cons and what you need to know before buying a condo or venturing into one.

1) Depending on the monthly HOA sometimes those monthly payments with your mortgage payments you total payment is the same and sometimes more than buying a home.

2) Because a lot of condos become rentals which some lenders will not do the loan on them because too many of the units are rented out, and sometimes the HOA’s have financial issues getting a loan for a condo can actually be a lot harder than it would be getting regular home loan.

3) Remembe HOA’s come with rules, such as leaving your garage door open or even what kind of door  knocker you can have on your door.  Which can result in a fine for not following the rules.

4) HOA ‘s almost always go with inflation so maybe the monthly dues are $150.00 there is no guarantee that they will stay there, something to keep in mind if your budget is tight.

5) Last but not least is that condo’s do not appreciate the same as a home on its own lot would.  They still appreciate of course but not the same as a home.

After all that you still want to buy a Condo I can help you get the loan for it.  But here is what you need to know.

Now a condo is great for those that have no time for yard work.   Or even those that like to entertain if the development has a nice club house or pool.  And being that they sell for less than a home it makes it easier to buy with smaller down payments than a home.

But you do need to check if the condo complex is on the FHA hud approved list especially if you are a first time home buyer.    Here is the link below to see if your condo complex qualifies.  If you need help in getting a home loan whether that be a FHA , VA or just a convention loan let me know and we can see what you qualify for.  If your condo is not approved it can be difficult getting a loan, basically this means that condo complex may have financial difficulties or that there are too many renters in that complex.  Meaning that you may not get the best rate possible or may have to put down a large down payment.

Good Luck ..

Click Here To See If Your Condo Is Approved.

 

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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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