No matter whether you are a Vet trying to buy your third house with lowVArates using your VA loan eligibility or you are a first time home buyer tapping into some down payment assistance program be prepared to show a lot of documentation to get your mortgage.

Take for example your tax returns. In the past, before the mortgage crash of 2007-2008, you could get away with only having to provide 1-2 years of W-2′s and a paystub to prove your income. Today, however, in 2011 be prepared to show the 2-3 years of full tax returns including your W-2′s and at least a couple of pay stubs.

Here is a more thorough list of documents you’ll need to get a mortgage in 2011

• 2 most likely 3 months of bank statements
• At least 2 pay stubs covering the last 30 days of your current employment and showing year to date totals
• 401K, IRA, and Money Market quarterly statements
• If you have had a bankruptcy within the past 10 years, be prepared to show your bankruptcy paperwork. You may not have to if you have been out of bankruptcy for more than 3 years – but have the paperwork on hand just in case.
• Annual award letters from Social Security if you need to use what you make from it to qualify. You will also need to show several months of bank statements that reflect the regular deposits from Social Security.
• If you have had a divorce – even if it is several years old, be prepared to show divorce paperwork – including the settlement papers as well as custody papers. If you had some credit accounts split between you and your ex-spouse and they are responsible for paying some accounts still on your credit report – you may have to show proof that they are making the payments per the agreement.
• Annuity income or other forms of monthly interest income will need to be documented and be prepared to show the statements proving the income will last at least 3 years.
• Similarly to annuity income, if you are receiving any child support or alimony be prepared to show your legal documents to prove that you’ll be receiving that income for at least three years. In the event of child support you may have to provide birth certificates to prove your child’s (children’s) age(s).
• You will need to show proof of your identity – this is typically covered with a driver’s license and a social security card. You may also show a green card if you have one. Check with your loan officer about what forms of ID you may need if you have questions.

A good idea when it comes to starting into the home buying process is to gather this information before you speak to any loan officers. If the loan officer is doing their job correctly they will ask you a lot of questions about your personal financial situation. With your documents on hand you’ll save a lot of time accurately answering questions. You will also be prepared to provide a nice tidy packet of information if and when the loan officer asks for it.

It’s always a good idea to talk to at least three different lenders to get a variety of opinions on what you might qualify for as far as home price and mortgage programs go. There are many programs out there. If you are a Vet, you could go with one of the specialty VA mortgages like a VA hybrid loan or a regular VA loan since those loans usually do not require a down payment or mortgage insurance. You could also look at an FHA, USDA or conventional mortgage.

Now down to the question of pre-approval versus pre-qualification. Being pre-qualified is the first step in getting a mortgage. You supply the lender with a basic picture of your finances and they give you an idea of what you might be able to borrow. Getting pre-approved is a much more involved process.

The pre-approval process includes providing copies of your financial documents to the lender, including pay stubs, bank statements, tax returns, credit report and W-2s. You will also have to sign a loan application. From there, the lender will send all this information to their loan underwriters for review. The underwriter will tell you the maximum amount for which you can qualify.

The lender then issues you a pre-approval letter, which may vary from state to state. You then can give this letter to your real estate agent. With the letter, your agent knows in what price range your home will be and can direct you accordingly. The seller can also accept your offer knowing that you aren’t wasting their time. When a seller accepts an offer they basically take their home off the market, so if you aren’t pre-approved it could be a problem for the seller.

After you agree on a sales price and have a signed sales contract, the underwriter will look at all factors in the loan, including the contract, home appraisal, title and deed information, and inspections. If everything looks good, your loan will go into the final stages of approval, where the underwriter will re-check your financial and credit documents as well as verifying your employment. After this, your loan gets approved and you can sign the closing documents.

Don’t forget the added costs of homeownership. You can always buy less house than you qualify for and get a lower monthly mortgage payment so compensate for the added expenses. You don’t want to find yourself in the situation of having a big house but no extra money with which to enjoy life.

To answer this question you must put your question into proper perspective. Are you trying to buy a home using a VA loan, FHA loan or some other loan program, or are you just wondering about making your rent payment for some other reason?

As a person looking to qualify for a mortgage, you will definitely need to keep paying the rent. Often as part of qualifying for a mortgage you may be asked to provide cancelled checks of your rent payments. Typically, if you need to provide cancelled rent checks you will need to show at least 12 months. For mortgage qualifications, housing payments (either as a mortgage payment or as a rent payment) are one of the most important credit requirements. If you make your rent payment or mortgage payment on time qualifying for a mortgage will be a lot easier.

In reference to making your rent payment – if at all possible you want to make sure you make your payment with a check. This is the strongest proof you have of making your payments. Cash receipts and landlord letters are not always accepted.

If you are not trying to qualify for a mortgage you should consider the idea that you have a legal requirement to the landlord to continue making payments. In general, your lease agreement legally obligates you to make your rent payment. If you stop making your payments, you could possibly be evicted. If you have a question about the legalities of your state and your situation then you should contact a real estate attorney licensed in your state to determine your exact legal standing.

I’m not sure why, but the Roth IRA rules for tapping into your Roth IRA without penalty or taxation, that I know of, stipulate that you qualify as a first time buyer if you haven’t owned a home in the past two years. This is contrary to most first time home buyer mortgage programs which have a three year requirement where can’t have owned a home. None the less it is good news if you are buying a home as a first time home buyer and want to tap into your Roth IRA.

A Few Rules To Play By

• There Is A Limit: In general the rules allow for an eligible first time home buyer who has a Roth IRA to pull up to $10,000 out of their Roth IRA to purchase a home. This limit is a lifetime limit.

• Get Qualified First: One thing you do not want to do is pull your money out too soon. If you plan to use your Roth IRA money to buy a home, make sure that you get yourself qualified for your mortgage first. The limit for accessing your Roth IRA for buying a home is 120 days. If you pull your money out too early you could be subject to having to pay penalties and fees for early withdrawal, so be careful.

The process of getting qualified for a home should even include finding the home. In today’s home buying market – 2010 – it is taking a fair amount of time to not only get through the bank qualifications but extra delays can be expected if you are trying to buy a home that is a short sale home.

This just about covers some of the very basics about using your Roth IRA to buy a home. Of course, to determine your exact qualifications you should consult with tax preparer or financial advisor.

Family Who Used an FHA Mortgage To Buy A House

Since the late 1990′s to prior to the current credit crisis, the demand for FHA home mortgage loans was limited to first time home buyers and those home buyers who less than perfect credit. Since the mortgage and real estate crash of 2007-2008, many lenders have gotten rid of other loan programs. As a result, FHA mortgage loans have become the loan of choice for many people.

Many people living in states like Arizona, Pennsylvania, Tennessee, Georgia and numerous others, are choosing FHA mortgage loans as the way to finance their first home or their next move up home.

You may not be aware of this, but FHA, which stands for Federal Housing Administration, is not actually a lender who lends you money. Rather, FHA only acts as an insurance company to insure your home loan, that you do get from a mortgage lender, in the event of default. This means that when you take out your FHA loan, you will be required to pay (up front) something called UFMIP — short for Up Front Mortgage Insurance Premium. This amount of money varies from 1.5% of your loan amount to 3% of your loan amount depending on loan program.

General FHA Mortgage Loan Highlights – Features – Benefits

• Down payment is 3.5%, but it can be a gift from a relative
• FHA home loans do not allow pre-payment penalties
• Monthly mortgage insurance is required on all FHA loans
• FHA loans allow the seller to pay closing costs
• Technically there is no minimum FICO credit score requirements, but 620 is an unwritten guideline for getting a mortgage approval.

FHA Streamline Refinance

For anyone who has an FHA loan currently, when rates drop the best refinance program for FHA loans is the FHA streamline refinance. The FHA streamline refinance is the easiest way to get a lower rate. The primary criteria to be eligible for the FHA streamline is that you have made your mortgage payments on time for the last 12 months.

FHA 203k Streamline Program

Because of the number of foreclosures in Arizona, Nevada, California, Texas, and Florida the FHA 203k streamline rehabilitation loan is great for buying bank-owned properties. The reason for this is because the FHA 203k rehab loan allows you to finance repairs right into the loan and foreclosure properties tend to need repairs.

When you finance a home with the FHA 203k loan, the money set aside for repairs can be paid directly to the contractors and up to 35,000 can be set aside. If you think the FHA 203k streamline might be an option for a home you are considering, be sure to speak with a loan officer who has experience with FHA 203k streamline loans.

FHA 85% Cash Out Program

For different reasons, many times people will want to access a portion of the equity in their home. The FHA 85% cash out program makes that possible if you have enough equity in your home. Many people find that by paying off high interest debts, they are able to get in a better overall financial position.

Summary

If you want to buy a home, buy a foreclosed home, purchase a fixer upper house, need to refinance you may want to consider an FHA home loan.

Here’s What So About The Real Estate Market That Makes It A Good Time To Buy:

• $8000 First Time Home Buyer Tax Credit – The $8000 first time home buyer tax credit is good for first time home buyers who buy a home in 2009 before 12/1/2009. This tax credit puts money directly into the first time buyers pocket, but only at tax time next year. More information on First Time Buyer Tax Credit. See below for explanation about tax credit bridge loan offered by State Housing Authorities, FHA lenders and HUD approved non profit housing agencies.
• Falling Home Prices – Just about everywhere you go in the US real estate values have been on the decline for nearly 2 years now. Who knows if home prices will continue to fall. They are back to levels lower than they were in 2003.
• Mortgage Interest Rates – Mortgage rates have been near record lows for most of 2009, and even with the slight increase in rates as of the beginning of June 2009, rates are still very attractive and low to make lower priced homes even more affordable.
• Abundant Inventory – With the huge housing market slowdown and decline in property values, there is a lot of inventory for a home buyer to choose from. In some cases there are great move in deals, and there are plenty of deals that require some home improvement work as they are a result of being vacant and on the market for some time. Home buyers can pick and choose to find just the right house for their needs and likes.
• Short Term Tax Credit Bridge Loan – This program is new as it has just recently been launched by HUD and FHA to provide a way for first time home buyers to use the $8000 home purchase tax credit when they buy their house instead of having to wait until tax time.

What you just read were some of the good reasons to buy a home in the current buyer’s market. Now we’re going to cover some of the reasons to consider not buying a home in the current state of affairs with the US economy and housing market.

• Job Certainty – many prospective home buyers are nervous about the job market and layoffs. No job is guaranteed right now and if you do loose your job, it is a tough getting a new job. So, many people do not want to take a chance with their finances until the job market brightens up.
• Housing Prices – some folks are still waiting to see what home prices are going to do. Many feel that home prices are going to continue to go down meaning that there are even greater deals to be gotten.
• Interest Rates – Similar to housing prices, are rates going to continue low or go even further?
• Less than perfect credit – gone are the days of buying a home if you have credit scores less than 620. While FHA and VA underwriting guidelines still allow for lower FICO scores, mortgage investors are not buying mortgages where scores are less than 620.
• Little to No Cash Reserve – with the slow down in the economy, many people just do not have money for the down payment and trying to save for a down payment is difficult.

With these reasons, buying a home might just be a fantasy and waiting it out a reality. If your credit scores are low – do some credit repair to improve your scores. If you do not have enough money for a down payment arrange for a gift from a relative, or see what your employer has to offer. Some employers have programs to help their employees buy homes – your may be one of them.

No matter what situation you are in buying a home in today’s economic environment does take some careful consideration and planning. You may consider a home buyer education course. If you are a first time home buyer, you may be required to take a course if you seek to use a first time buyer program or a down payment assistance program to buy your home. Be proactive and take a class ahead of time to prepare you in advance for the journey that lies ahead in buying a home.  Good luck and happy house hunting.

As great as the Lease to Buy Contract is for becoming a homeowner, there are some rules to follow – guidelines to follow – to make sure your efforts are rewarded in the future with a mortgage.

The first thing to ensure about anything you do is to get it in writing and document everything. For example, every time you write a check for the lease, or monthly rent, home repairs authorized by the property owner, down payment deposits or anything else associated with the home, make sure you get a copy of the check before and after it is cashed.

Additional Items For Your Lease To Buy Contract

• Make sure you keep a copy of the lease purchase agreement and that it spells out how your down payment deposit is handled if in fact your are paying something. Keep copies of your check, any receipt you get, and the canceled check.
• If you can, make sure the paperwork is reviewed by a real estate attorney to make sure you are getting what you think you are getting in the contract.
• Make sure that the lease contract on the home is recorded against the deed of the home by a title company or real estate attorney.
• Ensure that you have the first right of refusal to purchase the home outright during the lease period if for some reason another buyer for the home comes along and offers your home seller money. The last thing you want it to have the home sold from underneath you. You also want to make sure your deposit is protected if in fact you do not purchase the home.
• Ensure you establish a sales price and that that number is written into the lease contract. You do not want the home seller getting greedy on you down the road if the value of the home goes up before you take the deed in your own name.
• If you plan on making contributions to a down payment over time through your lease payment, make sure that your lease payment is greater than the average rents for a similar home. If it is not, you will not be able to count the payment as down payment and you may run short of money down the road.
• Make your monthly payments with a check. It is imperative that you do this so you can show a rental history. An underwriter will be looking for you to prove your rental history.

For further explanation on some of the topics and to read the source for this post visit: Lease To Buy Agreement – Key Contract Points To Protect Yourself

Home Purchased With Lease Rent to Own Agreement

How about a lease rent to own agreement as a way to buy a home with bad credit? Ever heard of it before?

The lease to own option is a great way to buy a home if you have had recent credit problems and cannot currently qualify for a mortgage. Perhaps you have just gone through a foreclosure, if so, you may have to wait for up to 5 years to be able to qualify for a mortgage. But with a lease rent to own option you may be able to enjoy the benefits of being a homeowner sooner than later.

What Is A Lease Rent To Own Agreement?

The lease rent to own agreement is an agreement between you, a potential home buyer, and a home seller, or home owner, that allows for you to lease the home for a certain amount of time with the ultimate being that you buy the home from the seller after a period of time.

The lease rent to own agreement is also called a lease purchase option, or a lease to own, or a rent to own agreement. This agreement allows you establish a rental history that demonstrates a commitment to homeownership which his what any mortgage underwriter wants to see to aide in their mortgage application approval process.

With prior and recent credit problems you will most likely have low credit scores which will keep you from qualifying for a mortgage. With a lease rent to own agreement, all you have to do is convince a home owner to sign a lease purchase agreement with you. Typically in this situation – money talks. If you have some money saved you can use this for a down payment on the agreement.

If you do have to put money down, make sure to make photo copies of all paperwork including the check before you give it to the home owner as well as the canceled check. Later when you try to qualify for a mortgage this paperwork will be very important in helping you establish how much money you used as down payment so you can get credit for it on your mortgage application.

For more information on the Lease Purchase Agreement visit: Lease To Buy Home Purchase Option Good For Bad Credit Home Buyers.

Down Payment Soucres

Great question. What can you use for your down payment if you need down payment help? Largely this depends on what type of mortgage loan program you are using to purchase your new home. Are you buying a home using an FHA home loan, or a Fannie Mae conventional mortgage such as the HomePath Mortgage Program? You may be using a VA loan or a USDA Rural Development Mortgage to buy a home. With each of these, the rules are a little different.

Additionally, if you are using a first time home buyer program through your state housing authority or state housing agency their requirements for your down payment may be spelled out a little differently than a comparable regular home purchase loan program. Some mortgage loan programs require you to have $100 of your own money with little focus on how you get the rest of the money. Others do not want you to have too much of your own money where they cap your bank account at $1000.

As you apply for a mortgage make sure you cover your down payment questions with your loan officer or housing counselor very carefully. You do not want any mistakes.

According to FHA, you must have 3.5% of the home purchase price for down payment, acceptable sources of down payment are the following:

• Cash in your bank account that has been there at least 60 days. The underwriter does not want to see any large deposits into your account when they look at your last few months of bank statements. If there are some, be prepared to document where the money came from. During the spring a common large deposit is a tax refund check. You can prove this by submitting your tax return for that year.
• A gift from a family member or close relative to cover the full 3.5%. Make sure that this is a gift and not a loan.
• Government down payment assistance from any Federal, State, and Local Governmental Agencies and Government Approved Non Profit Organizations
• FHA approved Non Profit Organizations such as Neighborhood Housing Services, CCCS – Consumer Credit Counseling Services, Council of Governments, Community Services, Accorn Housing Services and many other community development organizations.
• Money from an employer in the form of an employer/employee contribution
• Money borrower from a retirement fund such as a 401K or IRA.
• Money borrower against real collateral such as another home, or an automobile.

Sources of Down Payment That You Cannot Use

• Money borrowed on a credit card
• Money borrowed from a friend
• Mattress money – unless you can provide proof of where the funds came from
• Money borrowed from a family member or relative – the money from a relative must be in the form of a gift as previously stated

The previously listed sources of money are specifically listed for FHA. However, if you are looking for a conventional mortgage through Fannie mae or Freddie Mac then this list will apply in some way. Make sure you speak to your loan officer carefully about your down payment options if you plan to get help coming up with your down payment.

For VA and USDA Rural Housing loans, down payments are usually not required. Home sellers may contribute up to 6% of the home’s sales price to your closing costs. So the rules for these loans are very flexible and leave the door wide open for down payment options.

Hopefully you now have an idea of what kind of money sources you can use for your down payment.

Get A Home Loan By Applying For A Mortgage First

The simple answer about how to get a home is to go to your local bank or call a mortgage company and apply for a mortgage. Once you get your mortgage lined up you can then go find a house. But this is in a perfect world and there is a lot more to it.

Let us cover applying for a mortgage…

As you apply for a mortgage there will be a lot of questions thrown at your from your loan officer. They will ask you questions like:

• What is your name, address, phone number, email address?
• How long have you been living where you are living?
• What do you pay in rent?
• Do you pay your rent in cash, check or money order?
• Do you pay a management company or a private landlord?
• What do you do for a living?
• How much money do you make?
• How long have you worked there?
• How long have you been in your line of work?
• Do you get over time or bonuses?
• Are you self employed?
• How is your credit?
• Have you had any bankruptcies, foreclosures etc.
• Are you married? If so, is your spouse going to be on the loan?
• How much money do you have for a down payment?
• What cash assets do you have? Do you have any 401K, IRA or Money Market Accounts?
• Are there any other sources of income that you would like to tell us about?
• Are there any other loan payments that you would like to tell us about?
• What kind of monthly mortgage payment do you want or are comfortable making?
• Do you want to escrow your taxes and insurance payments?
• How long are you planning on staying in the home you want to buy?
• Do you want an interest only loan, or a fixed rate mortgage, or an adjustable rate mortgage?
• When do you plan on buying a home?
• Are you a veteran of the military?

There are a sampling of the questions that you may get asked when you start talking with a loan officer. Depending on how you answer these questions, you may get more. Your loan officer may not ask these either.

Once your loan officer gets what they need to know and they have discussed what they think you pre qualify for, they will want to move to the next step which is to get your credit report. Getting your credit report is a very important step in how to get a home loan as it tells the loan officer what your credit history and credit scores are like. With your credit scores in hand, they can then start to really narrow down what kind of mortgage programs you will fit into.

If you plan on moving forward with getting a mortgage, your loan officer at this point after getting your credit report should send you a set of loan documents which should include a loan application and a lot of other forms for you to review, complete, sign and return. Most of what the loan officer sends you should already have much of your personal information filled in.

One of the most important documents you should get from your loan officer is the Good Faith Estimate. The Good Faith Estimate is the document that tells you exactly what your loan closing costs are going to be as well your monthly payment.

Next up in this series is what happens after you apply for a mortgage.