Posts Tagged ‘first time home buyer seattle’

I had an interesting exchange with a buyer who asked how having student loans will effect his ability to qualify for a home loan.  I thought others of you might also benefit from the info, so here was my advice to him:

Having student loans alone does not preclude you from qualifying for a loan.  The problem as you have already figured out is the monthly payment.  How much the bank will allow you to pay monthly for a loan is reduced effectively by how much you are paying into your loans. Your best bet is to talk to a bank and find out the real story for sure. 

Just as an aside, did you see that Obama has hopes of signing into law that student loans will be forgiven in ten years if you are in public service and in 20 years if not?  Just something to think about for the long term.
Overall it sounds to me like have a great income.  You may want to consider renting for a year or two and paying off as much of the loans as you can.  It improves your credit and will allow you to pay less per month. 

When I graduated school I had the same situation.  Here is what I did.  I paid the minimum on the loans and then when I had saved up enough to pay off one of the loans (usually the smallest) I did so.   Then it lowered my monthly.  If you can just do this a few times your monthly starts to drop and gives you more money to save toward the next loan.  In a year or two the monthly goes down, you get a raise or two and viola, now you qualify for a bigger home. 
Just a thought. 

Best of luck,
Rob

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www.robgrahamrealestate.com

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I received this question from a reader of this blog.  

I thought many of you might appreciate reading the response:

Dear XXXXX,

Currently the minimum down payment for an FHA loan is 3.5%

You will also have closing costs including your loan fees, escrow fees, title
fees, prepaid taxes and interest, and recording fees.

Also keep in mind that you will want to have an inspection done on the home and
I highly recommend a sewer scope if you are purchasing a home but not if you
are purchasing a condo.

Here is an estimate of what you can expect to pay for a $300,000 home.

Escrow Fee:  $500-$600
Title Fee: $700-$800
Recording Fees: $100-$150
Inspection: $400
Sewer Scope $200

The fees associated with your bank loan will be the most expensive part of the
closing costs.  It is difficult to estimate what they might be.  Banks vary.
1% of the loan amount is typical for an origination fee, but then there are
other fees associated that you would need to speak to you lender about.

Prepaid Tax and interest is dependent upon when in the month you sign.  You
typically don’t make a mortgage payment the first month after you move but the
interest and taxes still need to be paid at closing for the period before you
first payment.

I hope the info helps.  If you have more specific questions.  Let me know a
little more about your situation and I’ll be glad to see what I can do.

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Rob Graham, Accredited Buyers Representative

Windermere Real Estate

206-321-6349

robgraham@windermere.com

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I was hoping to hold of on writing about this until the details of how this is going to work are official, but I keep getting questions about it, so I thought I would let you know where things stand right now.

The $8,000 tax credit is designed to stimulate home buying for first time home buyers.  First time home buyers typically make up about a quarter to a third of home purchases and represent the segment of home buyers that typically have the least cash to put down on a home.  Because of this the tax credit was introduced to make first time home ownership more affordable for people. 

One of the things that stalled the housing market in recent years is the fact that zero down home loans went away.  Banks were no longer willing to take that risk when they started to see increases in default rates especially among those who used the more risky loan products. 

What Washington State along with many other states are recognizing, is that the more readily available that $8,000 is to first time home buyers, the more it is likely to get used.  Ways to access the credit already include waiting until next year and or having your withholding adjusted this year. 

Now the governor and state senate have agreed that making the tax credit available to help pay for your down payment, is a good idea.  It makes perfect sense.  FHA loans offer the lowest down payment option.  Still you are required to come up with 3.5% of the purchase price to qualify for an FHA loan.  Not many first time home owners can come up with that kind of money.  $8,000 would go a long way to easing that burden. 

As of right now we are not sure how the money will be made available.  The most talked about solution is that banks lending on the home will grant the borrower an additional loan and then  be reimbursed from the government.  The details are still vague, but one thing is clear.  All sides are working hard to make home loans more flexible and affordable for people.  In particular first time home buyers.

Stay tuned.  As the details of this program become clearer, I’ll keep you posed.

Let me know if you need help.  Summer is a great time for home buying.

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Rob Graham, Accredited Buyers Representative

Windermere Real Estate

206-321-6349

robgraham@windermere.com

Popularity: 7% [?]

Everyone knows that you need to do an inspection and in fact frequent readers of mine have read about me insisting that a sewer scope be done as well. 

To find out more about sewer scopes you can read my earlier post. 

The biggest Mistake a Seattle Home Buyer can Make.

Many buyer’s however are not as familiar with these ten things that can make a transaction very hairy. 

1.  Do not spend all of your savings on the down payment and closing costs.  Moving always carries with it extra expenses, not to mention all the cool furniture you will want to buy once you move in.  Keep a decent amount of money in reserve for the first six months after you move.  If you find you have too much left over after that you can always make an additional payment toward your principle. 

2.  Do not use the listing agent to purchase a home.   The listing agent has entered into an agreement with the seller to represent their best interests.  By agreeing to work with you and the seller at the same time, a situation is created where the agent gets paid double but honestly is not able to fully represent either the buyer or seller’s interests.  It is called dual agency and while it is a great payday for the agent and perfectly legal, it results in you getting less then great representation most of the time.  Since using a buyer’s agent isn’t going to cost you anything anyway, why not have your own agent negotiating on your behalf?

3. Have your agent do a walk through of the home prior to the day of closing.  The standard purchase and sale agreement allows for the buyer’s representative to do a walk through and visual inspection of the home prior to closing.  Most agents do not perform this service, but it is a big deal.   The walk through is to ensure that the owner’s possessions are completely removed and the home is in swept clean condition.  There is nothing that ruins moving day more then getting the keys for you new home and finding boxes and boxes of the previous owners junk still in the home.  Once the house closes that junk becomes your problem.  If it is discovered prior to closing, the closing can be delayed until the previous owner removes the items. 

4. Get everything in writing.  This one sounds like a no brainer, but it bears repeating.  Don’t assume that nice second fridge or big screen TV is included in the sale if it isn’t in the contract.  Even if you have gotten verbal confirmation that certain items will stay, if they are not attached to the property, you better get it in writing.  Otherwise the seller can take them with them and you will have not have any recourse.

5.  Visit the home more then once. It never ceases to amaze me that people make such an enormous emotional and financial decision, without visiting the home more then once.  I recommend, you visit during the weekday and also on the weekend.  It is also a good idea to visit the home in the daylight and also at night to see what the difference is. 

6.  Shop your loan.  I know people who will go to 10 stores before they buy a TV, but to only one bank for a $400,000 mortgage.  Banks do differ.  Once you know what you qualify for from one bank, see if you can’t beat that offer.  Good clients are in short supply and if you tell a bank you already have one pre-approval and that if they beat it they can have your business, they will jump through hoops to try to find you a better deal.  Banks jumping through hoops for you is a good thing.

7.  Schedule the closing for the early part of the month but not before the 5th.  You have to trust me on this one.  Banks will give you amnesty for the first month’s mortgage payment.  Obviously you want to have the longest possible period of time before your first payment.  If you close on the 6th of May for example, you will not have a payment in June.  Your first payment will be due July 1.  If however you close on May 4th, your first payment will be due on June 1st.  So do yourself a favor and close between the 5th and the 15th or so and save yourself a months payment.

8.  Never use an agent you can not meet face to face.  I love the internet (obviously), but I would never use a real estate or mortgage agent I can not reach by cell phone and meet in person.  It is criminal how many transactions go bad because some fly by night company offered some phenomenal deal to a client and then can’t be located when a problem comes up.  Fortunately the recent downturn has run many of the cheap skate agents out of the business, but they are still out there.  Be careful and work with a reputable agent you can see and get a hold of.

9.  Drive your commute.  Sure it was a snap getting to the house during the Sunday Open House and on the following Saturday when you brought your folks by with your agent, but what is the drive like on Friday at 5 PM?   How long will it take you to get to work if there is construction on the bridges or a Mariner’s game?   Make the drive to and from work during the time you will normally be driving.  That way there are no surprises when you move in.

10.  Always get the ALTA Homeowner’s title Insurance.  When you purchase a home the seller is going to pay for a title insurance policy for you to cover you in case there is a claim against title in the future.  There are three different kinds or levels of insurance.  Obviously the seller would prefer to get you the cheapest kind with the least amount of coverage, but don’t fall for it.  The cost between decent and good coverage is negligible and I have never seen or heard of a transaction being held up because the buyer insisted on a better title insurance policy.  The ALTA policy is pretty standard across the industry and is the coverage you want for the vast majority of residential transactions.

So there you have it.  10 very simple and very common mistakes made by buyers and bad agents. 

Give me a call if you need help.   I’d love to be your agent.

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Rob Graham, Accredited Buyers Representative

Windermere Real Estate

206-321-6349

robgraham@windermere.com

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