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Qualifying for a loan is the first important step in the home-buying process
By Anita Stratos
I t's a buyer's market in the world of real estate, with interest rates at their lowest in years and plenty of homes on the market. While the focus has been mostly on foreclosures and the difficulties some homebuyers have had in securing mortgages, Steve Gross, senior loan officer at Jersey Mortgage Co. in Manasquan, says it's easier than you may think to be approved for a home you can truly afford.
"People with credit scores of 580 and above can still get an FHA loan," Gross said. "We can help homebuyers understand what they need to do in order to qualify for a loan."
Gross advises that homebuyers contact a mortgage company early to begin the process and help them get the best possible advantage. One of the first things Gross recommends is that homebuyers check their credit scores and get them as high as possible. He will help clients resolve any outstanding credit issues before they apply for a mortgage and advise selfemployed clients what they need to do to eliminate any potential problems stemming from their businesses.
Likewise, Ann Marie Burke, president of Amity Mortgage Corp. in North Brunswick and Seaside, said that her company helps repair poor credit so their clients can purchase or refinance a home.
"Ideally, people should consult us first so we can see how much they can afford," Burke said. "We can give them their preapproval letter immediately, so they'll already be qualified for a certain amount. This gives them more leverage to make an offer on a home. Buyers may find out they can afford more than they think. Firsttime homebuyers [defined as never having owned a home or not owning a home for at least three years] could qualify for a tax credit of $8,000."
Both Amity Mortgage's Web site, www.amityhomeloan.com, and Jersey Mortgage's site, www.jerseymortgage.com, have plenty of helpful information and a mortgage calculator where buyers can get a general idea of what they'll be able to afford.
Before a Realtor will show clients homes and certainly before making an offer on a home, prospective buyers need to get a preapproval letter from a mortgage consultant. Jersey Mortgage's loan officers can go to client's homes, including nights and weekends, to check their credit and other necessary information, and give them their mortgage limit immediately. Amity Mortgage will also obtain clients' credit reports, figure their debt-to-income ratio, and inform them of all the other expenses associated with homebuying and ownership, so their clients never encounter unexpected costs. Both companies give clients their preapproval letter on the spot.
Several different types of loans are available to homebuyers. The FHA loan, which is available for people with credit scores as low as 580, requires a down payment of only 3½ percent. Gross said this is a very popular loan among homebuyers right now, and Burke points out that although these loans are credit sensitive, the loan ceiling has been raised so that buyers can now borrow higher amounts; as a result, more people are able to qualify. People who prefer conventional fixedrate mortgages can opt for a repayment period of 15, 30, 40 or 50 years; Gross said that repayment rates for this type of mortgage usually start off higher and then lessen over time. Adjustable rate mortgages are available, but they're not for everyone.
"We recommend adjustable rate mortgages for people who only plan on being in their home for the short term, maybe a couple of years," Gross said. "They could save about 1½ points on the rate, but it's not something for anyone planning to stay in their home for a long time."
For buyers of higherend homes, Burke said that although jumbo loan programs (for those borrowing over $750,000) are harder to find, they're still an option that Amity can offer to qualified buyers.
There are also low- or no-down-payment mortgages for first-time homebuyers who will stay in their home a minimum of five years. Gross said these homebuyers can possibly qualify for a grant of up to 4 percent, but it's best to check with your mortgage company for details as they may vary by county.
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