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Home Buyers Bible

Saturday, April 13, 2013 - Article by: MICHELLE DEMA - Embassy Funding LLC NMLS FL 1449883 & NY 854225 - Message

Today, with the lenders adhering to guidelines tighter than ever before, it is extremely important to talk to a Mortgage Professional to make sure you are informed. When you sit down with your Realtor to discuss homes that you'd like to look at, you should speak to a Mortgage Professional to get qualified and informed as well.

If you are reading this then you are working with an absolute professional Realtor and Mortgage Professional and together we will help you with the home buying and mortgage process.

At Embassy Funding we realize the importance of going over your financial situation at the start of the process so that once you decide on a home, the process will move smoothly and quickly. We work as a team with you, your Realtor and attorney. We will outline some important items below that will put you in position to buy your new home and eliminate the hassles that could be associated with the mortgage and home buying process. Our goal is to help people achieve the dream of home ownership!
1. Guidelines. Lenders will typically require 3 open and active trade lines on your credit report and a minimum middle fico score of 620. We have some Lenders that will allow a credit score of 580 or better and as little as no trade lines, call us for details. Remember banks lend according to risk, so the less of a risk they deem you to be the better rate they will offer. As a rule lenders will also require that all funds for your purchase be sourced and seasoned for 60 days. What this means is unless you are getting a gift of funds, you will need all money that you will be using for your purchase in your accounts for sixty days prior to your signed contract for your new home. If you are getting a gift of funds from a family member, you will still need to get a copy of the account the money came from, and proof it was deposited into one of your accounts. Remember we can also use a non occupied co borrower to help you qualify for your loan if needed, call us to discuss how this works.

2.Paper Trail. What that means is the lender will look at your accounts that we are using for your purchase and if there are any deposits of over 900.00 (sometimes even less so try not to deposit cash at all in the account you will be using for your purchase transaction) they will want proof of where the money came from. If you can't provide proof they will not allow you to use any funds in that account. If your paycheck is deposited every month that is not an issue. We recommend that you try and use one checking and savings account and keep it clean with only explainable deposits going into them. If you have stocks, bonds, IRAs or any other type of liquid assets you will be using, that is fine, you will just need to deposit them into the account you will be using for your purchase transaction. Again we will need to see proof the funds have been withdrawn from those accounts and proof it is deposited into the account you will be using for your purchase.

3. Proof of down payment. Make sure when you give your down payment that you use a check and make a copy of the check. As soon as that check is cashed, the statement showing that it was cashed will be needed.

4.Funds needed for your purchase. You will need enough money in liquid assets for the down payment and closing costs. Give us a call at Embassy Funding/ Team Best Mortgage Option and we can give you an estimate of your closing costs and down payment. These numbers will vary based on the purchase price and property taxes. Remember to tell your Realtor up front if you need a sellers concession to pay for closing costs. Give us a call and we can explain how a sellers concession works. There are also programs called DAP's or down payment assistance programs. These are programs available in some areas that will provide you with your down payment money if you qualify, give us a call to see if there are any DAP's in your area and if you qualify. You typically need to be a first time home buyer.

5.In addition to the down payment and closing costs you will need the following prior to your closing. Appraisal fee, for a single family home you can figure on anywhere from 375.00 to 475.00 depending on your purchase price. Home inspection fee, for a single family home the cost is about the same, ranging from 375.00 to 550.00 depending on purchase price and the services you want. Your Realtor can help you find someone for that. You will also need to pay for a full years worth of home owners insurance as well, this amount will be calculated based on your purchase price. Your insurance agent can tell you the exact amount.

6.Reserves. As a rule of thumb you should have at least two months worth of reserves after your loan closes. Your reserves will be based on your total monthly mortgage payment. This is principle, interest, taxes, insurance, home owners association fees or common fees and monthly mortgage insurance if your loan requires it. Call us and we will give you the payment info on your property so you can determine what reserves you will need. Some loan programs will not require any reserves, it will depend on the underwriters findings once run through Fannie Mae(Known as Desktop Underwriter or DU), or Freddie Mac( Known as Loan Prospector or LP).

7.Debt. Once you start the purchase process, do not add any new debt to your credit. Speak with us prior to opening any new credit cards, car loans or any type of loan that has a monthly payment. This can cause major issues with your loan application as it can raise your debt to income ratio and possibly cause a loan denial. As a rule to qualify your debt to income ratio should be no higher than 45%, ask us what yours is and we can tell you how to calculate that if you'd like.

8.Documents needed. We will need a two year work history or your transcripts and degree showing when you graduated. We will need you to provide copies of your driver's license and social security card. We will need a month's worth of most recent pay stubs. Last two Years W-2's and or 1099's along with last two years tax returns. We will also need the last two months of any assets accounts that will be used for the purchase of your home, all pages even if blank. If those accounts get a quarterly statement we need the most recent one.

9.Flood Zones. Be sure and ask whether or not a home is in a flood zone or not. Since hurricane Sandy and all the flooding, Fema has changed the flood zones and many homes that weren't previously considered to be in a flood zone now are. Flood insurance is expensive and can raise your debt ratio, thus causing problems with your loan approval.
The above information may seem a bit daunting, but if you use it you will have a better experience buying your new home, guaranteed! The above information if used and followed will help you with your purchase, but we recommend you give us a call and use the skills and knowledge of your realtor and mortgage professional. Whether you are looking to buy right now or in the future give us a call now so we can help make your purchase as smooth as possible! We love what we do and care about our clients and their families.
You Can Reach Us Any Time! Michelle & Benny 201-962-3555 Embassy Funding/Team Best Mortgage Option
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