12 Month Future Home Buyers Preparation Guideline

Buying a home is a big step – one that should be carefully planned out and prepared for. Ideally you should start preparing yourself and your finances for the purchase about one year in advance. This is the first part in an article series designed to give you a rough home buying preparation timeline. We will first take a look at the things that need to be done the twelve to six months before you plan to buy a home.

The Twelve to Six Month Countdown List

At this point, you know your goal is to buy a home. Now you need to figure out what it is going to take to do so. There are three basic things that mortgage lenders base your mortgage acceptance on: your credit score and history, your debt-to-income ratio, and your assets.

Credit

Your credit report is a highly influential document these days. Lenders use it as a reflection of your responsibility with credit sources. They also use your credit score as a gauge of how much risk there are assuming by lending you money. In fact, the interest rate that they will offer you on a mortgage is often directly related to your credit score - the higher your score, the better your rate. So your task is to start now to make your credit score as attractive as possible to lenders. It generally takes at least six months for any credit practice improvements to be reflected in your score, so don’t delay! 

First, pull a copy of your credit report and score from one or all of the three major credit reporting agencies, TransUnion, Equifax, and Experian. With your report in hand, scan the document for any blatant errors. Be sure to report these immediately to the credit bureaus to have the information corrected. Next look for reasons by your credit score may be lower than you want. Once you have identified problems areas in your credit habits, it’s time to go to work! The most important factors in improving your credit score include making very punctual payments on all your credit accounts (you may want to consider setting up automatic bill payments) and lowering the balances on all your credit accounts. During the next year you should also steer clear of opening or closing credit accounts, as this will generally bring down your score.

Debt-to-Income Ratio

Your income is an important factor in obtaining a home loan. Lenders want to make sure you have a stable, sufficient income to be able to support the mortgage payments. Beyond simply determining your income, lenders will want to know how you are using your income to see whether you could afford the loan. Mortgage lenders often use the 28/36 rule in determining whether or not you qualify for a loan. The 28 part of the ratio means lenders like to see that your total monthly debts are equal to or less than 28 percent of your monthly income. Those debts would include credit card payments, student loans, car payments, etc. The 36 in the ratio means that lenders prefer that your total debts plus your mortgage payment will not exceed 36 percent of your monthly income. Some lenders will be more lenient on these percentages, but they are a good rule of thumb. Starting a year before you want to buy, you should evaluate your debt and make a plan for reducing it to within the 28/26 ratio. Reducing your debt will also improve your credit score!

Assets

A third factor lenders will use in determining your eligibility for a home loan is your assets. This next year should be a year of saving. Not only do you need to save as much as possible for a good down payment, but you also have to be prepared to pay for the loan closing costs (which could run anywhere from several hundred to a few thousand dollars.) Once you actually get into a home, there will be plenty of expenses related to the upkeep of the house. Plus some lenders may even require that you have a couple mortgage payments’ worth of money saved away in order to avoid default for awhile if you have some sort of financial crisis or emergency.

In the next part of this series we will outline the important preparation steps to take during the three to six months before you buy a home.

There are many things that need to be done in order to feel confident on the day your home loan closes. The first part of this article detailed the issues to be dealt with during the six to twelve months before you buy, including improving your credit score, reducing your debt-to-income ratio, and saving for all the necessary fees. This portion will help you figure out the important steps you need to during the three to six months before you plan on buying a home.

THE SIX TO THREE MONTH COUNTDOWN LIST

Determine Your Price Range

Now is the time to start figuring out just how much house you can afford to buy. While it is great to fantasize about the size and layout of your dream house, you have to determine how much of that dream house can fit into your budget. You should realize that some lenders may be willing to qualify you for a bigger loan than you can truly afford. It is up to you to decide on your financial limits. You may want to use the 28/36 ratio discussed in the last article to calculate how much your monthly mortgage payment should comfortably be. Basically, your mortgage payment plus all your monthly debts combined should be no more than 36 percent of your monthly income. So for example, you earn $5,000 per month. Your monthly debts total $700. Thirty-six percent of $5,000 equals $1800. Subtract your monthly debts ($700) from that total and you have room in your budget for a $1100 monthly mortgage payment. Don’t worry; if all this seems to confusing, almost any mortgage lender’s website provides a handy calculator that will do the calculations for you.

Plan for Home-owning Costs

You started your home buying savings plan several months ago, but now you need to calculate just how much it is going to cost to remain a homeowner. Find out how much you will have to pay for property taxes and homeowners insurance. You should also take into account the fact that if you are planning to move into a bigger place, your utility bills will likely be larger as well. You should also plan into your budget and savings plan for various home repairs that will need to be taken care of. Once you figure out the total amount for all these expenses you will have a better idea of what it will cost to maintain your home.

Research the Loan Programs Available

Finally, this is also the time to start studying your options in terms of the various loan products available. These days there are 4 different loan options available to borrowers as far at the program type:

FHA Mortgage: A government backed program that requires 3.5% down payment.

Conventional Mortgage “Fannie Mae/ Freddie Mac Loan” : Require as little as 5% down.

USDA Home Loan “RD Loan” : A loan option that doesn’t require any down payment, but has restrictions on max income and property location.

VA Home Loan: Offers up to a 100% financing, but requires the borrower to be veteran or active duty military.  

Research the differences between fixed rate loans and adjustable rate mortgages. List the pros and cons of each type of loan for your situation. After you understand the basics you can dive into more specific programs. You can consider the choice between a 30-year, 15-year, or even 20-year fixed rate loan. Or you may find that you favor a Adjustable Rate Mortgage “ARM”. Once you have discovered your preferences you will be prepared for the next stage of preparation: shopping around for a mortgage.

In the next part in this series wet will give you a run-down of the things that you need to do two months ahead to the time the mortgage loan closes.

 THE FINAL THREE MONTHS COUNTDOWN LIST

The final part of this article will walk you through a outline the important tasks to be done starting from three months until you plan to

Review Credit

We have already discussed how important your credit report and score are in obtaining a mortgage loan, so now is a great time to recheck your credit and look again for errors that could be corrected before you apply for a home loan. You should also try to find ways to decrease the balances on your existing credit accounts as this will help beef up your score before application time. Of course, continuing to make timely payments during this period is essential to maintaining your credit score, so make sure you stay current in all your accounts.

Another word of caution: do not open or close any credit accounts from this point forward until your mortgage closes. Opening more accounts make it look as if you are desperate for more credit sources, while closing accounts might increase your debt-to-available credit ratio, both of which may pull your credit score down. Don’t do it!

Shop for the Best Lender and the Best Rate

Now is the right time to start shopping around for the right mortgage lender with the right deal. Be sure to research what the current average interest rates are for people with credit scores like yours. Then get quotes from several different lenders and compare the interest rates and fess offered. It is often more helpful to compare loans based on the annual percentage rate (APR) rather than simply on the interest rate because the APR takes into account closing costs, points, and other fees. It is a more accurate reflection of the true cost of the loan.

Get Pre-approved

Once you have found a trustworthy mortgage lender who has offered you good terms on a home loan, you should ask for a letter of pre-approval. This means that the lender has sat down and thoroughly reviewed your income, debts, and assets and is willing to promise you funding up to a certain amount. You can bring this letter with you as you shop for homes. Sellers and real estate agents like pre-approved buyers because they know they are serious and have the funding to make good on their offer.

Shop for a Home

Now comes the exciting step of selecting the right house for your needs. You may want to enlist the services of a real estate agent to help you find the right neighborhood and the home with all the features you are looking for. Once you have located the perfect house, you can place your bid with confidence and proceed on to the loan application process if your offer is accepted. Having done all your homework and carefully prepared for this end goal will make for a much less stressful purchase process!

About the Author:  

ZFG Mortgage headquarter in Tulsa, Oklahoma is the #1 rated mortgage lender in Oklahoma.At ZFG Mortgage we pride our selves in offering the lowest mortgage rates at the lowest closing costs.  We have & A+ Rated rating with the Better Business Bureau & have been nominated & won numerous awards like the BBB Torch awards and the BBB Honor Roll for NO complaints in the last 3 years! If you are need of a Home loan in Oklahoma, then go with the lender you can trust. Apply online or call 1-877-205-7266 for Free Rate quote or Pre-Approval.

ZFG Mortgage

6670 S Lewis Ave #200

Tulsa, OK 74136

(P) 918-459-6530

(F) 918-459-6535

(Toll Free)  1-877-205-7266

http://www.ZFGMortgage.com

Common First-Time Home Buyer Mortgage Questions

If you are considering your first home purchase, you probably have lots of questions. There are many issues to consider and many confusing terms that you will hear as you start the home-buying process. The following are some of the more common questions that first-time home buyers have about mortgages and they may help you in your quest for homeownership.

How much money will I have to pay upfront to buy a home?

The answer to this question is not a simple, one-size-fits-all answer. The exact amount will depend on the price of the home you buy as well the type of mortgage financing you choose. The basic costs for any home loan though will include the down payment and the closing costs. Depending on your loan program, your down payment could be as much as 20% of the home's price, although there are loans available that require as little as 3.5%-5%, and even some loans that will let you get by with no down payment at all. Closing costs account for all the fees associated with processing your loan. These include lender fees, appraisal, inspection fees, title feess, lawyer fees, insurance, and points. The typical range for closing costs is between 3% and 6% of the loan value. So if you are buying a $150,000 home, your down payment could be anywhere from $0 to 30,000 and your closing costs would likely be between $3,500 and $4,500.

Can I buy a home if I do not have money for a down payment?

The answer is yes! In addition to no down payment loans, you can also try getting a government insured loan like an FHA mortgage where you can have down payment funds gifted to you. You can either arrange for the home seller to cover the down payment costs, or you can contact one of several non-profit organizations designed to grant down payment money to first-time home buyers. And don't despair if you have little or no money for closing costs either. There are gift programs available for closing costs as well. Another great option is the 100% USDA mortgage. A USDA Loan is a mortgage loan that is insured by the US Department of Agriculture and available to qualified individuals who are purchasing a home in an area that is not considered a major metropolitan area by USDA. In most city many suburban areas are considered rural so many buyers use this loan if they do not have a down payments.

Will I qualify for a home mortgage loan?

The only way to determine the answer is to do some research. You need to have some important figures handy. You need to know your annual income, your annual or monthly debt payments, and an idea about what your credit score is. (You can obtain a free copy of your credit report once a year from any of the three credit reporting agencies.) Lenders are able to work with a variety of financial situations, but they will definitely want to see that you have income sufficient to afford a monthly mortgage payment and that your current debt will not be so big of a burden that it keeps you from making those payments. They will also expect that you have a credit score between a certain range. There are lenders who will loan you money no matter what your score is, but basically, the better your score, the better the loan and interest rate you will receive.

Your approval for a loan may also largely depend on the price of the home you are buying. You may be able to qualify for funding, but just not for the amount you are seeking. You may have to start with a smaller or cheaper home to get a loan.

There are many, many more questions involved in making your first home purchase, but answering these basics will help point you in the right direction. Be sure to counsel with your financial advisor or a mortgage professional to determine all the specifics for your situation.

ZFG Mortgage headquarter in Tulsa, Oklahoma is the #1 rated mortgage lender in Oklahoma.At ZFG Mortgage we pride our selves in offering the lowest mortgage rates at the lowest closing costs.  We have & A+ Rated rating with the Better Business Bureau & have been nominated & won numerous awards like the BBB Torch awards and the BBB Honor Roll for NO complaints in the last 3 years! If you are need of a Home loan in Oklahoma, then go with the lender you can trust. Apply online or call for Free Rate quote or Pre-Approval.

ZFG Mortgage
6670 S Lewis Ave #200
Tulsa, OK 74136
(P) 918-459-6530
(F) 918-459-6535
(Toll Free)  1-877-205-7266

http://www.zfgmortgage.com

The Ultimate Spring 2011 Home Buyers' Guide

According to recent USnews article uncertainty remains in the market, but experts say purchasing a home is still a good long-term investment

Traditionally, spring is when prospective home buyers come out of hibernation and begin the hunt for their next residence. But with the economy still in flux, budget battles raging in Washington, and a housing market on shaky ground, many house hunters are wondering whether it's the right time to buy.

The wild card remains home prices, which are still down 31 percent from their pre-recession peak in July 2006, according to the S&P/Case-Shiller Home Price Index. While some experts see another wave of foreclosures further depressing home values regionally, others say the worst of the housing slump is over. "I'm hopeful the spring will be better because the job market is improving," says Celia Chen, senior director at Moody's Analytics, who expects housing prices to bottom nationally by the third quarter.

Despite the uncertainty surrounding the housing market, experts say for Americans poised to plant roots, the market climate can't get much better. "Confidence is building, prices are down, interest rates are wonderful for a 30-year fixed rate mortgage. It's a good time to borrow money," says Dorcas Helfant-Browning, managing partner at Coldwell Banker Professional Realtors.

To help consumers sort through the pros and cons of buying this spring, U.S. News gathered house-hunting advice from the experts:
Get qualified and determine your budget. Interest rates on 30-year fixed-rate mortgages are at historic lows—about 4.69 percent, on average, nationally—but experts concede that qualifying for a mortgage this spring might be more challenging than it has been in the past. "The big constraint on [housing] demand this year is going to be the availability of mortgages," says Chen. "Lenders are still being very cautious."

Although there are signs that the credit markets may be loosening a bit, even some of the most credit-worthy consumers may still be unable to snag the best interest rates on mortgages. Consumers with lower credit scores could also face higher down payment requirements, says Keith Gumbinger, vice president of mortgage information website HSH.com. "You'll need good credit to get the best pricing," he says. "We're talking about a FICO 740 or above for the best possible pricing."
Would-be home buyers must jump through additional hoops, as lenders are demanding more financial documentation from applicants. "You need to be able to fully document your income and all your assets," Gumbinger says. "Your debt loads relative to your income need to be pretty low. You can't have the leverage you used to be allowed several years ago."
Despite these obstacles, qualifying for a mortgage is an essential step, says Diann Patton, Coldwell Banker Real Estate consumer specialist. "Too many people put the cart before the horse," Patton says. "It's so important to know exactly what you qualify for and have that pre-approval letter in hand before you even look at houses."
Knowing how much you can borrow to finance a home purchase is important, but it shouldn't be the only consideration when looking at your budget. "Look at what you qualify for and then what you really want to have as excess capital," says Helfant-Browning. "Provide yourself a savings plan, an entertainment fund, and give yourself a little cushion. Don't buy at the top of what you qualify for, but what's comfortable, so you can do all the other things in life you wish to do."

Think local, not national. Don't let national headlines about plummeting home values or foreclosure trends spook you, says Patton. "Real estate is not global, it's local," she says. "I could sit and talk to people from Wisconsin or New York or Manhattan, [and] their market could be 180 degrees different from my own market."
Over the next year, experts say the trajectory of home prices will vary widely from region to region, state to state, and even city to city. For example, home values in Minneapolis are expected to increase 21 percent by 2018, while prices in Austin, Texas, are projected to rise only 8 percent, according to Moody's Economy.com.
Prospective home buyers should pay extra attention to the local economy and job market when thinking about purchasing a home. "You need to look at the long-term economic prospects for your area. Not even just the housing market—what does job growth look like projected out? What does the population growth look like?" says Tara-Nicholle Nelson, a consumer educator for Trulia.com.

In general, markets with a diverse and varied economy are more likely to see the job and population growth that fuels home-value appreciation over the long term. "Places where you see big companies moving and creating a lot of jobs, that's where you want to be. It maximizes the resale prospects for your home," she adds.
Do your homework. With so many resources available for house hunters, it's easy to get overwhelmed by an avalanche of information. Start by using online research tools such as Zillow, Realtor.com, and Trulia to get a broad sense of your market. Consider hiring a real estate agent with expert knowledge of the local community, but don't be afraid to get your hands dirty.
"People should get more assertive about the DIY research and preparation they want to do," Nelson says. "We're seeing regular home buyers with spreadsheets. It's not that they're not looking to their professionals for advice, they just want to make sure they feel comfortable with it on their own."
After looking at the big picture, drill down to more specific metrics by neighborhood, such as how long a home has been on the market, list-price to sell-price ratios of comparable properties, and the percentage of listings in a given market with price reductions.
Although it's advantageous to have a good feel for your housing market, the decision should correlate more with your personal goals than any national trends or local statistics. "You have to make your real estate decisions and decide on your strategy based on your personal life and family vision more than anything that's going on in the market," Nelson says.
Plan to stay put. During the housing boom, homeowners were virtually guaranteed to make money or at least break even on their homes, regardless of how long they owned the property. But the luxury of rapid price appreciation is another casualty of the financial crisis and housing market collapse. These days, would-be home buyers should avoid purchasing a home unless they plan to stick around for at least five years.

"People need to buy today because they're buying the family home," says Helfant-Browning. "This is not buying an investment you're going to live in for a year and flip. People need to be in five, seven, or eight years to break even."
That length of time could be even longer in particularly hard-hit markets, Nelson says. "It used to be you could count on whenever you bought [a home], you'd be able to turn it around at, or more than, what you paid for it," she says. "Now, the more hard-hit your market has been by the real estate recession, the longer you should be comfortable staying put. The most powerful thing you can do to avoid locking in losses on your home is to plan to stay in it a long time."

Home prices are expected to appreciate slower than they have in the past, so the direction of your career—and the location you think you'll ultimately end up—are important factors in deciding whether to buy. "We've seen a lot of people struggling with mobility concerns around careers right now," Nelson says. "You really want to know what your career path and trajectory is going to look like for the next five, seven, 10 years, and if you're feeling like you need to be able to move around the country for work, then buying now is not the right idea."

While the housing market might look gloomy 10,000 feet up, experts say the financial advantages of home ownership still remain. "If you're going to pay to live in something every month, why not own it?" Helfant-Browning says. "By getting a 30-year fixed-rate mortgage, 10 years from now when the rents in the community are usually going to be substantially higher, the only thing that will change for you is your home owner's insurance and your real estate tax."

For more information regarding a Oklahoma Mortgage or to Apply online for “Free” Pre-Approval
Log on to our website http://www.zfgmortgage.com
Or Call 918-459-6530