For first time home buyers, this is an opportunity you do not want to miss!  The Housing & Economic Recovery Act is newly enacted legislation that allows up to a $7500 tax credit for first time buyers or those that have not owned a home in the past three years, on home purchases made from April 9, 2008 through July 1, 2009.   To qualify for the full credit amount, single taxpayer incomes cannot exceed $75,000 and for married couples filing jointly, income levels cannot surpass $150,000.   Ownership of a vacation home or rental property not used as a primary residence does not disqualify a buyer. The credit is refundable, meaning the home buyer can claim an amount greater than their tax liability.  The government will send the home buyer a check for the amount that exceeds what they owe in taxes (even if they owe nothing). The amount of the tax credit is based on the purchase price of the home with $7500 being the maximum. The tax credit is 10% of the purchase price of the home up to $75,000.  The tax credit is treated as an interest free loan that must be repaid over 15 years, however repayments do not need to begin for two years after the credit is claimed. This is significant when compared to a loan at 7% interest payable over 15 yrs, the homeowner would save $4200 in interest payments, if it is a 30 year mortgage at 7% the savings would increase to $8100 in interest payments.  The home buyer not only saves on the interest, but it also provides a reduction in taxes in the year it is claimed. To participate, no formal application or pre-approval process is required.  This program is being handled through the IRS and not a financial institution. You simply claim the tax credit as a line item on your federal income tax return.   In an effort to boost the housing market and stimulate the nation’s economy, other provisions were put into place under this Act to provide additional tax relief for the homeowner.  For more information please contact any of our loan officers at NextHome Mortgage Corp., 1-888-566-4100.

Applying for a home mortgage is a relatively easy process. However the information needed to obtain home loan approval in a timely manner requires a coordinated effort by the borrower and lender. The mortgage loan application is prepared by lender with the borrowers input and takes about 30 minutes to complete. The lender then gives the application to a loan processor, who organizes the information. The processing of the application may require additional information for verifying employment, bank balances or other information. This information is often obtained at the time of application and can help speed up loan approval.

During loan processing, some of the items requested may include the purchase contract for the home, if the home loan is being obtained to buy a home. Updated bank statements or investments that may have changed in value may also be requested. If a borrower is self employed or is in a specific career (Doctors, Nurses, Police & Fire, Teachers, Military & Veterans, Pharmacists & Dentists), then tax returns and/or Profit and Loss statements for the past 2 years may also be required. Depending on the personal home loan needs of the borrower and down payment amount, evidence of past mortgage or rent payments, divorce settlement papers, and gifts provided by a relative or a non-profit down payment assistance program may also be needed.

Simultaneously, an independent appraisal of the home is ordered. The appraisal is needed by the lender to establish the maximum amount a lender will loan based on the home’s appraised value. The loan processor is assembling and organizing the borrower’s financial information in an organized manner to present to an underwriter. The underwriter will review the information to determine if the borrower meets the guidelines for making the home loan. Once approved, a commitment letter is provided which states that the lender will make the loan based on the specific conditions determined in underwriting.

The whole process generally is completed in 30 days or less. Speeding up the mortgage process is a simple easy three step process.

Applying for a home mortgage is a relatively easy process. However the information needed to obtain home loan approval in a timely manner requires a coordinated effort by the borrower and lender. The mortgage loan application is prepared by lender with the borrowers input and takes about 30 minutes to complete. The lender then gives the application to a loan processor, who organizes the information. The processing of the application may require additional information for verifying employment, bank balances or other information. This information is often obtained at the time of application and can help speed up loan approval. 

During loan processing, some of the items requested may include the purchase contract for the home, if the home loan is being obtained to buy a home. Updated bank statements or investments that may have changed in value may also be requested. If a borrower is self employed or is in a specific career (doctors, nurses, police & fire, teachers, military & veterans, pharmacists & dentists), then tax returns and/or Profit and Loss statements for the past 2 years may also be required. Depending on the personal home loan needs of the borrower and down payment amount, evidence of past mortgage or rent payments, divorce settlement papers, and gifts provided by a relative or a non-profit down payment assistance program may also be needed.

Simultaneously, an independent appraisal of the home is ordered. The appraisal is needed by the lender to establish the maximum amount a lender will loan based on the home’s appraised value. The loan processor is assembling and organizing the borrower’s financial information in an organized manner to present to an underwriter. The underwriter will review the information to determine if the borrower meets the guidelines for making the home loan. Once approved, a commitment letter is provided which states that the lender will make the loan based on the specific conditions determined in underwriting. 

The whole process generally is completed in 30 days or less. Speeding up the mortgage process is a simple easy three step process.

Home buyers have a myriad of choices when considering which lender to choose for their mortgage. Choosing the right lender is a very important part of the home buying process and should be done very early on before you even seriously start looking at homes. There are many considerations to take into account when evaluating lenders and their importance will vary depending on individual borrowers’ needs. 

Important questions you should ask when looking at mortgage lenders include how long they have been in business, their Better Business Bureau record and the experience of the individual mortgage professional. The range of products offered provides you with valuable options when evaluating your specific needs. Banks may not necessarily be the best choice as they may not offer the variety of products a licensed mortgage broker can. In fact mortgage brokers originate the majority of home loans annually.  

Some questions should include the following: 

Do you offer fixed rate mortgages, variable and hybrid mortgages?A lender should be able explain the differences between your options and work with you to create a satisfactory solution.  

What types of fees do you charge?

Remember to request a Good Faith Estimate, which provides in writing detailed closing costs including fees and interest rate.  

Is there an origination fee being charged to obtain the quoted interest rate?

Some lenders may charge an origination fee that the borrower pays at closing. This fee may be used to provide a lower interest rate to the borrower. You should ask the lender what the interest rate is without an origination fee.  Are there Discount Points being charged to obtain the quoted interest rate? A discount point is a percentage of the loan amount paid by the borrower at closing. The lender may provide a lower interest rate by charging the borrower discount points. You should ask the lender what the interest rate is without paying any discount points. 

Are there any prepayment penalties that apply to this mortgage?  

Prepayment penalties occur when you pay down your mortgage faster than expected. The lender’s profit expected over the term of the mortgage is reduced if the borrower pays the loan off faster than the original term. 

Can I lock in at the interest rate you just quoted?

The lender may lock in a quoted for a specific period of time allowing you to shop for a home without the risk of your rate increasing. If your rate is locked, you will be able to negotiate from a position of strength with a seller.  

Ultimately, choosing the right lender is an integral part of the home buying process. By selecting a professional mortgage lender that has an understanding of your situation you will set the stage for a smooth transaction and a financial relationship that could potentially last for decades. Home buyers should approach the choice with careful consideration and do what is in their long-term best interests.