Real Estate Blog

Every Monday Morning at 8:15am, join me on my Facebook page as I sit down with a local lender, and do a live interview and talk about a Mortgage Tip that may help YOU with your next Real Estate Purchase. 

This morning I sat down with Barb Adelaine from BankStar. Today, she explained the different options home buyers have with low down payment loans.  You can reach Barb at 605.696.8562 or barb.adelaine@bankstar.com.  Her office is located at 1301 6th St., Brookings SD 57006 or on the web at www.ebankstar.com 

- Good morning everybody, Shane here from the Brookings Home Team, powered by Century 21. Monday morning, 8:15, that means it's Monday Morning Mortgage Tip. And this morning I am graciously sitting next to, is it graciously, I don't know?

- Eh.

- I have the honor of sitting next to Barb here from BankStar. And we'll just jump right into it, Barb. Thanks again this morning for jumping in here with us.

- You bet.

- And what do you have for our tip today?

- Lately I've had a lot of people ask me can't they just preapprove themselves? Like they don't wanna take time to go to the bank and it shouldn't be all that hard, it's just a math problem. So I'd like to kind of run you through it just real quickly. If you wanna get super simple, what we're really looking for is that the house payment, so that includes taxes and insurance, maybe you'd have some mortgage insurance, maybe you belong to a home owners association at the house that you're looking at, those kinds of things. All the things about the house would be about one third of your income for each month. So if you look at your pay stub and you find your gross, 'cause we work off gross, before they take the taxes and everything out of it. About one third of that is gonna do it. The technical answer is 28 to 29%, but you can see that's about one third, so that'll get you there. That sounds way too simple to come to the bank for. But then there's a whole bunch of ifs, and ands and buts, and all of those technicalities. How that gets calculated are where you need a professional. Some examples would be if you change jobs or you just come back to the workplace after an absence. Or if you do any kind of self employment, that's gonna have an effect on your income. And most people go well it could only be better, right? Well as an example, if you have a hobby farm or if you sew pillows and sell 'em to people at the fair, and you take that as the expenses as a deduction on your tax returns, and you take everything you can to reduce your taxes, that might be a negative bottom number for that little business. And when it is, then that goes from being making money to losing money in the bank's way of figuring things out. So instead of adding to your monthly amount you can spend on your house payment it actually takes away from it. So if you have anything complicated like that it's good to go talk to a professional. The next thing that people always ask me about is they heard you don't need a down payment. And that's true for some people and not for some other people. So you have to kind of figure out some programs here and see what you're eligible for. Veterans, whether they were veterans in World War II or they're currently in the National Guard, any kind of veterans may be eligible for 100% financing. There are some people who could use the first time home buyers program, and they have some that are available for 100% financing. So you kind of need to go through these numbers with, again, a lender to make sure that you know if you can do 100% financing. If you can't though a lot of people bounce right to oh no I have to save up 20% and that's a ton of money. I don't know how I'm gonna do that. And the truth is there are quite a few programs that are for three or five percent down. When you're looking at a $100,000 house five percent is just $5,000. So that doesn't sound so bad as 20% down. When you have those lower down payments you have some mortgage insurance and that goes in the calculation of how much house payment can you afford. But you're still, even if you get 100% financing you're still gonna need some money for your closing cost. So people wonder what those are. The first part of course is that down payment, if you have one. So we've gotta save some for that. And then the bank has some fees for working through your process. In our area it's most typically one percent of your loan amount, so not your purchase price, how much you're borrowing. And then you have home owner's insurance. And you get to go choose your agent, just like you chose your realtor and your banker. After that it's all third party fees, and the bank needs to order these. And they're things like your appraisal and your title insurance, finding out if you're in the flood zone or not. Maybe doing a survey to make sure the house is all on the land or the lot that was described with it. So there's a lot of things going on, a lot of moving parts that you could stub your toe on here. And that's why it's good to get to a trained person to help you with this. Any bank, or any lender that you go to is gonna have these little green booklets, it's called a Tool Kit. The Consumer Financial Protection Bureau put those out and it has all the math in there for you. It warns you that there still could be some oddities on each person's situation, and that's what we're for. So if you get a chance it's worth the time for a lot of reasons to go sit down with the banker for an hour before you decide to go looking at houses so you get in the right price range and you don't get disappointed once you're ready to make that offer on the one you love.

- Wow. A lot of good information. You bet. And yeah it's not as simple as saying hey I make x amount and I have x amount in liabilities. I'm approved. No so much. Plus, like you said, you got, there could be some really great options for programs that you might not even know about that you could qualify for.

- Indeed.

- Which would help with that as well. So, all right, Barb, thank you. Great, great information today. So if you have any questions for Barb, feel free to reach out to her. Again, her information's on top, on the bottom or on the side, wherever your device allows you to see that. And if you do have questions for any of us here going forward, feel free to let us know and we'd be happy to answer that on the next episode. And please, sorry. Please share or tag this video with anybody else you think would be interested in it as well. So thanks again for watching this Monday Morning Mortgage Tip. We'll be back next Monday for some new information for you guys. Thank you.

Thinking of selling and/or moving to Brookings, Volga, or any surrounding areas? Got questions? I’m here to help! Visit BrookingsHomeTeam.com for more details!