HOME OWNERSHIP 101
Watch the free Financial Literacy event #HomeOwnership101 presented by Dreamteam Home Studios held at Second Missionary Baptist Church in Monroe now:
https://www.youtube.com/watch?v=C2lfv68tuis&t=1666s
For more free valuable information on building generation wealth follow @mortgaegmandela on TikTok & Instagram
Do you have a qualifying Credit Score to get pre-approved to buy a home?
10 things to do with your credit
Monitor your credit
Make sure all personal information is correct
Review inquiries and accounts in good standing
Review & dispute inaccurate negative accounts
Put everything on autopay
Separate cards by expenses
Pay as much as you can before the statement date
Ask for credit line increases
Don't co-sign for ANYBODY (only spouse)
Build business credit
Why do you need credit?
Credit is a tool that can help you now and you can pay it over time
Credit is your ability to borrow money or products under an agreement between a lender and a borrower, who promises to repay the lender later, generally with interest.
A borrower may make a strategic decision to not pay in full, even if they have the available cash
Credit can affect where you live
Good credit = Car approval or Home Approval
Business loans require good credit
HAVING A CREDIT MINDSET
DON'T CHECK YOUR CREDIT?
I BUY EVERYTHING WITH
CASH
I DON'T NEED DEBT!
DEBT IS BAD!
CHECK YOUR CREDIT DAILY
USE YOUR CREDIT FOR EVERYTHING
DEBT HELPS YOU SCALE
DEBT ALSO MAKES YOU LOOK RESPONSIBLE
Do you have a qualifying credit score above 580? You may be ready to buy a home!
To get approved for a mortgage you not only need a qualifying credit score, but a qualifying debt to income ratio & the funds for your down payment and closing costs
Debt to income is a measure of the amount you have coming in monthly versus the amount of your monthly revolving debts going out
FHA mortgage
Government Backed Loan program traditional promoted to first time home buyers (not only for first time home buyers)
580 or above to get approved- This usually comes with a lower Debt to income ratio allowed if you are under 620 (tighter DTI at 45% or below instead of the normal 57% or below on FHA) – Comes with Private mortgage insurance – Comes with an Up Front Mortgage Insurance Premium rolled into the loan amount. This amount is 1.75% of the purchase price collected by the lender in case the borrower defaults on their mortgage payments
At Rocket! We cannot print your pre-approval until you have presented your income and asset documents if your credit score is under 620
620 or above to print your pre-approval right away - debt to income needs to be at or below 57%
Comes with Private mortgage insurance – Also comes with an Up Front Mortgage Insurance Premium rolled into the loan amount
The Down payment requirement on FHA loans is 3.5% of the purchase or above
This program allows homes that are 1–4-unit properties
VA Mortgage
580 or above
If the qualifying FICO is less than 640 and Loan to Value is over 95%, The debt to income is capped at 45%.
640 or above preferably to take advantage of the %0 down
The property purchased with these loans can be anywhere between 1-4 unit homes (no investment properties)
VA loans offer up to 100% loan to value so you can take advantage of putting 0% down if qualified for this program
We usually prefer to keep the debt to income under 60% but there is no specific debt to income requirement on VA loans
Conventional Mortgage
Not government backed loan
620 or above – usually will not get approved unless you are looking at a large down payment above 20%
680 or above – debt to income or below 47%– if you put 20% down there is no Private Mortgage Insurance and this will drop off at 80% Loan to value
Conventional loans usually provide more competitive offers due to a faster, less involved appraisal process in comparison to FHA or VA loans
Conventional loans require a 3% down payment for first time home buyers and if you already own or have owned in the last 3 years 5% down
You can purchase a Primary Residence, Second home/ Vacation home or an Investment property with these programs
The property purchased with these loans can be anywhere between 1–4-unit homes
“Prepare for a mortgage payment that is just under 1% of the price of the home” – De’Andre Kemp-Jordan my teammate on the pacemakers
Interest Rates
2 Declining Quarters of our Countries GDP determines if we are in a recession
There is a lot of talk on if we are in a recession or headed towards a recession
Why Mortgage Rates Change
You will often see the mortgage interest rates go up and down with the U.S. 10-year Treasury Rate which fluctuates due to three main things:
Sentiment of the economy: When investors feel optimistic about the economy, the 10-year treasury rate generally goes up. When people are feeling cautious, the rate often goes down.
Interest rates: When it comes time to invest, investors might prefer stocks over bonds or vice versa which affects all interest rates – including the 10-year rate.
Inflation: The policies of the U.S. Federal Reserve, or The Fed for short, focus on monetary actions that will help us reach our economic goals as a nation. Treasury rates generally rise when The Fed, the policies of the U.S. Federal Reserve, takes measures to combat inflation like raising their benchmark rate
Discount Points
At a time like this it is very important to know how interest rates will affect your monthly payment and to be in the know on how much you will pay over the life of the loan in interest so you can make the best decision for you and your family
As a buyer you should also be informed on if you are being charged more at closing to secure a specific interest rate by paying for something called “discount points”
1 discount point is equal to 1% of the loan that you as the buyer will be responsible to pay additional in cost at closing
Knowing this information will help you to decide if you would like to invest in discount points to secure a lower monthly payment or if you would like a loan without points to keep the cost at closing as low as possible
Assets
When preparing yourself to buy a home it is important to know how much money you need to save based on the purchase price of the home
As a buyer you are responsible for your down payment and closing costs
It is also common for a seller to ask for an earnest money deposit. This is a deposit made to a seller demonstrating the buyer's good faith in a transaction, securing the home against competing offers for a set period of time.
Earnest money allows the buyer additional time to seeking financing
All funds for closing must be sourced or seasoned for a minimum of 60 days, which means no mattress or shoebox money
You can use funds from a bank account, retirement account, brokerage account and more but you will not be able to provide cash as a source of funds for a down payment
Gift funds
Based on the program and loan type you may be able to use gifted funds from Family
Gift funds can be used for the down payment, including earnest money deposits, and/or for closing costs
Gift funds can also be used to pay off debt to qualify
All gift requirements must be met. Gift funds can be used when the subject property is a primary residence or second home.
If the subject property is an investment property gift funds cannot be used.
Gift funds must come from Family
All the following are considered family members:
Spouse
Domestic partner
Fiancé(e)
Future in-laws
Parent, including step-parent and foster parent
Grandparent, including great grandparent, step-grandparent, and foster grandparent
Grandchild, including great grandchild and step-grandchild
Aunt or uncle, including great aunt or uncle and step-aunt or uncle
Niece or nephew, including step-niece or nephew
Cousin, including step-cousin, adopted cousin
In-laws, includes parents, grandparents, aunt or uncle, brother or sister
Child, including step-child, foster child, adopted child
Sibling, including step-sibling, foster sibling, adopted sibling
Former relative
Godparents
Relative of a domestic partner
Down Payment Assistance and Grants
Different mortgage lenders and brokers have access to different down payment assistance programs and grants
I will share some that I have access to with my company Rocket Mortgage but please do your own research on the state and local level for additional programs.
Inflation buster – 1% lower interest for the entire first year due to a lender paid credit to buy down your rate
This will ensure that you have a lower monthly payment and pay less interest for the first year of your mortgage, after the first year your rate will return to the rate you locked in
Rate Drop Advantage
FOR MORE INFORMATION
WWW.DREAMTEAMHOMESTUDIOS.com
Ready to be Pre-Approved?
https://social.pr/p/rocket-mortgage-purchase/DorianGray/?page=1&order=recent#stories