New Homes Today Magazine
Can I Qualify for a Home Loan?
How Your Builder Can Help Make It Happen
By Trey Warren
The process of buying a new home can be an overwhelming experience, especially when it comes to finding the right lender for your mortgage. In today's market, the economy is giving many people the chance to find the right home for themselves and their families. Getting a mortgage as a first-time home buyer is stressful, but isn't impossible. Interest rates are at a historic low and buyers may be qualified for more than they may have anticipated.
First time home buyers can still find great financing options with an experienced loan officer, who can customize a plan for the buyer's budget. Finding the right loan depends on the buyer's situation, according to Jeremy Lovett, a loan partner with WJ Bradley. The most popular loan now for first time home buyers buying new homes is FHA since it requires only 3.5 percent down and is the most liberal on its guidelines, he says.
The basic requirements are a fico of 640, stable employment, and a maximum debt to income ratio of 55 percent," says Lovett. "Many-first time home buyers have an issue with one or more of these as a result of our current economy." For those with a credit score below 640, Lovett says buyers would be looking at receiving "private capital" loans. If a buyer has a very low credit score, they may be able to receive a private money loan, a loan that allows buyers who don't qualify for any other loan but still want to purchase their own home. "These loans require higher down payments and have much higher interest rates since the investor is taking a much greater risk," Lovett explains.
Do you choose the lenders or does the builder? Many new-home buyers are going through their builders' lenders to keep the process simple and ensure they get the incentives being offered. However, builders' lenders can be relatively conservative in the loans they approve, forcing some buyers to seek loans outside the bank. Homebuilders still have programs to help first-time buyers through the process. Buyers may go through their builders to receive incentive offers that can cover most or all the buyer"s closing costs and may even cover small upgrades to the house. "The builders can't help with the down payments anymore but they will do just about anything else," says Lovett.
Some builders say it isn't just the incentive closing costs they offer, but a close working relationship that develops during the home buying process. For example, Maracay Homes, an Arizona builder, receives and completes the documentation required for the loan from the builder, which means less paperwork for the buyer to complete.
We are also kept up to date on when the new home will be completed for closing, so we are sure to have the buyer's mortgage ready at the same time," says Valerie Janson, a home mortgage consultant for Maracay Home Loans. "This makes it a more seamless process for the buyer."
It doesn't hurt to find out if you qualify to be a first-time home buyer. Work with your homebuilder or call a mortgage specialist to see if you meet the requirements, and get started on looking for your dream home.
