When is a First Time Homebuyer not a first time homebuyer? According to our loan programs a first time home buyer is anyone who has not owned any property in the past three (3) years at the time of credit application.
So many times I’ll hear of or work with clients who assume that they can’t apply as a first time homebuyer because they’ve owned property in the past. Which leads me right to my next question. How many people would buy a home again if they were able to take advantage of todays First Time Homebuyer programs?
There are lots of misconceptions out there about todays mortgage programs and about todays real estate contracts. For example, a common ( but costly )Â misconception is that FHA mortgages are only for first time buyers. Of course that is not the case. FHA is available for any primary residence purchase or refinance with liberal loan limits.
Two great things about today’s FHA mortgage is that the rate is the same for every borrower regardless of where they fall on the qualifying credit scale or what the LTV (loan to value) is. A borrower with a 601 credit score will get the same low rate as a someone with a 750. And a qualifying borrower requiring a 97% loan amount the same as someone requiring 90%.
The other favorable thing about today’s FHA mortgage is that the allowable loan amounts and property values are much higher than ever before. Rates on FHA loans are low for everyone.
Normally when we see a published mortgage rate the misconception is that the rate is the rate regardless of the loan program. That of course is not the case. Any conventional loan will have it’s own loan matrix. Rate is than determined primarily by the credit score and LTV. Other factors may play into that rate being higher or lower on any given day.
The published rate is normally based on a 30 year fixed for a fully documented, highly qualified borrower. Quite simply it is probably the best rate that can be offered from that loan matrix.  Â
So FHA is not necessarily a First Time Buyer program but it is available for borrowers toward a primary residence. It’s rate doesn’t vary according to credit or down payment although conventional Fannie Mae loans do. The best and fastest way to answer any question is to find someone who knows the answer.
Don’t be fooled by misconceptions. There are tremendous opportunities out there. Financing is available, rates are extremely low and home prices are what we should now call pick and pay. Getting the right answers for the right reasons requires just a call or email or a website visit.
“Don’t be fooled by misconceptions. There are tremendous opportunities out there. Financing is available, rates are extremely low and home prices are what we should now call pick and pay.”
This statement should come with a HUGE *ASTERISK * before and after it as it is both true AND not true.
It IS true to a person with GOOD credit and with respectable assets either to put down or at least as reserves. And by “respectable” I mean more than your average person. Nevertheless, if none of these criteria are issues to a buyer in this market, then yes, it may be a true statement………..to an extent.
It IS NOT a true statement to a buyer who still has grand visions of what the market was like from 02-06. According to the HONEST marketing and advertising machine BKA as NAR, these people should ALL be able to go out and buy a home right now………………………………………this very minute…………….regardless of their situation…………………………………………..right?…………………… Well wait a minute, what do you mean that isn’t what they meant? See, this is when the lines are crossed and statements such as the one i quoted from this article should come with a HUGE asterisk. MOST people who are interested in buying in this market CAN NOT get approved because they do not understand that the lending requirements have COMPLETELY changed from how they used to be just a short while ago. So all the stories they hear from their co-workers and friends on how easy it was to buy a home a year ago are complete MYTHS today. They can’t walk into a mortgage company, print and sign their name on a loan app with a crayon, and automatically get the keys to a home anymore. Lenders are trying to FIND reasons on how to turn loans down. Don’t believe me, then ask anyone you know ( whether an investor, owner, or look in the mirror) if their line of credit was terminated even if they were paying on time and didn’t have a large balance. Or how about the countless loans that have been sent through underwriting that you just knew would be a great app, but all of a sudden were turned down, LTV lowered (requiring MORE money to be put down), required ANOTHER appraisal to be conducted simply because the first was “too high”, or whatever other reasons they can think of these days to make deals PURPOSELY fall apart. But I digress.
The point is that statements like this aren’t so true to the AVERAGE consumer who isn’t so educated in terms of real estate and goes by what they hear everyone else say. It is VERY difficult to acquire lending in this market. It is very possible, but still very difficult, and to only a select few. I understand that banks want to narrow down the cases of unqualified buyers so that they don’t continue escalating this foreclosure crisis, but try explaining that to a freshly disapproved buyer who just a few months ago had one of his/her co-workers purchase a home while this client who has just been turned down has a better credit score, lower DTI, better income, AND more money in the bank! Not such a true statment then is it.
And about home prices: who is to REALLY say that they are “pick and pay”???? According to WHO are they pick and pay? If you’re judging from the drastically OVER INFLATED prices of a few years back, then yes, I guess you could call these “pick and pay”. But if you compare today’s prices to those of a long time ago, like, let’s say……..oh …………..2000………..then you may have a completey different outlook on things then. Prices today are still EXTREMELY higher than those of 2000. And that was JUST 8 years ago! Where is this real estate psychic $0.25 gumball machine that tells you that home prices WON’T go down even further????? If prices continue to go down for another two years, will the prices of mid-year 2008 still be considered “pick and pay”? Or will they be “wow I can’t believe you paid THAT much for your house” prices?
Truth is that NONE of us know.
Dear Julio,
Thanks for the comment (s) and post. So sorry that you’re not able to see or show the opportunities available in “today’s” real estate and mortgage market.
The article did say “today’s” didn’t it. I don’t recall anything at all about the 2006 or the 2000 market. It’s time you and so many others get over it and get on with today and tomorrow.
As for your quesion about 2 years from now I have a standard answer. Let me check my crystal ball.
Get over it and get on with today and tomorrow huh? That’s exactly what I’m doing by asking you why you think these are “pick and pay” prices when you very well know that they are NOT. You very well know that they will CONTINUE to go lower. And according to your crystal ball (I borrowed it for a little while, while you were out of the office), it shows that the market will continue to go down lower till AT LEAST 2010. Is that “tomorrow” enough for you? Does that mean that “today’s” prices are REALLY “pick and pay”? Didn’t really think so, but hey I guess I haven’t gotten over the last market yet (which I wasn’t a part of, by the way).
Julio,
Tell the truth now….you never borrowed my crystal ball because I don’t have one and neither does any of the so called forecasters and experts.
As long as your able to qualify for a mortgage or otherwise pay for a property you and anyone else can pick and choose. If you’re ready willing and able to take advantage. If you’re in that position I’d be happy to help get you out there so that you can pick and pay anything you’d like. If you’re not sure about financing give me a call and we can get an answer in 24 hours for you.
Thankfully we have buyers and sellers that are doing well in today’s market. Some skeptical and rightfully so but mostly positive after all and doing well. Anything I can help you with please let me know. If you’ve been hurt by this market of course you’re not alone and maybe it’s time for you to try to turn the tide on it.
“As long as your able to qualify for a mortgage or otherwise pay for a property you and anyone else can pick and choose. If you’re ready willing and able to take advantage. If you’re in that position………..”
Now THAT’s what I call HONEST MARKETING!! So thanks.
I personally haven’t been hurt by this market, because like I previously stated, I wasn’t part of the last market so I’m “new blood” in this world we call real estate. My main gripe is having to hold onto properties for longer than before, but hey, that’s expected in this market so as long as the units move then I really can’t complain. My issue is with the REAL MISCONCEPTIONS that are out there trying to make buyers think it’s the greatest time to buy in the history of our solar system.
Most people understand the market and some would like to buy if they could. The article attempts to address some of the misconceptions about the inability to obtain favorable financing. If you think we can help you sell, buy or obtain financing for yourself or someone else let me know. In the meantime, all the best.