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Show Me the Money

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Ok, we are going to go Johnny Manziel on Real Estate and talk about “show me the money”.  Of course this is the most uncomfortable conversation you can have with anyone whether you are at church, in a marriage or buying property.  People love to go out and look for a ranch or house when they have no idea really and truly what they can afford or buy.  Getting qualified and understanding the type of loan that is required to purchase, whatever it is you are looking for, is the first step and the most important step.  Why go out and look at a piece of property and fall in love with it just to find out you can't afford it?  Plus in today’s market, if you do not have a pre-qualification letter attached to your contract offer, most sellers will not even consider your offer.  Why let someone tie up your property and take it off the market when your not even sure they can get a loan?  As a buyer, you have to be able to put yourself in the shoes of the seller because if you get the house or property bought, you more than likely will be one some day.  Lets talk about getting qualified and the different types of loans that are available for the different types of properties.

Lets start with the types of loans that are available to purchase a home, whether it is a house in town or a rural home on some land.  There are four main products out there and a buyer’s circumstances will determine which one they may be able to use. 

1) USDA - I know it is hard to understand why the people who inspect our meat are in the mortgage business but they are.  The qualifications for a USDA loan depend on the location of the property, the income level of the borrower, credit level and price of the home.  This is a 100% financing loan!!

a.   Home must be outside the city limits of a major city like San Antonio.

b.   Income level must be under a certain amount depending on circumstances.

c.   640 credit scores or higher,

d.   Home CANNOT HAVE an in-ground pool or at least no value can be given to one in an appraisal.

c.   Seller can pay up to 6% of the buyers closing cost or the buyer can borrow up to the appraised value and roll in cost of their closing.

b2ap3_thumbnail_mortgage-application_20130909-195255_1.jpg2) FHA - This is a loan that has been around forever and is a great avenue to purchase for most people.  One thing to remember though is when you get an FHA loan today, you will be paying as part of your payment a Mortgage Insurance Premium and it stays with the loan for the life of the loan.  You used to be able to get rid of it after you had 22% equity in a property but no longer.

a.  3.5% down payment.

b.  620 credit score.

c.  Seller can pay up to 6% in closing cost.

d.  Debt to income ratio depends on certain things that vary but a little more lax on FHA.

 

3) VA - Must be a Veteran and is a great loan because it is also a 100% financing loan.  Not all properties will qualify for a VA loan because they are a little particular in what they will loan against due to the condition of the property.  The VA does not do inspections on a home like most veterans think they do, but they put restrictions or requirements on the appraiser when it comes to the condition.

a.  100% financing loan.

b.  620 credit score.

c.  Seller can pay up to 6% in closing cost.

d.  VA funding fee paid for by the veteran and is usually added into the loan.

e.  Because of the VA funding fee no Mortgage insurance premium included in payment.

4) Conventional Loans - This is the old standard of loans and is here for people who make too much money to get a USDA loan, or have enough in a down payment to avoid the never ending mortgage insurance premium of a FHA loan, and may not be a veteran or already has a VA loan (you can only have one VA and/or FHA loan at a time) and is looking to purchase another home somewhere else. 

a.  Down payment can vary from 5% down to 20% down.

b.  620 credit score.

c.  Debt to income ratio depends on automated findings.

The key to getting qualified and knowing what type of loan fits you the best can also determine the type of product you can buy.  Now just because you qualify for a mortgage loan does not mean you qualify to purchase a piece of land.  Most people think they can use a mortgage loan to buy ranch or small recreational property, but it doesn't work that way.  All the loans that we just went over are directly related to mortgage loan or just a house loan.  To buy a ranch or small recreational property you will need to go to bank or lender that specializes in agricultural or recreational properties.  The qualifications are completely different than a house loan and so is the down payment.  These loans require 20% down across the board regardless of the bank.   The interest rates vary and depend on the situation and borrower and so do the terms.  Most offer a variable at a lesser rate and a short and longer term fixed rate that is quite a bit higher than the variable.  Below I will list the people and banks we like the most and would recommend for the different types of loans.   If you ever have any questions or are unsure what you should do next as you get ready to buy something, call me and I will walk you through it.

Mortgage Loans

Community National Bank - 830-931-3411

Castle and Cooke Mortgage - Carrie Ramirez 210-725-8084


Land Loans

Community National Bank - Sandy Wilson 830-709-3066

Capital Farm Credit - Brett Riff 830-741-2040

 

 

Matthew 6:24 No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money.

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