Thursday, May 5, 2011

First Time Home Buyer Loan Availability

Today we are discussing the availability of loans for first time home buyers with Joe Iaccheri from Regent Financial Group in Omaha, NE. First time home buyers are the biggest group of buyers in the market.

The most commonly used loan for first time home buyers is the FHA Loan, (Federal Housing Administration). The FHA loan has more leniency is some areas where first time home buyers are concerned. These areas are Total Debt Ratio, Credit Score and Available Reserves which make this loan easier to qualify for. Mortgage Insurance is also now built into the FHA loans where before you would have had to carry PMI or Private Mortgage Insurance on your first home. This Mortgage Insurance insures the money on the behalf of the lender. As of April 18, 2011, The government has increased Private Mortgage Insurance.

5% Conventional Loans are great for people with rock star credit. You will need to have a very high credit score and good reserves. Most Private Mortgage Insurance companies do not like to insure 5% Conventional loans for people. They would rather flip you to a 10% Conventional loan or to an FHA loan and be able to carry Private Mortgage Insurance. With just a 5% down payment, you are considered more of a risk by the bank rather than if you were to put 10% down.

Get your credit cleaned up.

Be prepared for extra paperwork.

The national average is 45 days for closing of loans.

Call Joe Iacherri at Regent Financial today!

Peg Maloney
Re/Max Real Estate Group