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General Chat / Re: Mortgage Rates are DROPPING. I am a Loan Officer - Any Questions?
« on: September 09, 2024, 10:15:43 AM »
Let's start with Credit.
Make sure you have 3 tradelines w/ at least a 12 month history behind them.
They don't all have to be active, but at least 3 tradelines on your Credit Report makes things a little simpler going forward. That means Credit Cards, Auto Loans, Personal Loans, Student Loans, Time Shares, and even your rent can all be a tradeline.
Next, Credit Score.
Do what you can to get your score as high as possible.
you definitely want your score above 600, and if possible, as high above 700 as possible. 800 or higher is the target. Below 600 and you might not be able to find a loan at all.
There's lots of ways to affect your credit score, so google search it for tips and tricks on what to do to remove negative stuff and clear collections off your report.
The 3 Credit Bureaus are:
www.equifax.com
www.experian.com
www.transunion.com
visit them, make an account, and manage your credit.
you can also visit www.annualcreditreport.com for a free copy of your report from each of the 3 bureaus as well.
Next big thing to think about is Down Payment.
There was just a new rule passed that the buyers have to have money set aside from their available assets to pay for their Buyers Agent. That means this could lessen the amount you have saved up for Down Payment and Closing Cost.
My suggestion, is if/when you get setup with your new agent, you work out some deal where they would negotiate with the seller to cover closing cost, and you could "increase the purchase price" to cover it.
But you will need at least 3% down to purchase a home (3.5% if you go FHA), and there are LOTS of grants out there that you could potentially take advantage of that could help you out.
Where I work gives up to $17,500 that you don't have to pay back (you can DM for more details) but there are also likely some local grants for the areas you are looking at that could give you some sizeable down-payment assistance (DAP). But you'll have to do the research, as even the ones that are listed as "compatible" with my place of employment, may not be the only ones in town.
And the bonus being, that whatever DAP you find, might be useable w/ the $17.5k grants we offer.
but that a conversation for another time.
We also have a special type of loan that is only for certain geographical markets, and LA county happens to be on that list of places.
and the last but not least things I need you to look at is your Debt Ratio.
this is the Gross amount you make (net if you are 1099/Self Employed), vs the amount you spend.
You need to look at your outgoing vs your incoming.
Now your outgoing is going into include ANY debts that show on your credit report, and the new Mortgage, Property Taxes, Home Owners Insurance, and anything else that has to do with the new property, like Mortgage Insurance, HOA, Flood Insurance, Solar, etc.
FHA can go up to a 55% debt ratio, but you'd like to keep it at 50% or under if you can.
You want a solid 2 year work/school history, so definitely hold down those jobs, and chase those checks.
As for your original question....if you can, you may want to look into a Duplex (Triplex/Quadplex), as you can live in one, and rent out the other(s), and if you do it right, that could significantly reduce the amount of the mortgage coming out of your pocket monthly. And you can use rental income to qualify for the property.
Make sure you have 3 tradelines w/ at least a 12 month history behind them.
They don't all have to be active, but at least 3 tradelines on your Credit Report makes things a little simpler going forward. That means Credit Cards, Auto Loans, Personal Loans, Student Loans, Time Shares, and even your rent can all be a tradeline.
Next, Credit Score.
Do what you can to get your score as high as possible.
you definitely want your score above 600, and if possible, as high above 700 as possible. 800 or higher is the target. Below 600 and you might not be able to find a loan at all.
There's lots of ways to affect your credit score, so google search it for tips and tricks on what to do to remove negative stuff and clear collections off your report.
The 3 Credit Bureaus are:
www.equifax.com
www.experian.com
www.transunion.com
visit them, make an account, and manage your credit.
you can also visit www.annualcreditreport.com for a free copy of your report from each of the 3 bureaus as well.
Next big thing to think about is Down Payment.
There was just a new rule passed that the buyers have to have money set aside from their available assets to pay for their Buyers Agent. That means this could lessen the amount you have saved up for Down Payment and Closing Cost.
My suggestion, is if/when you get setup with your new agent, you work out some deal where they would negotiate with the seller to cover closing cost, and you could "increase the purchase price" to cover it.
But you will need at least 3% down to purchase a home (3.5% if you go FHA), and there are LOTS of grants out there that you could potentially take advantage of that could help you out.
Where I work gives up to $17,500 that you don't have to pay back (you can DM for more details) but there are also likely some local grants for the areas you are looking at that could give you some sizeable down-payment assistance (DAP). But you'll have to do the research, as even the ones that are listed as "compatible" with my place of employment, may not be the only ones in town.
And the bonus being, that whatever DAP you find, might be useable w/ the $17.5k grants we offer.
but that a conversation for another time.
We also have a special type of loan that is only for certain geographical markets, and LA county happens to be on that list of places.
and the last but not least things I need you to look at is your Debt Ratio.
this is the Gross amount you make (net if you are 1099/Self Employed), vs the amount you spend.
You need to look at your outgoing vs your incoming.
Now your outgoing is going into include ANY debts that show on your credit report, and the new Mortgage, Property Taxes, Home Owners Insurance, and anything else that has to do with the new property, like Mortgage Insurance, HOA, Flood Insurance, Solar, etc.
FHA can go up to a 55% debt ratio, but you'd like to keep it at 50% or under if you can.
You want a solid 2 year work/school history, so definitely hold down those jobs, and chase those checks.
As for your original question....if you can, you may want to look into a Duplex (Triplex/Quadplex), as you can live in one, and rent out the other(s), and if you do it right, that could significantly reduce the amount of the mortgage coming out of your pocket monthly. And you can use rental income to qualify for the property.
