Welcome to our section on dispelling home buying myths of finding the right home.
As you probably know, buying a home can seem daunting and knowing where to start may seem complicated. That’s why we’re here to talk about some of the key considerations you’ll want to keep in mind as you begin the home buying process. This process should really not be that intimidating, so we are here to help guide you.
We will focus on when and how to begin your search for a new home.
Three common myths we’ll tackle are:
- What to consider when buying your first home
- Types of homes that are acceptable for a mortgage
- FHA programs that may help you buy the home you want
Let’s look at topic one: what to consider before you begin the process of purchasing a home. There are many factors you should consider while working through this first step. Making a list is a good idea it will help you keep track of your priorities and remind you of what’s important when you begin looking at homes.
One of the first things you want to think about is the size of your family. How big is your family? Do you have an extended family that is with you part-time that needs consideration? Is it just you and your spouse? Do you need room for children either now or in the future? Taking time to think about and discuss with others your family size and requirements is important. If it’s just you, great, make a list of your needs and prioritize them. If it’s you and someone else, make a list and discuss it so everyone can contribute. Maybe your list includes needing an extra room for an office because you work from home, maybe you want to have children, or need room for a future nursery, and so on. These answers will help you determine the size of home you need and additional features you may want to keep in mind.
You’ve heard it before; location, location, location – it really matters, so think about the neighborhoods you are willing to consider. Do you want to be in the city, in the suburbs, or in the country? Many times people want to be close to public transportation or be able to walk to the grocery store or library. For others, being out in the country or home with a large lot size is important.
Regardless of your preference, be sure to consider how far you are willing to commute for work and how close you want to be to your friends and family. If you have children, schools are an additional location factor. It’s worth researching which school districts are right for you and your family. Also, consider if your kids will ride a school bus or walk to school.
Not everyone wants to take care of a lawn or enjoys repairing gutters. If this describes you, think about whether a single-family home is a requirement or if a condo is an option. If a condo is an option, keep in mind that the HOA fee is an additional monthly expense that has to be taken into consideration. Even though the HOA is paid separately from the mortgage payment, it still has to be factored into the debt to income ratio which can take people by surprise.
You’ve considered a lot already before beginning the search for your new home. Make a list of the features you want in your home, the number of bedrooms and bathrooms, a fenced yard, types of countertops, a garage, etc. and rank them in terms of priorities. Put your priorities in order of importance rearranging them as you need, throwing out what doesn’t make sense, and putting key priorities at the top.
This will give you a clear vision for beginning your home search.
One more key point before you begin your search, no matter how you answered all of these questions, is knowing what you can afford. Knowing what you can afford is one of the primary things you want to know. Sometimes people fall in love with a home before knowing this number and then are disappointed to learn it’s out of reach. Start off on the right foot by knowing what you can afford before starting your search by talking to a loan officer at AAA Capital Funding.
We will discuss different options and strategies with you about how much you can afford. We here at AAA Capital Funding understand all of the different mortgage programs and guidelines available and can help you determine the best course of action.
Once you have your list, you’re ready to prioritize. For some home buyers, living in a specific neighborhood takes precedence above all els. For others, having three bedrooms is more important. In a perfect world, you’d find the ideal home in your neighborhood of choice at a price you can afford but realistically, most people will have to make some compromises.
Call us at 954-390-7994 or 888-601-8344 so we can review your overall situation and give you advice on buying a home.
Topic two focuses on the types of homes are available for mortgage financing. Once you’ve considered what’s important to you in a new home and you have your list of priorities, it’s time to start narrowing your needs further, but before you decide what’s right for you, it’s helpful to know what types of homes are eligible. We here at AAA Capital Funding can help you purchase single-family dwellings; including houses, townhouses, and row homes (villas), duplexes, triplexes, and fourplexes, some manufactured housing, and condominiums.
Yes, you can purchase a 2-4 plex with a 3.5% down payment. In order to be eligible for a low down payment, each of these must be your principal residence in order to qualify. We do finance investment properties but those come with higher down payment requirements.
We love our Veterans and 100% financing is available using a VA loan for those who served our country.
Condominiums come in many sizes and shapes and sometimes it’s hard to tell if a home is a condo, a single-family home, or a townhome. In either case, we finance all of these. Sometimes a home could look like a townhome, have all features of a townhome, and even be advertised as a townhome but legally be considered a condo. We will help you investigate further to find out the true legal description of a specific property. This is important because it will determine the type of financing available for that particular home. Please also keep in mind that manufactured homes may also be referred to as mobile homes, sectionals, multi-sectionals, double wides, triple wides, or single wides.
While AAA Capital Funding finances houses, townhouses, condos, 2-4 plexes, and some manufactured housing, it’s important to recognize there are some types of properties we do not cover. Properties such as 100% commercial properties, hotels, or motels, some mixed-use condos which may include commercial property could be an issue to obtain financing on by us.
Finding a home, whether it’s a single-family home, townhome, condo, 2-4 plex, or a manufactured home can be a great investment, so consider all of your options and compare them to your needs when making your final decision. Work with a loan officer at AAA Capital Funding who can review your overall situation and give you advice on buying a home.
Let’s discuss our mortgage loan programs. AAA Capital Funding offers many programs that can help you finance a home. We have programs that have different eligibility requirements and objectives. Some of these programs include Government insured mortgages such as FHA and VA, Conventional loans otherwise known as Fanne-Mae and Freddie-Mac, HomeReady and HomePossible, Non-Conventional loans, closing cost assistance, and many others.
The next program we’ll talk about is a group of programs set aside for fixer-uppers. Many first-time homebuyers fall in love with a home that needs some repairs but believe that lenders want all repairs completed before closing. The good news is AAA Capital Funding allows you to buy a fixer-upper and rehabilitate it after the loan closes and best of all, you can finance the cost of repairs into the loan. The property does not have to meet minimum property standards at closing so this can make buying a fixer-upper a viable course of action.
There are two primary fha programs that AAA Capital Funding offers dedicated to rehabilitating a home; FHA 203k for major repairs and FHA Limited 203k for minor repairs. The qualification requirements for these FHA insured loans makes getting the rehab loan easier than a typical construction loan.
Let’s look at each program; the 203k program allows you to make major renovations to a home by rolling in the cost of repairs into the mortgage. The advantage is that the loan amount is not based on the appraised value of the home before the renovation, but instead on the projected value after the repairs are completed. It allows you to buy a fixer upper that may not have been affordable otherwise. The loan must be a minimum of five thousand dollars and you are required to use a 203k consultant when applying. This program would be used for major improvements like making major structural changes. Some of these changes could be converting a one family structure to a two family structure, repairing a foundation, remodeling a bathroom or kitchen, adding on a room or finishing a basement, and repairing plumbing, heating, or air conditioning systems, and many more improvements as well.
The 203k and the limited 203k program is nearly the same but it is used for minor non-structural repairs. It has a limit of $35,000 and you do not need to use a 203 consultant although, you may use one with this type of loan. You can make minor home improvements like repairing plumbing, installing a new refrigerator or other kitchen appliances, installing new flooring, repairing decks and patios, and eliminating health and safety hazards. The list of repairs goes on.
The last program we’ll talk about is HUD homes or HUD real estate owned properties sometimes referred to as HUD REO or simply REO.
What is a HUD home? A HUD home (or HUD REO) refers to a residential property acquired by HUD as a result of a foreclosure or other means of acquisition on an FHA insured mortgage. In these cases, the Secretary of HUD becomes the owner and offers it for resale. In short, a HUD home is a property without liens sold by the US Government often well below market value.
How does this HUD home become available before being listed for sale? FHA displays a sign identifying who is managing the property. During this time, the property is appraised, title issues are resolved, and a determination is made about the property’s eligibility.
AAA Capital Funding offers a $100 down payment specifically for HUD owned homes.