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Common Questions on Home Loans!

Watch and learn more about common questions around home loans!


M O R T G A G E M A T T E R S


Watch and learn more about common questions around home loans!

- First time Home buyer? Pre-Approval?

- What's the difference between Conventional, FHA and VA loans?

- What do I need to know about Closing Costs?

- What should I know if I'm interested in new construction homes?

- and Final thoughts if you're just beginning the process!

- Let's talk about loans. Hi, my name is Danielle Scott with Keller Williams Realty. I'm here today with Jimmy Joseph of First Lenders. Of course, you know, dealing with first-time home buyers, even people who've been in the buying process before, everyone wants to know what do they need to know about loans? One question I get a lot is "What's the difference between FHA and Conventional, also VA loans?" So, if you could just talk a little bit about them.


- Those are three different types of loans. One, VA loans for active slash retired veterans. That's a loan that's used for them through a program which is administered by the government. Then you have FHA, which is another loan program administered by the government, where it gives you flexibility in terms of your down payment, below-average credit scores, and higher debt-to-income ratios to purchase the home. It gives you flexibility in your debt-to-income ratio as far as buying power. And Conventional, that's what we call our traditional lending, where you're allowed to put 3% to 20% down payment, and that has private mortgage insurance, PMI.


- So, how about first-time home buyers and the pre-approval process? What tips would you give for them?


- For first-time home buyers it's important to use a free tool, which is Credit Karma. I think it's absolutely great because it gives you an idea where you're at with your risk. However, when I'm giving out a pre-approval I collect four factors: cash, income, property, and risk which is your credit score.


- Do you have any thoughts on closing costs? People usually are very concerned with that.


- Yeah, they should be, because usually, sometimes, they don't understand what comes into the closing costs. What's in the closing costs is: settlement fees, your escrow, and origination costs. It's important that you look at that and have your lender talk to you and talk through, line by line, of what's going on, what's costing you the most. Because in the end, this is what your loan is going to be for the future as you make your monthly payments.


- So, Jimmy, what do you think about new construction homes? I get that question a lot, people looking for new construction. What should people be concerned about?


- They should be concerned about two things: the taxes and making sure your lender knows what's going to happen as your escrow changes. With new construction, sometimes the lender does not have access to what's going on with the taxes. So it's important that you communicate with the tax assessor to understand when the property is going to be re-assessed so that when that amount is adjusted that your lender knows, so moving forward you can make your monthly payments. What happens in come cases, lenders are not communicating with the tax assessors and your escrow is short and sometimes clients have a concern, like "I didn't know what happened, what's going on?". Nevertheless, it's important that the lender, and yourself, and the tax assessor get involved to make sure you are taxed accordingly and correctly for the new property.


- Thank you so much, are there any final thoughts you want to give to people who are, you know, just starting the process?


- Yes, make sure when you're working, when you're looking for a home, or trying to figure out what you want, how you want to go about it; please speak to a realtor. They have experience, they know what they're doing and they will make sure that they coordinate your needs to the fullest.



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