Home Buyer Q & A

  • We are interested in purchasing a home. The asking price is 325,000, and we do not know if we want to go FHA or 95%? What is the difference? Both are good loan programs, and it really depends upon your needs. If you had a credit issue in the past and your credit scores are not quite as high as they normally might be, then FHA is your program. If you have great credit and just do not have a lot to put down, then the 95% program is beneficial for you. Recently, FHA increased their mortgage insurance structure and is due to increase again in June 2012, The monthly mortgage insurance on a loan amount of this size would be approximately $366/month. On a conventional program at 95%, the monthly mortgage insurance is much less expensive, approximately $142/month.
  • We are looking at purchasing a home in North Carolina. We would prefer not to put any money down. Is this an option? It depends on the geographic are of North Carolina. The USDA Guaranteed Rural Housing program will accomplish this in NC, but each address has to be checked on the USDA maps to ensure the property qualifies. We then also need to check income versus number of people in the household to ensure the borrower qualifies. So, USDA is a two-step process: property and income.
  • We want to build a home. We puchased the lot about 2 years ago. How do we calculate our construction loan amount? If you have owned the lot for more than 12 months, the construction loan is determined by your cost of construction plus the appraised value of your lot. If you have enough equity in the lot, you may not need any additional cash in the project. The first draw of the construction loan is to always pay off any loans against the lot and ties the house to the piece of property in one loan, which will then convert to your permanent mortgage.
  • I have gone through a rough divorce. I would like to purchase home, but I do not know if my credit has been damaged. What is the process? Oftentimes credit may need some repair after a divorce. The best thing to do would be to get pre-qualified. At that time, a tri-merge credit report is pulled, so we can see exactly what has happened. We then review the credit report together to determine our direction. We do have a program, Pathway to Home, where we assist you with reminders through e-mail of steps in the process to credit report to assist you in becoming mortgage ready. We determine our timeline and what needs to happen between then and now.

- Jennifer Keenan, Senior Mortgage Consultant, NMLS# 101837, Tidewater Home Funding 757-366-8690