Are you a first-time home buyer? Do you want to buy your first home, but need assistance getting the financing? I can help!
I am a mortgage broker, which means I have access to wholesale mortgage lenders. I do all the work to get the loan on your behalf. And the best part is that I have many different loan options for all types of situations, including for a first-time home buyer.
If this is your first time buying a home, I am here to help you navigate through this process. Even if it’s not your first time buying a home, you can use me to guide you through all of the constant changes that are happening in real estate.
In this article, I am going to discuss how you can use your first-time home buyer status to your advantage in getting the best loan possible for your situation in Oklahoma.
What is a first-time home buyer in Oklahoma?
Do you know what a first-time home buyer is? Qualifying may be easier than you think.
Here is the definition of a first-time home buyer: a borrower who has not had a mortgage loan, in their name, in the last 3 years.
Many people tend to think of first-time home buyers as young adults, but age has nothing to do with it. In fact, the age of the first-time home buyer has been trending older and older over the last decade. And you can see why. As older homeowners decide to sell their homes that have been paid off, they become first-time home buyers again. They haven’t had to make a mortgage payment for many years. It’s new to them again! And they now get to enjoy the benefits of being a first-time home buyer again.
What are the benefits of being a first-time home buyer?
There is a reason I am writing this article. There are in fact several real, money-saving benefits to being a first-time home buyer. Most of which involve two things:
- Qualifying for a lower down payment
- Receiving assistance in making the down payment
For many first-time home buyers, a big obstacle to purchasing the home is having enough liquid cash to both make the down payment, and pay for the costs of closing the loan. For those reasons, both the lenders and the government have tried to help.
First, let’s discuss the amount of the down-payment required for the first-time home buyer. How much you have to put down on the home depends on the type of loan you get. There are many different types of home loans, but you can think of them as being in two major categories:
- Conventional loans and
- Government sponsored loans (such as FHA, VA, USDA, etc.).
As a mortgage broker, I have access to all of these types of home loans, and always consider all of these options when trying to find the best deal for my clients.
With a Conventional loan, the minimum down payment is usually 5% of the purchase price. However, for the first-time home buyer, that requirement goes from 5% down to 3%. Then you have the FHA home loan, which requires only 3.5% of the home price. But the best deal is reserved for our veterans, because with a VA loan, the down payment can be 0%!
Down-Payment assistance for first-time home buyers
So what if you are not a veteran and therefore you must come up with the cash for a down payment but you do not have enough in savings? Then we start looking at various loan programs that offer down payment assistance.
There are both government and non-government programs that provide down-payment assistance to first-time home buyers. Both of these types of programs involve giving or loaning money to the borrower to be used as the down payment, usually with strings attached. Some government programs may offer a grant, which doesn’t have to be paid back, to certain borrowers that meet certain criteria. But these types of programs usually have a lot of restrictions, from the area the home must be located, to limiting the amount of income the borrower earns.
As a mortgage broker, my specialty is in working with wholesale lenders, not government agencies, to finance my clients. Therefore, I typically utilize first-time buyer assistance programs from private lenders as opposed to government agencies. You may be asking, “why?”
One reason is to limit the amount of people working on your loan. By utilizing one of the programs from my private lenders, I don’t need to bring in a government employee and have them involved in the process. I can get the down payment assistance and the other benefits without bringing one or more individuals who don’t work for me, who may not be easy to get ahold of and who definitely don’t work weekends (like I do) which is when first-time home buyers are out shopping and making offers.
Here is an example of just one type of loan I have for my first-time homebuyers:
- Conventional loan up to $500,000.00
- Borrower must meet first-time home buyer status
- Down payment of 3% is loaned to the borrower at 0% interest
- Borrower does not have to pay back the 3% down-payment loan until the house is sold or refinanced
If you would like to apply right now for this loan, click the button below, fill out the application and I will call you immediately to get started.
What about assistance with closing costs for first-time home buyers?
The down payment is not the only lump sum of cash you will need to buy a home. You will also need money for what are referred to as “closing costs.” What are closing costs?
Closing costs are all of the expenses related to buying a house and convincing the lender that this house will be a suitable asset to secure the mortgage loan. These include things like title insurance, the appraisal, the termite inspection, and the like. Why is all of this necessary?
Think about it from this perspective: the lender is going to loan you most or all of the money to buy this house. They want to know that if you don’t pay them back, that they can sell the house to recoup the money they loaned you. Therefore, they want to know that the house is actually worth what you are paying for it (appraisal); that the house is not falling apart due to termites (termite inspection); and that there are any long-lost cousins or heirs of the seller that might file a lawsuit claiming ownership (title insurance).
That is why a title company is involved. They provide title insurance after researching the history of the various sellers and deeds related to the property (in a document called an Abstract). They also handle the process of exchanging the purchase money for the deed and provide a neutral place for all parties to sign the documents. But this all comes with at a cost. The cost of doing business or in this case, a six or seven-figure real estate deal.
You can expect to spend somewhere in the range of $10,000 to $15,000 (or more) on closing costs that must be paid at the time of closing (i.e. getting the deed and they keys to the home). This is in addition to your down payment. But what if money is tight?
This is where having a creative and experienced mortgage broker comes into play. I have so many tools at my disposal. From understanding where we can save money, to how we can persuade the seller to provide “seller credits” or “seller concessions” to knowing how to structure the loan to possibly include the closing costs, there many ways to skin a cat.
The most important is that you come to me as early as possible in the process so I can get to work. The last thing we want to is to not have enough time to use a Plan B or Plan C. So contact me as soon as you make the decision to buy your home!
Are First-Time Home Buyers required to pay for mortgage insurance?
Not always. Mortgage insurance is required when the down payment is less than 20%. So if you are utilizing one of the low-down payment options discussed above, your loan will carry mortgage insurance. Which is not a big deal, it is just another fee that will be factored into your monthly payment.
You may be asking, “what is mortgage insurance?” and the easiest way to explain is to make an analogy to buying a car and having it financed. When you buy a car, the lender will make you carry “full coverage” insurance on the car, in case there is a hail storm or the car is wrecked. That is because they don’t want to loan money on a car that is wrecked or damaged. Therefore, they make you buy insurance to repair those damages in case something happens. However, once you pay the car off, it is up to you whether to carry full coverage insurance.
Mortgage lenders make you do the same thing. Once you have paid down and own at least 20% or more of the home’s loan to value, it is up to you whether to carry mortgage insurance. But until then, the lender will require mortgage insurance to protect against the possibility that you may default early in the payment plan.
On conventional loans, mortgage insurance can be removed as soon as your equity in the home exceeds 20%. On government loans, the rules are a little bit different and mortgage insurance may be required for a longer period of time.
Instead of writing an encyclopedia on this topic, you can simply ask me about your particular situation and I can explain everything you will need to know.
The process of getting a loan for first-time home buyers in Oklahoma
When you are buying a home for the first time, it can seem daunting learning all the in’s and out’s of the entire process. You keep discovering new requirements, and costs, you didn’t previously know about. But just like a good realtor helps you through the process of shopping for a home and negotiating the price, I will help you shop payments, rates, and fees for your mortgage loan.
The process of getting a loan goes a little something like this:
- Get pre-approved for a certain loan amount
- Go house hunting!
- Make an offer(s) on the home(s) you like.
- Get the house under contract.
- Send me the contract.
- I will start shopping loans and bring you back the best deals I find.
- You chose the loan that has the terms you want.
- We schedule a closing, at a title company, and your chosen lender will wire the money to the title company on the day of closing, to be given to the seller in exchange for a deed in your name to the property.
That, in a nutshell, is the entire process of buying a home. Now, the most important steps are Step 1 and Step 4. Meeting with a lender before you go house hunting is really beneficial, because I can pre-approve you so that you know what price range to be shopping in.
Next, getting the house of your dreams (that’s within your price range) is the next most important part, because once you have it locked down, no one else can make an offer on it, and I now know what I’m working with when I start my process of shopping for loans for you.
About Travis Charles Smith, mortgage loan officer and attorney
Travis is a licensed mortgage broker (NMLS #2596609) and provides mortgage loans to his clients, whether they are looking to invest or simply looking to buy or refinance a home. Avoid the high costs of traditional banks and have Travis get you financing for your next home. Travis has access to a nationwide network of lenders that specialize in mortgage loans. If you are interested, contact us today to get started.