Category Archive: FL first time home buyer

Challenges First-Time Home Buyers Face

First-time home buyers are on the rise. According to Realtor.com1, in August of 2015, 35 percent of buyers said they were first-time buyers. Jump forward to August 2016, and 51 percent of buyers identified themselves as first-time buyers. But buying a home and getting a Florida mortgage for the first time comes with a unique set of challenges. Here are some of the things first-time buyers in Florida will face:

  • Down payments: The biggest challenge faced by most first-time buyers is coming up with enough money for a down payment. For conventional mortgages, many first time buyers believe they need to come up with a 20% down payment. On a $200,000 house, that’s $40,000. However, if those same buyers pursued a mortgage that’s insured by the Federal Housing Administration (FHA), they only need a down payment of 3.5 percent. On a $200,000 house, that’s $7,000. In fact, well qualified first time buyers can consider a Conventional loan with as little as 3% towards down payment.
  • Credit scores: Mortgage lenders depend on your credit score to determine who will get mortgage loans and what rate they’ll be charged. FICO scores range from the high 300s to the low 800s, and first-time buyers often don’t have long, established credit histories. That can mean a lower score. Lower credit score buyers should consider the credit flexible FHA loan approach and perhaps even compare it to a Conventional mortgage option, although conventional programs generally require stronger credit profiles and scores.
  • Employment history: Mortgage lenders prefer borrowers who have worked for the same employer for at least two years. This can be a problem for first-time buyers, who are still establishing their careers and may have changed jobs recently. Some first time buyers may qualify for an FHA with as little as 6 months with current employer.

Know your options

At Embrace Home Loans, we work with all kinds of borrowers in Florida, including first-time buyers. We can suggest strategies that will help you meet the first-time buyer challenges, including:

  • Low-down-payment mortgages or down payment assistance programs: In addition to FHA loans, which require a lower down payment, there are a number of down payment assistance programs available in Florida.
  • Financial organization: You can improve your FICO score by staying organized, paying your bills on time, and double-checking your credit for errors.
  • Steady income: While mortgage lenders like to see steady employment, many will overlook a short job history if you can show a steady source of income that will cover your mortgage payments.

Find out more

If you’re a first-time home buyer looking for your Florida mortgage, contact Embrace Home Loans at 407-733-6425. We’re experts in mortgage lending, and we can review your financial situation and help you find ways to improve your credit, locate a loan that’s right for you, and find a new home.

1 http://www.realtor.com/news/trends/first-time-home-buyers-face-different-challenges/?is_wp_site=1

Top 5 Mistakes First-Time Homebuyers Make

Home buying is on the rise, according to the fourth annual Mortgage Service Index from TD Bank. According to the survey, 42 percent of Americans expect the housing market to improve over the next six months, and 56 percent feel it’s a good time to buy a home.

That means, if you’re shopping for a new home in Florida, there’s going to be more competition for the available homes. First-time homebuyers can help themselves clinch the deal by avoiding some common mistakes:

  • Choosing a home that’s too expensive. With the financial meltdown of 2008 still fresh in everyone’s mind, it’s surprising that people are buying the most expensive homes for which they can qualify. Qualification doesn’t tell you how much you should spend on a house, it just tells you how much the bank will lend you. Huge mortgage payments may leave you with no money left for bills or savings.
  • Not educating yourself. Learn about your market and the value of the homes in it. Make sure you also understand ALL the expenses involved, like insurance, taxes, utilities, association fees, and more (see mistake #1). Don’t make the mistake of buying the first home you see. Shop around.
  • Not getting your finances in order. Make sure you’ve got a budget and you know exactly what you can afford (see mistakes #1 and #2).
  • Not scouting the neighborhood. Things are much different at night than they are in the daylight. Visit your prospective neighborhood at different times of the day. Park your car and walk around. Are there noisy neighbors? Barking dogs? Cars roaring through residential streets? Do your homework, and make sure that this neighborhood is right for you.
  • Working with the seller’s agent. The seller’s agent is working for them, not you, and is trying to get the highest possible price on the home. In short, they’re not on your side. You need your own licensed Realtor® who is working for you.

Make the right move

While it seems to fly in the face of the advice above, one final mistake is falling victim to the “grass is always greener” mentality. Some home shoppers are convinced that there’s always something better, so they refuse to commit to buying a home. If you’ve done your homework, then trust yourself. Being indecisive means you might miss out on the home of your dreams. If you’re a first-time buyer looking for a home in Brevard County or the state of Florida, Embrace Home Loans can work with you to get you qualified for a Florida mortgage and help you avoid some of the mistakes others make. Contact us today at 407-733-6425.

The Top 5 Things First Time Homebuyers Need to Know

Buying your first home can be a bewildering process. But first time home buyers in Florida have some advantages over seasoned buyers, and here are some ways you can be more effective in your search for a new home:

 

  • Get Your Finances in Order. A good credit score and solid down payment puts you in a good spot to beat competing offers for the home you want. Check your credit report for errors at www.annualcreditreport.com and take steps to clean it up, and save up for your down payment. The bigger, the better, but remember that there are lots of options for mortgage loans, and some (like loans guaranteed by the Federal Housing Administration) will let you put down just three to five percent of the price.
  • Get Pre-Approved. This means a mortgage lender has reviewed your credit and income. Pre-approval gives you an advantage when the seller is in a hurry and needs to close quickly.
  • Use an Agent. You’re new to this process, so a good real estate agent can be essential to guiding you through mortgage applications, price negotiations, home inspections, and more. A good agent is an invaluable asset in finding listings that match your criteria.
  • Take Advantage of Your Flexibility. You’re not in a home now, so you don’t need to sell an existing home to buy a new home. That’s a key advantage other buyers don’t have. You can negotiate with sellers and offer to delay moving in or provide other concessions. Your real estate agent can talk to the seller’s agent to find out exactly what they need to close the deal.
  • Shop Around. Remember, you can be flexible. If you see a listing that seems overpriced, check back in a month. At that point, some sellers will take a lower offer, even if they haven’t reduced their listing price.

 

We’ll Work With You

Embrace Home Loans has financed thousands of homes for first time home buyers in Florida. We can help you understand the process, and we’ll review your mortgage options with you and help you get the financing you need. Talk to us today at 407-733-6425 and find out more tips to help you buy your first home in the Sunshine State.

First-Time Home Buyers Need to be Careful not to Overextend Themselves

A troubling trend emerged over the last few months. The First American Loan Application Defect Index, which measures the frequency of defects in the information provided for mortgage loan applications, has begun to increase. That hasn’t been the case since September 2013. And it hits close to home; Florida is the second-riskiest state in the nation for foreclosure.

Mortgage loan defects for first-time home buyers include things like insufficient credit, misrepresented income, inadequate mortgage insurance, and unpaid debts. FannieMae lists more than 200 categories of potential defects on its website.

Protect Yourself

A mortgage is the biggest debt most people face, so it’s very important to be careful you don’t bite off more than you can chew. Here are some tips to help keep you from making a costly mistake:

  • Decide What You Can Pay: Rather than letting a mortgage lender determine how much house you can afford, determine what monthly payment would be comfortable for you, and use that to figure out how much you can pay for your home.
  • Count All Your Expenses: There’s more to home ownership than a mortgage payment. Utilities, maintenance, taxes, insurance, and other expenses can add a lot to your monthly bills. Make sure you budget accordingly.
  • Fix Your Rate: With interest rates starting to climb, some people may be tempted to look at adjustable-rate mortgages (ARMs). But unless you plan to move in a few years, an ARM may get expensive. Eventually, the ARM will reset, probably at a higher rate.
  • Check Your Credit & Repair What You Can: Obtain a free credit report at annualcredit.com and check it for errors. Give yourself six months to a year to fix any mistakes and make changes that will improve your score. Paying down loans and making payments on time will improve your score.
  • Shop for Deals: Many borrowers are eligible for special loan programs, such as loans offered by the Department of Veterans Affairs (VA). Many cities, counties, and states also offer home-buying assistance.

Ask the Experts

If you are a first-time home buyer, and you’re concerned about your ability to buy a home, contact us at Embrace Home Loans. We’re experts in home mortgages, and we can help you locate programs or financing that will put you in the home you want. Give us a call at 407-733-6425 and get our perspective.

Credit Where Credit is Due: Mortgage Credit Certificates

A mortgage credit certificate (MCC) is a certificate issued by some state and local governments that give first-time homebuyers a tax credit for part of the mortgage interest they pay. In general, people who want an MCC must meet some conditions:

 

  • You must live in the new home as your primary residence.
  • You must meet certain income and price restrictions.

 

Some of these restrictions may be waived in some cases. For example, a city or state government might raise the income or price restrictions to encourage home ownership in certain areas.

How Does it Work?

Let’s look at a simple example. Assume you’re a first-time homebuyer who has a $150,000 mortgage at 5% interest. Your first year’s interest would be approximately $7,500. However, if you have a 20% MCC, you would be able to reduce your taxable income by $1,500 that year ($7,500 x .20). If your annual income is $48,000, you’ll only pay taxes on $46,500. What’s more, you can still deduct the remaining $6,000 that you paid in interest from your taxes!

The amount of the mortgage credit varies by the state or local government issuing the MC, but it is normally capped by the IRS at $2,000. Typically, an MCC is good for the life of your mortgage though the benefit will decrease as you pay down your mortgage and your interest paid decreases. Sometimes, lenders will allow you to add an MCC to your available monthly income, which may let you qualify for a larger mortgage.

MCCs work with many types of mortgages, including FHA, VA, and conventional mortgages. There is one catch, though. You may be subject to a “recapture” tax if you don’t meet the conditions of the MCC, which could be expensive. In general, though, you won’t face the recapture tax if you remain in your home for nine or more years before selling.

Find Out More

If you are a first-time home buyer and want to find out more about MCCs and what may be available in Central Florida, call Embrace Home Loans at 407-733-6425. We can help you locate MCCs offered by housing agencies and determine which mortgage lenders participate in that MCC program.

Are You Ready to be a Young Homeowner?

Millennials (the generation of people born between 1981 and 2000), consist of some 90 million people. And those people are entering the ranks of first-time home buyers in larger and larger numbers. In fact, in the summer of 2014, almost 30% of home buyers were millennials, according to Realtor.com. With that in mind, here are some tips that young first-time home buyers should keep in mind:

  • Boost Your Credit Score: Your credit card debt on revolving accounts versus your available limits is a big part of your credit score. Paying cards down and keeping low balances can really bump up your credit score.
  • You May Not Need a Large Down Payment: While you may think you need a 20% down payment, many loan programs require much less. Loans guaranteed by the Federal Housing Authority (FHA) only require 3.5% down payments, and many conventional loans require only 3%. Loans guaranteed by the Department of Veteran’s Affairs (VA) or the US Department of Agriculture (USDA) may not require any down payment. And remember, you may be able to make your down payment with a gift from a family member.
  • You May Not Need Two Years at Your Job: In fact, you may only need a few months on the job or even less. Having a job establishes your base income. Some lenders are willing to consider your work history combined with your school enrollment to document a two-year timeline.

It’s Not too Early to Get Started

If you’re a younger consumer wanting to be a first-time home buyer, call 407-733-6425, or you can browse the rest of the Embrace Home Loans’ website. We’re experts in helping people like you get financing for homes, and we can review your financial history and help you understand the options that may be available to you.

How to Clean up Your Credit to Buy Your First Home

If you’re getting ready to buy a house, your credit score will have a major impact on the interest rate you’ll pay for your mortgage. Even tiny increases can have a significant effect. Lenders often have firm rules about credit scores. For example, they may only offer their best rates to borrowers with a score of 690 or higher. If your score is 687, it could cost you thousands of dollars in interest over the life of your loan.

However, you can take steps to improve your credit score. Many variables affect your score, and it’s hard to single out actions that will increase your score by a specific number of points. However, there are some general tactics you can use:

  • Pay your bills. This is obvious, but it’s still the number one factor affecting your score. Pay all your bills on time whenever they are due.
  • Keep credit balances low. If your cards are maxed out, that’s a big red flag. You should only use a portion of the credit available to you. If you need a target, try to keep your balances at 30 percent (or less) of your overall lines of credit. Be careful about closing accounts (more on that below).
  • Don’t open new credit. It’s important to have a credit record, but don’t open new accounts unless you absolutely need to.
  • Those are general rules of thumb, but what happened when you’re looking for a house and just need to bump up your credit score a few points? Try these techniques:
  • Clean up your credit report. Pull your credit report (you can get one free every year at www.annualcreditreport.com) and take a hard look at it. If you like, you can use online credit score estimating tools to get an estimate of your score. Check your report for errors, like late payments that were actually paid on time, accounts that aren’t yours, or debts that are older than seven years (bankruptcies can remain for 10 years). If you discover mistakes, call the credit bureau and the creditor. If you can prove there’s a mistake, they have to fix it within 30 days.
  • Work with your credit cards. Paying down your credit cards will help improve your score. You can also transfer balances from a maxed-out card to other cards to “even out” your usage, to get closer to that 30 percent. Don’t close unused accounts, because that can affect your “utilization rate,” which is the amount of your total debt divided by your total available credit. If you do close accounts, keep the oldest ones open, so that you have a longer history of credit use. If they have a high interest rate, pay them off and don’t use them, but keep the account open.

The important thing to remember is that you can improve your credit score. You need to establish a clear picture of what your credit is like today, and look at options to improve your score. You can find out more about how your credit score and buying a home by contacting us at mortgageperspectives.com or calling 407-733-6425. We’ll be happy to help you evaluate your score and see what mortgages may be available to you.

Florida First-Time Homebuyers Taking Advantage of Tax Credit

Some homebuyers in the state of Florida may be eligible for a tax credit of up to $2,000 each year on their mortgages, but many first-time homebuyers don’t know about the program. The Mortgage Credit Certificate (MCC) program was established by the Florida Housing Finance Corporation to reduce eligible borrowers’ federal income taxes. The program was originally launched in 2005 but was suspended until 2013 because of the housing crisis.

How it works

Homeowners who have the credit are allowed to use half of their annual mortgage interest (up to $2,000) as a direct federal tax credit. The rest of their mortgage interest will still continue to qualify as a tax deduction for federal income tax purposes.

As an example, consider a borrower with a $100,000 mortgage at 5 percent interest for 30 years. That borrower would pay approximately $5,000 in mortgage interest in the first year of the loan. But with an MCC, the borrower gets a tax credit of $2,000. 50% of $5,000 is $2,500, but the maximum allowance is $2,000. So the homeowner gets to subtract $2,000 from his or her taxable income. In addition, the remaining $3,000 of mortgage interest can be deducted.

The program is good for the life of the mortgage, which could amount to 30 years of tax credits. The program offers another advantage: eligible borrowers can use that extra “income” as part of their loan qualification. That could help those buyers qualify for a higher mortgage.

Find out more

The eligibility requirements vary from county to county in Florida, and also by the number of persons in the household. The maximum purchase prices for a new home under the program also vary by county, and whether an area is “targeted” or “non-targeted.” Targeted areas are based on household incomes in a specific area. While this may seem confusing, the Florida mortgage experts at Embrace Loans can help you determine your first-time homebuyer eligibility and how the MCC can help you with your existing mortgage or with buying a new home. Contact us today at 407-733-6425.

Tips for First-Time Home Buyers

Buying a home is an important decision, and you will want to make the most of your home purchase. Once you’re ready to be a Florida first-time homebuyer, you’ll want to consider the following tips to help you through the process.

  • Are your finances in order? Your credit is crucial, so make sure you’re paying all your bills in a timely manner. In addition to having enough saved for a down payment, you’ll need to look at your credit history, and correct any inaccuracies on your credit report.
  • What type of home best fits your needs? There are a lot of options available now, including single-family homes, townhouses, condominiums, or others. Each has differences that you should consider before making any decisions. You should also think about the features you want, from major considerations like neighborhood and schools, to smaller details like yards, kitchen layouts, or décor.
  • How much can you afford? Prequalification can tell you how much a mortgage lender is likely to lend you. Before you start shopping, though, you should move beyond prequalification and get pre-approved. Pre-approval is a guarantee that a lender will loan you a specific amount, and it can keep you from wasting time on houses you may not be able to finance. In addition, think about how much you can actually afford to spend each month. There’s more to home ownership than just mortgage payments, so look at total costs, including insurance, property taxes, and potential home improvements.
  • What are your closing costs? You don’t want any surprises after you find your dream home, so make sure you understand closing costs and how much they are likely to be.

Get help from a professional

A qualified real estate expert can help guide you through the home purchasing process, and help you avoid potential pitfalls when shopping for a home. Real estate professionals can also advise you about programs that can help defray some of the costs of buying a home. In Florida, there are state, county, and even municipal programs that can offer you assistance with down payments and closing costs through grants or low-interest loans.  At Embrace Home Loans, we have the expertise you need when you’re are ready to be a Florida first-time homebuyer. Contact us at 407-733-6425 or browse our website for more information.

Now is the Time to Lock in That Interest Rate

While many people worry that the Federal Reserve will start raising interest rates this year, it may not happen and that means first time home buyers and those who have owned a home before should try to take advantage of these low rates.

While the economy is slowly improving, there hasn’t been a rapid recovery from the recession that began in 2008. According to Charles Biderman of Seeking Alpha, over the last 13 months, 3.4 million jobs have been created, as compared to 2.6 million over the previous 13 months. In addition, inflation is low. While this is certainly encouraging economic news, it’s not enough to cause the Fed to raise interest rates. Some other points to consider:

  • More first-time buyers

This influx of new jobs is going to drive millennials (people who reached adulthood around 2000) to start looking for their first houses in 2015, according to Realtor.com. The website feels that millennials will account for a whopping 65 percent of first-time home buyers this year. As a result, the demand will push home prices up over the course of the year.

  • Lower-end home prices will increase

Those two factors, more first-time home buyers and rising housing prices, are going to push up the prices of lower-end housing more dramatically in 2015. Sam Khater of Corelogic.com notes that lower-end home prices are increasing more rapidly than higher-end home prices in the largest 25 markets in the U.S. During the fall of 2014, Sam Khater also noted that low-end home prices were increasing at about 1.5 times the rate of more expensive homes.

  • Now’s the time to buy

Low interest rates and steadily increasing home prices indicate that now is the time to buy, especially if you’re a first time home buyer looking for a starter home. Realtor.com’s chief economist Jonathan Smoke notes that younger home buyers will be focused on areas with more affordable housing, like the Midwest and the South.

If you’re a first time home buyer or a seasoned homeowner looking to purchase a home in Florida, we encourage you to call Embrace Home Loans at 800-333-3004 ext. 3560 or browse our website for more information. Our experienced mortgage professionals can help guide you through the process of qualifying for a mortgage and that results in you finding that home you’ve dreamed of.