For Buyers-F1st Step: How Much House Can I Afford?

For first-time home buyers, we help make the lending process understandable and less mysterious. We also direct you if you qualify for first-time home buyer grants or programs.

Find out more: Please click on the following links to found if you qualify for any benefits:

HUD 

You can also check your local county website for more information on first-time home buyer programs and down payment assistance programs.

If you have questions about affordability, credit, legal matters, or income, trust us to find you what you need fast. We make sure you feel confident and educated every step of the way.  

The office of Blocker & Associates (Robbie Blocker/ Broker) has 32 years Real Estate Experience and we are Dual licensed:  

* Real Estate Brokerage firm  

* Mortgage Loan Originator 

* Designated as a Seller Representative Specialist (SRS) 

Finding the right home for you is your primary goal, but enjoying it with a lower payment and better mortgage terms is a very important secondary goal. At Blocker & Associates Real Estate, we're proud to be a full service brokerage that can also assist with all of your financing needs. We'll help you through the entire financing process and ensure that you find the loan and payment that's the best fit for you and your financial picture.

The self–employed borrower – Since the mortgage and housing crisis that began in 2007, it’s become a grueling process for a business owner or self–employed person to get a mortgage. Documentation of income and expenses is much more detailed, and we’re up–to–date on all of it. We’ll steer you toward multiple sources for great mortgages for the self–employed.  

The normal mortgage for working families – Just because there’s nothing special about your income stream, and you’re getting a paycheck every week, that doesn’t mean that there won’t be differences in mortgages and lenders for your needs. Every mortgage broker and most lenders tend to work within their own requirements and procedures, and these may or may not be the friendliest terms for a salaried or hourly wage earner. We know which are going to treat you right and give you the best terms, and we’ll guide you to them.

Less than stellar credit – All types of lenders have become tougher in our new financial environment, and it’s easy to get a ding or two on your credit these days. It doesn’t even take a mistake or late payment, as credit scores are reduced for the amount and ratio of debt, as well as types of debt. Millions of people pay their bills on time and still don’t have those high end credit scores. We know the lenders in the North Texas real estate market ready to provide good mortgages for less than high end credit scores, and we’ll make sure you're treated fairly.

ARMs (Adjustable Rate Mortgage) and When They're Appropriate –  Though most residential home buyers are buying a home they intend to occupy for a number of years, on average around the country at least eight, this isn't always the case.  Also, investors may be looking at a shorter ownership time frame. (ARMs) Adjustable Rate Mortgages, are appropriate if the plan is to own a home seven or fewer years, particularly five or fewer. Because the lender is tying up their money for a shorter defined time period, they loan at lower interest rates. ARMs can result in hundreds of dollars a month in lower payments in some cases. They can also allow a buyer to qualify for a larger home. However, this isn't generally a great practice, as once the ARMs fixed rate interest period is over, rates can escalate more than expected.

Financial Disclosure and Deal-To-Closing Considerations – Especially after the mortgage and housing problems that began in 2007, lenders and their underwriters are scrutinizing financial, income and expense information much more closely than ever before. Be prepared to dig out a lot of documentation, and it’s best to be forthcoming with any financial information that impacts your ability to pay the mortgage payment. Even if it’s not asked for early in the process, be prepared for questions and requests for documents throughout the process. Also, it’s highly recommended that you do not add any credit card or other debt between the purchase contract and the closing.  Just before closing, most lenders will do another credit check and a check for any liens or encumbrances.

Watch the Fees and Question Them –  There are a number of fees associated with getting a mortgage, and the total of origination and other fees is usually the highest closing cost aggregate item in the deal. Never hesitate to ask about all fees, why they’re charged and why they’re a certain amount and how they’re calculated. It’s your money, and you’re the customer.  

 Have you considered a Reverse Mortgage? - If you are at least 62 years old, now you can use FHA's new Reverse Mortgage Purchase Plan to put your equity to work for you and do away with mortgage payments forever! Using the equity in your current home, you can purchase a new home with a down payment between 34% and 48%, depending on your age. There will be no monthly mortgage payments - the loan would be due when you move out permanently, sell the home or pass away. Reverse Mortgages are non-recourse loan - you'll never owe than more what the home is worth. If your heirs choose not to repay the loan and the home is foreclosed, they will not be liable for any deficiency. Using a Reverse Mortgage Purchase Plan is a great way to move closer to your children, find a smaller home with less maintenance, or just be able to have extra money in your pocket every month!

What is TRID?

TRID is the result of the Federal Consumer Financial Protection Bureau’s “Know Before You Owe” initiative in which the agency is trying to make the home buying process easier to understand for consumers as well as making important documents available before the actual closing takes place. TRID is an acronym which stands for the TILA and RESPA Integrated Disclosure Rule. Yes, the government has actually come up with an acronym to replace two acronyms. Thus, first we must explain TILA and RESPA.

TILA stands for the Truth-in-Lending Act. This law regulates all consumer lending, not just real estate finance. For example, if a consumer obtains a credit card, there will be a TIL disclosure issued for the purpose of giving the consumer the “true cost” of borrowing by factoring in borrowing fees into an overall number called the “Annual Percentage Rate” or APR. What is unique about mortgages is that an initial TIL Disclosure is required for mortgages within three business days after submitting an application and a final TIL Disclosure is required at closing. In contrast, you might obtain a credit card the same day you apply for it.

RESPA stands for the Real Estate Settlement Procedure Act. This law specifically focuses upon the regulation of residential real estate transactions. There are many aspects of RESPA, but here we will focus on another required disclosure, the “Good Faith Estimate” of Closing Cost, which also must be issued within three business days of application. RESPA also requires the issuance of a HUD-1, the final closing statement, which some years ago was aligned so that the numbers were synchronized with the initial Good Faith Estimate.

How does TRID change all of this?

The government’s goal is to make the process simpler by integrating the two disclosures into one—both upfront and at closing. Thus, there is a new disclosure required three days from application which is called a Loan Estimate. This new disclosure replaces both the Good Faith Estimate and the Truth-in-Lending Disclosures. At closing, the HUD-1 and final TILA are replaced by the Closing Disclosure.

Though these rules are designed to make the process simpler, in reality the requirements for timing, re-disclosure if changes occur before closing, and making the forms “multi-purpose,” can actually be quite complex. Even the definition of what constitutes a “business” day can be confusing.

What about the timing requirements?

Though there is no change with regard to the timing requirements after application, there are two important timing changes that take place under TRID.

1. The Closing Disclosure must be provided to the consumer three business days before closing.  This means that transaction’s numbers must be finalized well before the settlement date.
2. The Loan Estimate must be issued seven business days before closing. Depending upon weekends and Holidays, this means that most closings must occur at least two weeks after application. In addition, if allowable changes occur, the Loan Estimate must be reissued within three business days and received by the consumer four days prior to loan closing.

What does this mean for homebuyers?

While it makes perfect sense that homebuyers should have access to their closing costs, payments and other final details well before closing, home purchases can often be fluid situations. For example, if someone is purchasing a new home, what if an option is added late in the process which would change the sales price and perhaps the final mortgage amount? Or perhaps a home inspection calls for significant repairs to the property which changes the purchase price.

Above all, this means that everyone involved in the transaction must work together in order to make sure all details are set earlier in the process. All actors must do their part:

• The applicant must get all required documents to their mortgage company promptly and make sure they are complete, legible and accurate.
• The real estate agent(s) must make sure that all contract issues are resolved very early in the process.  Any changes must be communicated promptly as well.
• The title company must provide required information to the mortgage company so that the final numbers can be calculated on a timely basis.
• The mortgage company must process and underwrite the file within a timeframe which will allow the final disclosures to be issued on a timely basis.

What is the consumer’s most effective tool to assure a smooth and timely closing?

The best way a consumer can ensure that the process is smooth and closes on a timely basis is to make sure that they obtain a fully underwritten pre-approval before an offer is submitted on a home. A pre-approval enables the lender’s underwriters to analyze a consumer’s documentation and issue a preapproval subject to an acceptable sales contract, appraisal of the property and locking in a loan program. Basically, there is a must shorter timeline from contract acceptance to closing when a preapproval is issued.

In addition, obtaining a preapproval puts a consumer in prime negotiating position with a seller who may be entertaining multiple offers. This preapproval basically signals to the seller that the prospect is a serious buyer.

What about “back-to-back” closings?

Many times one consumer will be attempting to effect two real estate transactions in one day – selling a home and then purchasing a home. The vast majority of the time, the owner must sell the home first because they need the cash from closing to purchase the second home and typically can’t qualify with both payments. Under TRID, this more complex situation is likely going to be more difficult to coordinate because of the disclosure timing requirements. In these cases it may behoove both the buyer and seller to obtain their mortgage from the same lender so that coordination is more seamless in this regard.

Under TRID, the world of real estate transactions is changing. The purchase of a home is the most important investment for most Americans and certainly a most important lifestyle decision. It is imperative that a potential homebuyer work with a mortgage company armed with the technology and experienced staff to effectively and efficiently comply with the timing requirements of TRID, ensuring a smooth and on-time settlement.

Article Courtesy of Franklin American Mortgage Company