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ASK the Loan Man Hans Bruhner - December 2016 - Feds Raised Rates...So What?


ASK the Loan Man - Hans Bruhner
First Time Buyer Help

by Hans Bruhner

First Time Buyer Help

I have helped a lot of first time buyers and I have also had to tell a lot of them that they either can’t get what they want or they need to set their sights a little lower.  Even worse is if I have to tell them that they are qualified but only up to an amount that will likely not find them a home in Sonoma County.

Some clients have gone further north up to Cloverdale or Mendocino county in search of a less expensive home. Others move to Lake county and quite a few have gone to Solano county in search of more house for the money. 

There are many ways to achieve the desired result of owning a home but for the most part you need to have enough money for closing costs and down payment and you need to make enough money to qualify to make the payment. Good credit helps but it doesn’t have to be perfect.

First things firstYOU DON’T HAVE TO HAVE 20% DOWN PAYMENT! For all loan programs you will need 2-3% of the house value for closing costs on top of the down payment. You can get into a conventional loan with as little as 5% down. With FHA you need only 3.5% down and we have lender credits available to help with closing costs. If you are in a rural area we have USDA loans with NO MONEY DOWN and VA loans for veterans can be had with no money down also. There are many grant programs to help with down payment, just ask.

If you qualify for the payments and your credit is good but you don’t have the money, a gift from a family member is allowed. HINT: Ask your family members for help or ideas. Wayne Gretzky said that you will miss 100% of the shots that you don’t take.

If you can scrape together the money but can’t afford the payment then consider buying with a friend. I helped 2 couples buy a 3 bedroom house together and they sold it after 4 years and each couple took their profit from the sale and bought their own homes. Once you get into the housing market, it is easier to stay in it and you have more options.

If poor credit is holding you back then you could possibly look at a lease with option to buy. You rent the home for fair market value and typically give a little extra every month towards the down payment. This can be a great way to lock in a price now and buy a house later but if you don’t qualify down the road either because you did not improve your situation or rates went up you have trouble and you could lose your investment. Also, the house could go down in value and you agreed to buy it for more. This one has worked for many people but it can end badly too. It helps to make sure you have spoken with a mortgage professional to make sure you can get over your obstacles down the road.

The bottom line is that the first step in buying a house is the desire to buy a house. If you have that desire then feed it and nurture it and do some investigating. GOOD LUCK!


Need to know more? Please send me your real estate and mortgage related questions. I am happy to answer you and it may become the topic of a future article.