Things Home Buyers Should Consider


Home buying and securing your mortgage can be a mysterious, if not scary, process that requires exhaustive research. If you’re a first-time home buyer, well, it can be even more daunting.

The good news is that there are several resources that are available to you. Knowing the requirements will keep your home buying dreams alive.

Here are the big three you should consider when buying your first home or even buying something after your credit was damaged due to a bankruptcy or foreclosure.

Good Credit. Scores above 740 tend to lead to better loan options. FHA loans only require a score of 680 or higher. You can find out what your credit score is for free here and here. No credit? Go for a secured credit card.

You can also build credit from scratch. Something important for younger home buyers, fresh out on their own and looking to buy to avoid paying rent (who wants to subsidize someone else’s home-ownership goals?)

What if you had credit and missed payments or renegotiated your payments through a counseling agency or worse yet, filed for bankruptcy or had your home foreclosed on? You’ll need to go about rehabbing your ailing score.

Stable and steady income. How much income you need to get a mortgage boils down to your debt-to-income ratio. To qualify for a home loan, your job’s income must be high enough to offset your current debts. Calculate your DTI (Debt-to-income) here

If your current DTI is too high to qualify (talk to your mortgage broker about your current DTI), consider developing a game plan to get your financial house in order.

Down payment. Most traditional banks require 20% down. Anything less often requires the dreaded PMI (Private Mortgage Insurance) but there may be ways around paying this expensive requirement when you have less than 20% down in cash. Contact me today so I can help you with lending strategies designed to address your unique situation.

State and local home buying programs are an excellent source of information for first time buyers looking for financial assistance.

You can reach out to these California agencies in your local community or on a statewide basis:

Don’t see your county or city listed?  Try these links:

HUD California City Programs
HUD California County Programs

Also, FHA loans let you buy with as little as 3.5% down. California even offers a deferred-payment junior loan of 3% of the purchase price or appraised value. I can also introduce you to some grant programs where you only need 1% down (restrictions apply and not everyone or every property will qualify).

Lastly, the Veteran’s Administration also has some amazing programs for buyers that have served this great country. California offers its resident veterans CalVet. Nationally, the U.S. Department of Veteran Affairs also offers purchase and cash-out refinance home loan programs.

Additional Material:

Smart Homes are Hot!

Smart homes are in and buyers are responding to this trend with these top five items at the top of their wish list:

SmartHomesUp until recently, getting these features into your home was more art than science. It sometimes required solutions from multiple vendors to create the desired end state.

So, whether you want to automate lighting, thermostats, remote locking, video monitoring or a master control for your entire home, nowadays, there are plenty of off-the-shelf (OTS) solutions out there. Many will plug right into your existing home security systems too!

How Will Blockchain Change Real Estate?

What is blockchain?

The most disruptive tech in decades. The distributed ledger technology, better known as blockchain, has the potential to eliminate huge amounts of record-keeping, save money and disrupt numerous industries in ways not seen since the internet arrived.

Is blockchain safe?

First and foremost, Blockchain is a public electronic ledger – like a relational database – that can be openly shared among disparate users. This creates an unchangeable record of their transactions, each one time-stamped and linked to the previous one—in a chain.

How do you protect yourself?

Each digital record or transaction in the thread is called a block (hence the name), and it allows either an open or controlled set of users to participate in the electronic ledger. Each block is linked to a specific participant.

Can you manipulate it?

Blockchain can only be updated by consensus between participants in the system, and when new data is entered, it can never be erased. The blockchain contains a true and verifiable record of individual transactions made since its inception.

Full Underwrites Save Lives

Look, no one is really saving lives selling real estate or writing mortgage loans, but we can change lives and we can help people find their dream homes, right?

I think we all agree that being part of this process for new buyers can be exceptionally rewarding. Moreover, if we do it right, we can save ourselves and our clients loads of time and stress! The result is client loyalty and that pays dividends over the long run.

You’ll still spend long hours hunting for the right home for your buyer. However, good realtors ensure that their buyers are well-qualified before getting in the car and driving all over God’s green earth, right?

Pre-approvals are nothing new. A buyer submits their documentation and then the bank runs the loan application through an automated system to generate a pre-approval. Simple, easy and it delivers an answer.

Often, this is as far as it goes until it comes time to go into contract. Then the file goes to underwriting where a live person goes through the details to render an official approval with conditions.

Imagine the following scenario: you’ve spent weeks (maybe months in this market) directing your buyers to ideal properties. You’ve shown them dozens of properties, spending valuable time (and money) searching for their dream home. You write the perfect offer, submit it to the listing agent, who accepts it, only to find out the underwriter won’t accept the buyer’s source of funds.

You’ve lost trust with your buyers, time and money marketing dozens of properties and preparing your offer and now the bank is bailing out on you because your borrower is using a recent crypto currency windfall for the down payment. (see the additional post within on how to use crypto currency to purchase real estate)

What if you could skip ahead of all this nonsense? What if you could get an underwriter to review your buyer’s documentation without having a property address? Crazy, right? Not really.

Contact us today about a fully approved and underwritten loan for your buyer before you get into contract. It could save you and your buyer considerable stress at the most important step of the purchase process.