Are First Time Home Buyer Mortgage Programs Ending Soon?

For first time home buyers in New Jersey and many other states, the first time home buyer tax credit not only gave some incentive to purchase a home, but it also gave them the availability to purchase homes they otherwise could not have qualified for. Let me explain.

Most states, if not all, have first time home buyer mortgage financing programs. In New Jersey, we have the New Jersey Housing and Mortgage Finance Agency (NJHMFA) that offers first time buyer grants, first time buyer mortgages, and a handful of other great options. In Pennsylvania, there is PHFA.

Many of these finance agencies made available a way to utilize the federal first time home buyer tax credit to buy a home. I'm not talking about settling on a home and getting the tax credit sooner through a revision of 2009 tax returns. I'm talking truly using the federal tax credit money for a down payment and/or closing costs. In New Jersey this is known as the Tax Credit Loan Program, or The "Prefund" Program.

There are several benefits to this program that make it a great option.

1. The interest rate on this program is lower than a first time home buyer program that has a grant program tied to it (Such as the Smart Start program offered by the same agency).
2. The Tax Prefund Program is not restricted to certain geographical areas like some other first time home buyer programs are.
3. Because the interest rate is lower, it allows borrowers to qualify in situations were approval is marginal. The difference in rate from one program versus the other could be as high as .75%. This changes a buyer's debt ratio and can allow for an approval when a buyer's profile is not perfect.

For some first time buyers who's price range is near the lower end of the market, these seemingly small differences make a huge difference to their buying power and loan approval. In 3 of the 4 transactions I personally have originated using this program, these differences were enough to allow for approval. That's three extra buyers this market may otherwise have not seen! That is GREAT news for them!!

Some first time home buyers who wait will be losing a lot more than just $8,000 when the tax credit expires; They will be losing their current oppurtunity to purchase a home.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

      

Treasury Mortgage - 550 Bridgeton Pike, Mantua, NJ 08051 - 1810 Springdale Road, Cherry Hill, NJ 08003

Licensed by the NJ Department of Banking and Insurance

Gloucester County, NJ First Time Home Buyer Series: Mortgage Programs (Part 3)

So maybe you've taken the jump to get pre-approved and have done your homework to understand your credit score information. Now when it comes to financing your new home, which mortgage option is the best for you? Understanding mortgage programs can be both simple or complex, depending on your needs.

Conventional Mortgages, FHA Mortgages, USDA (100%) mortgages, and VA mortgages are all available for both first time buyers as well as homeowners relocating.  Below is a short comparison of these options. We will also discuss first time home buyer loans below.

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The scope of this article is to further discuss first time home buyer options. The loan options mentioned above are listed only to make reference to, as each of the options above is available within the options listed below. It may sound a bit confusing, but with the help of an experienced mortgage advisor it will all come together.

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NJ First Time Home Buyer Options

As a first time home buyer in NJ, you have several options and angles to purchase a home. We will briefly review several of the current options available. (Aside - A first time home buyer is considered someone who hasn't owned a home in the last 3 years).

NJHMFA

The New Jersey Housing and Mortgage Finance Agency has several options for first time home buyers. These options are obtained by working with an approved HMFA lender, such as Treasury Mortgage (A division of Aurora Financial Group). Some confusion exists because the majority of mortgage lenders in business DO NOT have access to these loans. "Big Name" national lenders and mortgage brokers do not have access to NJHMFA options. Even most direct lenders or "correspondent lenders" do not have access either. 

Smart Start Grant Program

This popular option is a mortgage program with a grant option. You may obtain a grant of up to 4% of the loan amount used to finance your new home. For example, if you are buying a home and financing $100,000, a grant of up to $4,000 can be utilized. The most common use of this grant is to satisfy the FHA requirements of a 3.5% down payment (see above chart). In this case, the grant covers the down payment requirement, as well as come of the closing costs. (To see other ways to use your first time buyer options to cover a down payment, closing costs, and more check out Understanding and Using All of Your First Time Home Buyer Options.

Prefund Mortgage Program

A more recent and great addition to the NJHMFA mortgage options list is the Tax Credit Prefund Mortgage Option. This program allows $5,000 of the current federal tax credit (up to $8,000) to be prefunded and used for a down payment and/or closing costs. The benefit of this program over the Smart Start Grant option mentioned above is that the interest rate is .75% lower. For a home purchase price of around $150,000 or less, or for a situation where a buyer doesn't need a full 4% and would only benefit from having a "little" help, this option works very well.

A little more info: These programs have income limitations, but are quite high for many counties. They require a bit more paperwork than other options, but certainly can be worth the extra homework.

County Grants 

Many New Jersey counties have their own grant options for first time home buyers. Grant options vary greatly from several $1,000 to $10,000 or more. These options also usually have income limits. For instance Gloucester County has an income limitation for single buyers that is in the $40k's.

Some counties require no special education on the buyer's behalf, and some require several months of education along with a monetary investment. This article does not have the space to go into multiple county options, but here is something you want to keep in mind; Work with a lender that can help you understand how to incorporate several options together when you purchase your home. The link to the article above explains how a NJ first time home buyer can utilize a grant program, seller concessions, the tax credit and more, all at once!!

What to do now ...

There are MANY home buying and mortgage options out there. The most important thing to do is find a lender (mortgage advisor) to work with that understands ALL of these options. DO NOT settle for just anyone. Secondly, educate yourself as much as you can. Even the brightest and most experienced loan officers can benefit from an educated buyer bringing thoughts and options to the table that the buyer may have not brought up otherwise.

Look out for additional articles in this NJ First Time Home Buyer Series.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

      

Treasury Mortgage - 550 Bridgeton Pike, Mantua, NJ 08051 - 1810 Springdale Road, Cherry Hill, NJ 08003

Licensed by the NJ Department of Banking and Insurance

Gloucester County, NJ First Time Home Buyer Series: Understand Your Credit Score

If you are a first time home buyer,you have no doubt come across the fact that your credit score is one of the most important factors regarding your mortgage options. With the way this country revolves around money and finances, you would think that understanding the credit scoring model would be required education. Instead year-after-year we see the same ignorance towards credit.

The basics for credit need to be understood by all. Even those with great credit scores need some background on understanding the credit scoring model.

Mortgage programs in relation to credit scores.

Credit scores range from 350 - 850. The higher the credit score the better. The majority of mortgage programs today require a score of  620 or better. Some mortgage programs will allow scores below a 620 credit score, but these are limited and may not be the programs you need. Ideally you want as many options as possible, and the higher the credit score the more mortgage options you will have.

Credit scores do not always relate to lower or higher interest rates. For instance, if you choose to use an FHA mortgage to buy a home, the rate will be the same if you have a 720 or an 820 credit score. Most lenders will also give you the same or very close rate with a 620 credit score.

A conventional loan on the other hand requires more money down, has stricter guidelines, and has several price and/or rate increases depending on the credit score. A low credit score when utilizing a conventional loan can very quickly become expensive because of increased rates and costs. That is if you can even utilize a conventional loan. Many people are currently priced out of the "conventional loan" market due to their credit scores.

Mortgage insuranceis another credit related mortgage necessity. Mortgage insurance is required on a conventional loan with less than 20% down payment, and depending on one's credit score, even though a conventional loan may be a possible option, if there is no mortgage insurance company that will offer you insurance coverage because of a lower credit score, you can not use a conventional loan. Credit scores really can rule the day.

The good thing is that FHA loans are often there to save the day and offer great rates and low fees.

Education IS the key (to home ownership)

Now that we understand some of the ways that a credit score can determine what options are available for mortgage financing, it is now up to you to take about an hour to read up on the credit scoring model and how to obtain and maintain a great credit score.

Don't leave this important aspect of your life a mystery. A few minutes of education here will serve your life finances well, and long term will save you thousands and make a big difference in your life and the life of your family.

Additional articles for a better understanding of credit scores and the credit scoring model

• Credit Scoring - What Makes Up My Credit Score? (1 of 6)
• Credit Scoring - Payment History (2 of 6)
• Credit Scoring - Balances (3 of 6)
• Credit Scoring - History (4 of 6)
• Credit Scoring - Mix of Accounts (5 of 6)
• Credit Scoring - Inquiries (6 of 6) 

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

      

Treasury Mortgage - 550 Bridgeton Pike, Mantua, NJ 08051 - 1810 Springdale Road, Cherry Hill, NJ 08003

Licensed by the NJ Department of Banking and Insurance

Gloucester County, NJ First Time Home Buyer Series: Get Pre-Approved!

The first and most important part of being a first time home buyer is to get your ducks in order from the beginning, and that is by getting pre-approved before doing anything else. Getting a knowledgeable loan officer to pre-approve you shouldn't take long. The initial conversation only takes about 10 - 15 minutes. Expect your loan officer to take 24-48 hours to complete a pre-approval. Some situations require (literally) hours of a loan officer's time to complete a pre-approval.

It is important that you are clear, honest, and don't hide anything regarding your income, assets, credit, or anything else regarding your finances. Keep in mind that the loan officer is your friend. Your loan officer does not ultimately approve your loan and offer a commitment to lend you the money. An underwriter does that. The loan officer is there to help you structure your loan; To create the best financing for your situation, to make you aware of your options, and to help you navigate together to settlement.

Be forewarned: Going onto a website and plugging in your income, assets, and some other minor info is NOT the same as having a conversation with a knowledgeable loan officer. Completing a form like this on the Internet may be what some consider a pre-qualification. This is typically a worthless analysis and has only very minor helpfulness for you in determining your potential approval.

A pre-approval will help you with;

• Knowing what you can afford/estimated payments
• Knowing how much money you will need to complete the transaction
• What terms you should negotiate when making an offer on a home
• What time frame you will need to consider as some loan options take longer to complete

A pre-approval should't cost you anything upfront. However, expect to start paying fees once your loan has to be processed.

Your initial mortgage pre-approval conversation will cover your income, assets, credit, work history, and of course what you are looking to accomplish as a first time home buyer. Once you speak with your lender you should start to gather the necessary documentation needed for your approval. A loan officer may issue you a pre-approval without reviewing your documents, however you run the risk of wasting time and money if anything different or out of the ordinary comes up after a review of the supporting documentation.

Basic documents needed

• Pay stubs for the last 30 days
• Asset statements for the last 2 months (Checking, savings, retirement accounts, etc.)
• W2's for the last 2 years
• Photo I.D.

Other documents that may be needed:

• Tax returns (personal / business)
• Divorce/Child Support/Alimony documentation
• Letter(s) of explanation regarding derogatory items on your credit
• Loan specific mortgage documents
• Profit and loss statement(s)
• Collection/judgment payoffs/verification
• Other forms for verification of data pertinent to your approval

Documents needed once you find a home and an offer is accepted

• Signed mortgage application
• Signed agreement of sale (by both parties)
• Appraisal fee ($300-400, varies by appraisal type)
• Pest Inspection, well certification, septic tests, and other supporting documents
• Other documentation on the home and/or your personal finances

Your pre-approval should be updated once a home is found that you would like to put an offer in on. Keep in mind that credit reports are only valid for about 120 days. If it takes you a few months to find a home, your credit will need to be pulled again to allow it to be valid through the settlement date. Therefore, be very careful to do everything possible to keep your credit score as high as possible. A good loan officer will give you sound advice on credit scoring, but BE SURE to know the rules for yourself. This can not be overstated.

Lastly, a pre-approval is based on a monthly payment, not just a purchase price. So a cheaper home with higher taxes doesn't guarantee that you will qualify. This will have to be reviewed by your loan officer, so keep in constant contact with your loan officer to ensure your success.

Be sure to visit the next installment in the Gloucester County, NJ First Time Home Buyer Series.

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

      

Treasury Mortgage - 550 Bridgeton Pike, Mantua, NJ 08051 - 1810 Springdale Road, Cherry Hill, NJ 08003

Licensed by the NJ Department of Banking and Insurance

Gloucester County, NJ First Time Home Buyer Guide Series

Buying your first home is one of the most memorable moments you will ever have. It is an exciting, scary, thrilling, and rewarding experience rapped into one big ball. It is a new experience, and a huge decision. With some education and effort, you can help to make the process a sound, rewarding experience that is successful!

Some of the topics you will want to educate yourself on are;

• Real estate terms
• Credit scoring information
• Mortgages, working with a lender,
• Working with a real estate agent
• First time home buyer grants
• The home buying process
• Costs, fees, and requirements
• First time buyer tax credit (Up to $8,000)
• Helpful tips and pitfalls to avoid

In the coming series we will discuss these topics and more in a (somewhat) concise format that will give you a broad foundation to move forward in confidence as a first time home buyer.

1 - Gloucester County, NJ First Time Home Buyer Series: Get Pre-Approved!

2 - Gloucester County, NJ First Time Home Buyer Series: Understand Your Credit Score

3 - Gloucester County, NJ First Time Home Buyer Series: Mortgage Programs

4 - Gloucester County, NJ First Time Home Buyer Series: Home Buyer Timeline

5 - WORKING WITH A REALTOR

Steve Kappre is a Mortgage Planner with Treasury Mortgage. Steve specializes in;

• All areas concerning NJ First-Time Home Buyer Mortgages, grants, down payment assistance, tax credits, and more.

• Reverse Mortgages

• Equity Management strategies for high-end homes and high net worth individuals.

Contact Steve Kappre directly at 856-419-3561 or at www.stevekappre.com

      

Treasury Mortgage - 550 Bridgeton Pike, Mantua, NJ 08051 - 1810 Springdale Road, Cherry Hill, NJ 08003

Licensed by the NJ Department of Banking and Insurance

Tax Credit Loan Program

The "Prefund" Program

Looking for a way to use the $8,000 tax credit NOW to buy a home?

  Need help with a down payment?

Treasury Mortgage is at the forefront offering a "prefund" program to qualified home buyers, allowing them to purchase a home NOW utilizing the government's tax credit program. If a buyer is eligible for the First-Time Home Buyer Tax Credit, than they may also qualify to utilize that same tax credit money NOW for the required down payment needed to buy their first home.

In a nutshell, you are given a short term loan for the tax credit money, and you pay it back after you get your tax credit next tax season. It is a simple concept. And since the prefund amount is $5,000, you may also have tax credit money left over for whatever you like.

Call Steve Kappre today to gather more information and to get pre-approved for this program for First-Time Home Buyers. (Those not owning a home in the last 3 years).

Steve Kappre

Treasury Mortgage - A Division of Aurora Financial Group

856-415-7720

856-419-3561 - cell

856-355-4760 - efax

steve@stevekappre.com

www.stevekappre.com