Q: I’ve never owned a home and have so-so credit. I earn $1,000 per week after taxes. I am eligible for a Veteran’s Administration loan but I’m having trouble getting a mortgage. Who can I talk to that can help me?
— Tom F., Las Vegas
A: First, you should know there are more options out there than you may think.
For example, you may be able to take advantage of the newly enacted federal first-time homebuyer tax credit of $8,000.
Also, you should know that your timing is great. With mortgage interest rates at an all-time low, local home choices at an all-time high and prices as affordable as they’ve been in generations, it’s truly a great time to buy a home.
As a real estate professional for nearly 30 years, I think it is especially important in today’s challenging housing market to use a Realtor to guide you through the process of buying a home. A Realtor can explain the mortgage process and will be able to educate you in general terms about each type of loan that is available, such as conventional, VA, Federal Housing Authority and other loan types.
With the recent changes in the mortgage market, changes in Fannie Mae and underwriting guidelines for obtaining a loan, and all the new products that are available, it is equally as important to select a lender who can assess your financial situation and tailor a loan that is well suited to fit your needs.
I would suggest that you ask your family or friends for their recommendations concerning a competent lender based upon their experiences, whether good or bad, and then make an appointment to meet with one or more recommended lenders to get pre-approved for a mortgage loan.
Make certain you get a pre-approval and not merely a pre-qualification. There’s a difference. A pre-approval will be based upon your entire financial picture, a detailed credit report, verification of your employment history, verification of your finances, including any outstanding liens or any other derogatory items on your credit. On the other hand, a pre-qualification only takes into account the information that you provide the lender without actually verifying such things.
The stronger position is to have a pre-approval where all the preliminary work to obtain the loan has been done subject only to you finding a suitable home, with the proper appraisal and inspections being completed as well.
Once you are pre-approved for a loan, you will know exactly what you are qualified to purchase and how much money you will have to come up with for a down payment and closing costs.
Then you can work with your Realtor to find a home that will meet your needs within your budget and be able to close escrow in a relatively short period of time.
With so many buyers looking for a deal right now and many of them paying with cash, you work from more of a position of strength with a pre-approval than you would with a pre-qualification because you have already gone through the loan process.
A qualified and competent lender can also advise you whether you have to clean up any credit issues prior to purchasing a property and can help you through this process. He or she will also be able to tell you what you need to do if you have credit issues and advise you when you will realistically be able to buy the home you desire.
If you determine that you are not able to purchase today, maybe you will be ready within six months or a year.
I applaud you for wanting to take advantage of this buyer’s market. I encourage you to take the steps necessary to make homeownership a reality.
For more information, visit lasvegasrealtor.com.
Sue Naumann is the president of the Greater Las Vegas Association of Realtors and has worked in the real estate industry for nearly 30 years. GLVAR has more than 14,000 members. To ask her a question, e-mail her at firstname.lastname@example.org. For more information, visit lasvegasrealtor.com