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first time home buyers

3% down mortgages for first time home buyers.

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Just 3% DOWN PAYMENT MORTGAGES for First Time Home Buyers.

Low down payment mortgages for first time home buyers

Minneapolis, MN: Lack of down payment money is the biggest hurdle for most first time home buyers.  We eliminate that hurdle here at Cambria Mortgage for low and moderate income buyers in MN, WI, IA, ND, SD with the HomeReady Mortgage from Fannie Mae (R).

Conventional Loan – Low Down Payment Benefits:

  • More people qualify.
  • Just 3% down payment
  • Ideal for first-time homebuyers, millennials, and low- to moderate income borrowers.
  • Flexible sources of funds for a down payment, including gifts and grants.
  • Income limits as high as 170% of area medium income – no limits in underserved areas.
  • Mortgage Insurance drops off automatically at 80%, unlike FHA loans, which stays forever.
  • Avoid minor repair issues potentially associated with FHA loans
  • Standard conventional 30-yr fixed

Not every mortgage loan is right for every person or situation.  We’ll review your application to determine if this, or some other program works best for you. There is never any obligation to review your mortgage loan options.

Learn more at: http://firsttimehomebuyer-mn.com/homeready-conventional-loan.html

 

Buying a home is Cheaper than Renting

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Owning is cheaper than renting, so why do so many people choose to rent?

Historically, and even today, buying a home is still cheaper than renting, but it appears that isn’t what many people believe, according to new data from mortgage giant Freddie Mac.

According to recent survey, a full 70% of renters currently feel that renting is more affordable than home ownership, and 55% have no plans to buy in the next three years. Those percentages are pretty close across all demographic groups, from young to old.images98735Many people choose to rent for lifestyle reasons, citing age, and freedom from home maintenance as large factors. Lifestyle considerations for buying or renting aside, affordability is obvious. According to Trulia’s last Rent vs. Buy report, buying remains cheaper than renting nationally. Buying is an average of 23% cheaper than renting. Buying shows to be cheaper in almost every market, which owning being the winning choice in 98 of the 100 largest U.S. metro areas, according to Trulia’s survey.

The survey shows most renters still have favorable views toward homeownership, and many still spire to own a home, but more than ever before, many choose to rent because they view it as more affordable and a better fit for their lifestyle right now.

Many renters, even those who indicated they plan to buy, believe they face hurdles in down payment, and carry too much debt. While this may be true for some, the myth is not based in reality. Maybe you can’t buy the dream house, but they can easily afford a starter house.

Starter Homes

Starter homes lost their luster, especially in the boom years of 2000 – 2006, when many first time home buyers jumped right into large new construction homes, probably above their realistic affordability range, when they probably should have followed their parents path of buying a starter home, and moving up to bigger nicer homes as age, family size, and income dictated.

As a Mortgage Loan Officer, I speak to people everyday with the champagne taste of a new home, but the beer budget.  This attitude of “I deserve” prevents many of them from buying, when historically, real estate ownership has created more wealth for the average person in this country than anything else.

Finally, the survey indicated almost half of all renters whose rents rose in the last two years say they like where they live, and will likely stay stay regardless of rent increases, low mortgage rates, and home affordability.

 

Home ownership IS cheaper than Renting

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Owning is cheaper than renting

Minneapolis, MN:  The debate continues.  Is owning a home more affordable than renting.  New data is in showing that for most people, yes, owning appears to be cheaper than renting.

A survey by the big online company that starts with a Z and rhymes with Willow (I’m not a fan, so I don’t like to use their name) found on average, Americans spend about 15% of their income on a home mortgage loan, while renters that live in the nation’s largest cities spend around  30% of their income on just their rent.

Conventional wisdom says housing debt of 30% of your income or less is deemed affordable.

The report also looked at other issues effecting homeownership, and found that, just like in the past, coming up with down payment is a challenge for many, and that 13% of home buyers in 2014 got their down payment as a gift from relatives.

Many people are not aware that most home buyers DO NOT need a 20% down payment.  Conventional loan programs allow for as little as 3% down payment, and the popular FHA home loan only requires 3.5% down payment. If you are US Military, a VA loan is a no down payment loan. If you are looking to buy in rural areas of the country, the USDA Rural Development loan is also a no down payment loan.

Only if you live in a “high cost” are of the county where even the most modest home costs over $417,000 will you maybe need a larger down payment.

Many areas and potential home buyers also qualify for First Time Home Buyer programs, like the Minnesota Housing Finance Agency Start Up program, here in Minnesota where I am, that will typically loan the new homeowner a big chunk of their down payment money. The program here only requires the buyer to have $1,000 of their own money to buy a home.

Sadly, many renters THINK they can’t afford a home, when statistics tend to prove otherwise. Between small down payment requirements, gifts from relatives, down payment assistance programs, and even taking money from your 401k program for down payment, most people CAN make home ownership work.

Another challenge is debt.  Many talk about student loan debt killing home buying for millennials.  As a Loan Officer, I simply don’t see it.  What I DO see is first time home buyers needing to get back to reality in their home purchase. The term starter home needs to return to the lexicon of home buyers.

Your first home needs to fit into the reality of your income and debts. Therefore, your first home may not be your dream home.

Credit is the final challenge.  If you pay your bills on time, you should be just fine.  If you don’t, you need to get that corrected first. Realistically, you need to have a middle credit score of 620 or higher. If you have poor credit, you will need to work on improving your credit first. There are NO bad credit loans available.

 

ARE YOU READY TO BECOME A HOMEOWNER

All mortgage loan applicants need to meet some basic requirements:

– OK or better credit history.
– Stable employment
– Buy a home you can safely afford (known as debt ratios)
– Have some money in the bank

If you are realy, contact a local mortgage broker in your area.  Give them a complete mortgage application, and let them zero in on what programs you qualify for, how much house you can afford, what the payments will look like, and how much money you will need to pull it all together.

If it all looks good, you’ll be put in contact with a local expert Real Estate Agent, who will help you select that perfect home.

Danger of automated mortgage pre-approval sites

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It’s 2015.  I understand the daily advancements on computers, technology, and convenience. Popping up all over are sites that that claim the ability to “allows home shoppers to get pre-approved quickly and easily.” Instant pre-approval sounds cool.

But when it comes to home buying, potential home owners should be extremely wary of trusting any web site offering automated mortgage pre-approval tools.

The Traditional Mortgage Loan Process

The traditional process is you complete a loan application. ffA real live person reviews the information, talks to you about your situation, uses knowledge and expertise to explore all avenues and issues.  Then your file is run through one of the major AUS (automated underwriting system) of Fannie Mae, Freddie Mac, FHA, etc.

This AUS process only takes a few minutes, and the lender is provided with an answer to your loan application.  So if the computer says YES, you are good right?  NO, not even close.  This is just the first step.

The first major issue is simple. Garbage in equals garbage out.

Next, just because the AUS indicates ACCEPT (yes), there are still pages of information and requested items that need to be received and reviewed for accuracy. Common items are W2’s, pay stubs, bank statements, tax returns. Depending on your situation, you may need further items, like bankruptcy papers, divorce decrees, and more.

But it is the little nuances that even trip up less experienced Loan Officers, who unknowingly issue worthless pre-approval letters.

I was recently contacted by a client who had one of these instant pre-approval letters.  They had bought a home, and there application was now being fully underwritten by the lender. Just days before closing, underwriting was denying the file. The buyers big question, is “How can that be?  I was Pre-Approved?”

The issue in this case, was the income number the buyer input into the system was 100% correct. But the buyer was a 1099 contractor, not aW2 employee, who had only been with this company about 6 months. In the mortgage world, short-term contractor income is not allowed as qualifying income.

Did you know this? This is just one example. Could you be running around with an invalid pre-approval letter based off of income not allowed? You you make an offer, give notice on your apartment, and then possibly be homeless?

Your largest financial transaction of your life is too important to trust to just anyone, let alone a computer, without wisdom and input from a licensed, experienced, and professional Loan Officer.

Zillows New Pre-Approval Tool

Zillow recently announced a semi automated tool where potential home buyers enter very basic information. If they like the results, you continue by entering your name, email, and phone number. Your information is then sent immediately to the lenders in Zillows Mortgage Marketplace, who will get your information, pull your credit, and send you a pre-approval letter.

I don’t know about you, but the last thing I want to do is have my information shared with 5, 10, 20 lenders, who all pull my credit, and have my personal information. I don’t want that floating around with a bunch of unknown people.  I also don’t want to be contacted by a bunch of meal time calling aggressive lenders who just paid money for my “hot lead.” And I haven’t even started about potential identity theft.

The Best Move When Getting Mortgage Pre-Approved?

When buying a home, your best move is to always work with a local lender the traditional way. The guy located in your geographic area, with a local reputation to protect. There is nothing anyone on the internet on the other side of the country can offer that you can’t get down the street.  More often than not, it is just the opposite… Especially when it comes to down payment assistance programs for first time buyers. These programs are always only available from the local lender.

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 Joe Metzler is a Senior Mortgage Loan Officer for Minneapolis Minnesota based Cambria Mortgage. He was named the 2014 Minnesota Loan Officer of the Year by the MN Mortgage Association, and was ranked #98 of the Top 100 Loan Officers in the Nation in 2015 by Origination News. He provides Home Mortgage Loans in MN, WI, IA, ND, SD. He can be reached at (651) 552-3681

Don’t believe the hype – Millennials can still buy homes

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Millennials can, and still want to buy homes.

While it is true the American dream of home ownership is harder to achieve than in the past, it isn’t impossible. Young adults, more than ever in the past may be delaying home ownership because of student loan debt, and fear of the stability of their young careers. But they are still buying homes, just a few years later in life than in the past.

real1According to data from Zillow, in the 1970’s, first time home buyers on average had rented for just 2.6 years prior to buying a home, and was about 30-years old.  Today, the average first time home buyer has rented for 6-years prior to buying a home, and is three years older (33-years old).

The same data shows that in the early 1970’s, the average first time home buyer bought a home with a price 1.7 times their household income.  Today, that first home costs 2.6 times their yearly income.

Clearly this data shows that it is tougher for first time buyers to save for down payment, and to afford a home. At the same time, this lines up with other delayed aspects of adulthood from years past, including getting married later in life, starting families later in life, and having fewer children.

Just like generations past, once people start having kids, they start looking for homes to raise those kids, especially if they feel secure in their young job careers. But things have changed, many people years ago could count on right out of high school having a job they could start and stay until retirement with good benefits.  That just isn’t the case today. Another survey showed the average new buyer spent 4.5 years in their job field, and were at their current job for 3-years.

Most new home buyers still save their own money for down payment, which has become a bit harder with rising home prices, and high rents making it harder to save for a down payment, but the long held tradition of down payment help from Mom and Dad is still alive and well – and a very popular option.

Apply Online

Low mortgage rates, low down payment loans like the 3.50% down payment FHA loan, and the 3% down payment conventional loan, combined with down payment assistance programs significantly close the gap needed to buy a home.

The bottom line is there is a continued strong desire to buy among millennials.  It is just that the timelines to buy that home appear to have been pushed back a few years from generations past.

If you feel you are ready to buy in MN, WI, or SD – we can help.  Just click here to apply online.

MN first time home buyer programs

Twin Cities Home Prices Rise

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The Twin Cities real estate market continues to defy the traditional assumptions of supply and demand as year-on-year home prices rise while supply also increases.

worth_balanceOne reason for this is that so-called distressed properties, short sales and foreclosures, continue to disappear from a market they once dominated. These properties — where the mortgage balance due exceeds the home’s value — artificially depressed home prices. Now, it’s the resurgence of so-called traditional sales that is inflating prices.

St. Paul and Minneapolis Realtors’ associations reported recently that the local median sales price rose 7.2 percent, year-on-year, to $209,000 in October. Inventory rose 4.3 percent. The median was$205,000 in September.

The local trade associations also noted a decline in deal activity, with pending sales down 1.3 percent from last year. This also can result in higher inventory. New listings decreased 2.3 percent.

Traditional new listings rose 6.7 percent, while foreclosure and short-sale new listings were down 42.4 and 31.3 percent, respectively.

Months’ supply of inventory was up 10.8 percent to 4.1 months. Days on market is down 4 percent to 72 days.

Both associations counted the developments as a positive, citing greater inventory for buyers, with better prices for traditional home sellers, super low Minnesota mortgage rates, and plenty of loan programs for first time home buyers.

First time home buyer tip

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Minneapolis, MN:  As we start to enter the spring home buying season here in Minnesota, I have one big tip for first time home buyers.

welcome2_FTHB_1Buying now makes sense. If you have OK credit, a little bit of money for down payment, and you’ve been successfully renting for a year or two, you are ready to buy now. With the combination of affordable housing prices and low mortgage rates, there has never been a better time to become a home owner.

First Time Home Buyer Tip: Talk to a Loan Officer FIRST.

Most people do it wrong. They start looking at homes on the internet. Then they contact a Real Estate Agent and start looking at homes. Seems logical, but wouldn’t it make more sense to know if you can even get a loan, how much you can afford, what down payment is required, and what purchase prices you can qualify for first?

With that knowledge in hand, now you can start looking for homes you know you can afford, and what the payments, and loan programs would look like for you.

I feel bad when people have already found a dream home, only to be told for various reasons they cannot buy it. Don’t let this happen to you.  Get pre-approved with a local mortgage broker BEFORE talking to a Realtor.

Not only does it make sense, but your Real Estate Agent will appreciate that fact you are pre-approved so they can immediately focus on providing the best service to you without slowing things down while you get approved. Or, worse yet, having to completely refocus the search because of newly discovered information from a mortgage lender.

De-Bunking 3 Mortgage Myths

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I hear things all the time, that as a Minnesota Based Mortgage Loan Officer, drive me crazy.  Here are a few things that seem to be high on the need to be de-bunked list.

Myth #1 – Banks are not lending.
NOT TRUE:  We are very busy! Mortgage companies continue to see a record number of home buyers applying and qualifying for mortgage loans, and refinance loans are still popular with our current low mortgage rates.  BAD credit loans are not available, so I suppose if you are a bad credit customer, yes, banks are not lending to you.

qualifyMyth #2 – APR & Interest Rates are the same thing / Shop by APR
NOT TRUE: The interest rate is the price you pay to borrow money. APR (annual percentage rate) includes other fees that you may have financed into your mortgage loan, like closing costs and mortgage insurance. Don’t be fooled when shopping for a mortgage. When the rate is below everyone else, you are likely paying higher closing costs and discount points to “buy” that rate. Paying discount points is a personal decision based current cash flow,  time in the property, loan-to-value, and more. Talk to your Minnesota mortgage lender to determine what financing options are best for your specific situation.

Myth #3 – You can be pre-approved for a mortgage without submitting documents.
NOTE TRUE: If you’ve been told you that are pre-approved for a mortgage loan, but you never sent W2’s, pay stubs, bank statements, etc to the lender, YOU ARE NOT PRE-APPROVED, regardless of what they tell you.

First Time Home Buyers, Get Pre-Approved BEFORE you talk to a Realtor
First Time Home Buyers, Get Pre-Approved BEFORE you talk to a Realtor

Common First Time Home Buyer Mistakes

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It happens every day. First-time home buyers, partly due to enthusiasm or partly due to ignorance, make costly mistakes during the home buying process.  Like buying more house than you can reasonably afford, or simply buying the wrong house because they thought they were getting a deal.

To help you keep your sanity and your cash, become an educated consumer and avoid the mistakes others have made before you. Here are a few common mistakes new home buyers should avoid:

Big Mistake #1

Not planning ahead. From the moment you think about buying a home, start planning. Start by requesting a copy of your credit report. Carefully examine it for errors and be prepared to answer questions about items on your credit report. Talk to your MN based mortgage lender before you attempt to rectify errors on your report – in some cases your attempts to rectify credit report errors can cause a delay in the approval of your loan.  Talking with a licensed Mortgage loan professional (not an unlicensed bank application clerk) can provide you valuable guidance when it comes to improving your credit score or correcting errors.

Are you currently renting? Check your lease for an early release clause. If you’ll be subject to penalties, try to time your closing with the expiration of the lease.

During this planning phase, consider your life over the next five to seven years. Do you plan to start a family? Will an in-law eventually move in with you? Will you be working from home? The number and layout of the rooms you require will depend on your answers. If you qualify for financing based on a dual income, will you be able to survive on one salary in order to fulfill a long-range plan, such as one parent staying home to raise a child? Once you’ve answered these questions, establish a plan. Then direct the process with reference to the plan. Don’t let the process dictate to you.

Big Mistake #2

Failing to understand the home buying process. First-time home buyers need to ask questions, lots of questions. Choose a real estate agent and licensed mortgage professional who each have experience working with new home buyers. Experienced Realtors and financing professionals should be willing to explain the entire home buying process – from viewing homes, to negotiating, to financing, to escrow and closing in detail, and explain it again until you understand it. Do NOT tolerate a Realtor or Loan Officer you are not comfortable with or someone who treats you like a number.

Big Mistake # 3

Getting in too deep. It can happen when home buyers shop outside their budgets or over-extend themselves. What can you do to avoid getting hooked? Monitor your expenses for a couple of months. Then, based on your findings, develop a budget that truly reflects your lifestyle. Talk to a real estate agent who can provide insight into new home expenses and taxes. Then revise your budget.

Don’t buy a home thinking you’re getting a deal because the previous tax value was high, and the current price is low. If it was worth the previous tax value, that is what it would be seller for!

 

Stop Renting – First Time Home buyer myths

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STOP RENTING. No more excuses. Go buy a home!

The housing market has changed dramatically, and everyone should be taking advantage of some of the most affordable home prices, and lowest mortgage rates in history. You may be hearing a lot in the news today that in some markets it is cheaper to own than it is do rent. It’s true!

Stop listening to the doom and gloom drum beat the media plays. Bad news sell newspapers, so that is the spin they like to portray.

Common myths and misconceptions may be holding you back but shouldn’t.

  • My credit is not the best at this present moment: OK then stop delaying and start on the path to improve your credit scores. The vast majority of people can turn bad credit to good credit in less than a year – IF YOU WORK ON IT.
  • I do not have money for a down payment. Did you know you can buy a home worth $100,000 with just $3500 down payment?   There are many acceptable sources of down payment. Savings, 401k retirement plan, sale something, tax refund, or even a gift from a relative.
  • I do not feel comfortable with the economy:  WHO DOES?  But you have to live somewhere, so make that somewhere a place of your own?
  • I don’t think I will qualify for a mortgage: It takes just a few minutes for a licensed mortgage Loan Officer to review your basic information. There are no obligations, and you are committing yourself to nothing by talking to a Minneapolis, St Paul, or Duluth MN area mortgage lender. It really isn’t  as scary as some people think being a first time home buyer.