Fort Thomas, KY Mortgage Specialist

ARE YOU READY TO BUY A HOME?  How do you know if you are ready to buy a home? It is a great market for buying a home, interest rates are the lowest ever, there are so many homes on the market to choose from, in many ways timing could not be better.

Along with all these pluses in the current market, it is also a more difficult time to buy a home because there are fewer loan programs, underwriting guidelines are stricter and let's face it, many of the homes you can buy are perhaps not in the best shape.

I can't tell you everything you need to know in this post about how you know you are ready to buy a home, but I can hit one very important high spot:

      YOU NEED VERY GOOD CREDIT TO BUY A HOME. Even though some programs will go somewhat lower when looking at credit score, your good credit is a ticket to a smoother process overall. How do you know about your credit? Take a look at it yourself before you get too excited. Go to WWW.ANNUALCREDITREPORT.COM.

You can get one free copy per year of your credit report from all three bureaus. You will not get a score unless you pay for it. The actual reports are free, scores are at a cost. What you are looking for here, however, is the status of your credit, the score is not the most important thing. Examine it to see:

       what trade lines you have open?   You may need a minimum number of lines open for a real estate mortgage. You'll need to ask the lender about this specifically.

        how long have they been open?   Your lender may require several months of history.

        are you paying on time?  Important factor. If you are not, then why not?

        how much of the  available credit are you using?  Very important to the lender, if you are using over 50% of the available credit you will score lower than someone who is using less than 25% of the available line.

       are there things on your credit you did not know you had?  If so, you will want to make note of them to discuss with the lender. There are some situations where if you have a collection you were not aware of, you may want to discuss it with the lender prior to settling it. Any changes to an account like this affects your score, including paying it off.

Armed with this information and your employment information, you are ready to call a lender to get educated about the financing process of buying a home. You do not want to look at homes until you know you are ready to buy a home. To do so is frustrating to you, sellers who get their homes ready for a showing and the Realtor who may spend time with you when you are not ready.

Lenders want to see that you are handling your current credit situation responsibly. You can take that first step to determine if you are ready to buy a home by pulling a copy of your credit. I usually suggest the above website whether you are getting ready to buy a home,  whether you are renting or already a home owner. Get a copy of your credit, it is FREE.

Another good tip for using the above website is to pull only one bureau at a time. The three bureaus (Trans Union, Equifax and Experian) generally have the same data. You could, however, have a lender who reports to only one or two of the three so there can be some difference. You can look at your credit three times a year for FREE by looking at one in January, wait a few months and look at a second bureau and after a few months look at the third one. A good way to keep track of your credit on an ongoing basis and it costs you nothing even if you are not in the market to buy a home.

Do you want to buy a home? Get ready first!

HERE WE GO AGAIN! LENDERS TO RECHECK CREDIT PRIOR TO CLOSING!!!.  Another possible delay to closing your loan. Lenders are now required to repull credit prior to closing a loan.

WHY repull credit? To be sure the borrower has not had any inquires or more importantly opened new accounts that affect their ability to repay the mortgage loan.

WHY IS REPULLING CREDIT A PROBLEM? Many purchasers of new or different homes, particularly first time buyers do take on additional credit because they need appliances, a mower, maybe new carpet. We all know the variety of reasons a buyer may inquire about new credit.

With the new regulations the question is WILL TAKING ON NEW CREDIT ALTER A BORROWER'S  ABILITY TO REPAY THE LOAN???

It is another sign that the big investors are not taking chances on loans they purchase. Realtors and Loan Originators need to be advising applicants about this latest change. Lenders are coming up with their disclosures to the borrower about this; I just received a 6 page document to add to my loan package from one lender. Not very environmentally friendly.

Another question is WHAT HAPPENS WHEN THE LENDER REPULLS CREDIT PRIOR TO CLOSING and the borrower has taken on new debt. Bottom line is if the borrower still qualifies with the new debt the loan can close, but count on a delayed closing.

THE BIGGER QUESTION IS: WHAT IF THE BORROWER IS DISQUALIFIED AFTER REPULL OF CREDIT? If the borrower is trying to refinance,  we are going to have a very unhappy borrower, For a buyer who is moving to a new or different home he has spent money on appraisals and inspections he cannot recoup.

LESSON HERE! LOAN ORIGINATORS, REALTORS EDUCATE YOUR BORROWERS.

DO HOME BUYERS NEED A REALTOR is one of the most asked questions I get from a buyer. Not a difficult question to answer.

Buyers usually do not directly pay the Realtor. When you are buying a home not using a Realtor has so many pitfalls. First, if you are looking at a property listed on the Northern Kentucky or Greater Cincinnati Multiple Listing Services, the seller listed the property building in a fee for the buyer's agent.

Buyers often think they have to pay the Realtor from their own funds. Whereas they CAN do this, it is usually not done that way.

Most homes for sale are listed in the MLS. Another reason buyers need a Realtor, most homes are listed for sale in a multiple listing service, when you are looking for a home, that is where you most likely are going to find it. These homes are sold by Realtors, not often by the listing Realtor, but a co operating Realtor.

You can buy a "for sale by owner" home without a Realtor, that is a whole different topic. Many "for sale by owner" home owners are willing to co operate with your Realtor acting as your agent.

Realtors can help with the decision. Not only do I recommend buyers use a Realtor, but they should select a Realtor as early on as they are comfortable doing so. I'm not saying pick the first one you speak to, however, think about it, when you are working with one Realtor and see 10 homes, that Realtor has seen all 10 homes with you. When it is time to make a decision, he/she will be in a position to actually help you with that process.

A Realtor representing a buyer in a transaction can be priceless. Take your time and select the Realtor you think works the best with and for you. Ask friends and business associates for recommendations. I would highly recommend a buyer pick a Realtor before they make that first phone call on a property. Home buying is a multi step process - arrange your financing, then locate a Realtor who will work for you.

Here is a link that discusses  the use of a Realtor as well as some other home buying tips. http://www.dagriffinfinancial.com/hb/understanding.rad

HOW IMPORTANT IS GETTING PRE QUALIFIED OR PRE APPROVED FOR A MORTGAGE LOAN is a question a lot of buyers ask themselves at some point in the home buying process Interesting enough, many people thinking of a home purchase don't always think of this as one of the first things they need to do.

There is a difference in a pre qualification and a  pre approval. A pre qualification would give you a rough idea of what you could afford, a true pre approval is when you not only apply for mortgage loan financing but you also provide the documentation to support your application.

When I speak to potential borrowers here in NORTHERN KENTUCKY I usually tell them by gathering some information I will tell you what you can afford. Once you know what you can afford, then you can decide how much you WANT to spend. Having that knowledge is key to making this a pleasant process.

The best thing a borrower can do for themselves is to talk to a trusted financial advisor before they start looking at homes or calling Realtors. A well experienced Realtor will ask right away if a potential buyer has been pre approved. The biggest reason you want that pre approval or pre qualification first is that once you start shopping, you want to be looking at the right homes. You could be shopping for homes that you cannot afford, or you could be shopping for homes that better suit your needs when you know what you WANT to spend.

There are a number of ways to get pre qualified or pre approved. Some lenders want you to come to their office, some people go online and post their information with little knowledge of who is getting it or where it is going. Even in this computer age we live in, I do wonder why someone would rather put their information out on the net for any lender to grab as opposed to doing some research on their own first.

Personally, I like to start with a phone conversation. I do most of my pre qualifications by phone. It is a time saver for both myself and the borrower. It is the first step in preparing the borrower for the home buying process. Best of all it is FREE for me to take a look at the credit and answer some general questions. All the information you need is on my website www.dagriffinfinancial.com

Dora Ann Griffin

D A Griffin Financial, LLC       Serving Kentucky & Ohio

"Your Lender For Life"

859 442 9700

SHOULD FHA BE THE ONLY GAME IN TOWN?   Nearly every time I think of FHA, the thought creeps into my mind that there is something wrong with this picture.

 With housing being in the dumps, Fannie and Freddie tightened up guidelines  by increased fees for credit scores, loan to value, occupancy, property type. A long menu of changes along with most importantly requiring the use of Appraisal Management Companies to order appraisals.

FHA, which had sunk to a low level of usage over the last few years because of all the options available with a conventional loan, has risen up as the go to loan. I believe, this primarily due to the fact that up until March FHA did not require a blind appraisal ordering process. While conventional loans were taking a beating at the hands of the appraisal, FHA was getting a larger share of the market.

Now FHA is requiring a blind appraisal order. They are increasing the up front mortgage insurance premium. They talk of increasing down payment requirements. No doublt we will see FHA evolve into a different product than it was a few months ago. I wonder is it soon enough?

The question in my mind is how much damage has been done to the health of our economy and to taxpayers due to increased foreclosure numbers on FHA loans that were originated over the last year when FHA became the only game in town.  FHA as a rule is available to borrowers with lower credit scores, higher debt ratio, and fewer assets, i.e. the term "no skin in the game".

I'm not convinced this is the economic environment to "pile on" by doing riskier loans for which the taxpayers are ultimately on the hook. Fannie Mae and Freddie Mac were bailed out by the government, but they are not government programs. FHA IS a government program.