FIRST TIME HOME BUYERS: DO YOU QUALIFY?

Natasha Hunsaker and Marcia Reynolds were renting a 2 bedroom apartment in Wheat Ridge for $1025 per month when they started wondering whether they might be able to purchase a house of their own. “We kept seeing these articles about how this is supposed to be a great year to buy a home”, said Natasha, a General Manager for a soft goods manufacturing company. “But we really didn’t even know where to begin”.

The federal government is encouraging first time home buyers like Hunsaker and Reynolds to take the plunge into home ownership. But the water is still pretty frigid with an endless supply of bad news about housing. So this year congress enacted an economic incentive for first time home buyers in the form of an $8000 tax credit that can be cashed this year, even if you’ve already filed your 2008 tax returns.

So Natasha called her long time friend and Realtor, Tammy Marasia, a Keller Williams agent in Westminster. “She sent us so many refrigerator magnets over the years, I had to call her”, joked Hunsaker. Marasia, an experienced residential and commercial broker, was no stranger to world of first time home buyers. After meeting with the two women and conducting an initial needs assessment, she recommended that they speak with a mortgage broker first. “The rules and regulations have changed so much concerning home loans”, advises Marasia, “that I always counsel my clients to seek out an honest and reliable lender before anything else”.

The most popular loan program for first time home buyers is a government backed loan through FHA (Federal Housing Administration). Buyers can usually obtain an FHA loan with a minimum 625 credit score and a 3.5% down payment. But even if you know your credit score or don’t have the minimum required down payment, experts recommend seeking the advice of loan professional to receive better clarification and explore potential options. In Natasha and Marcia’s case, their Realtor referred them to Mitch Friedman with Premier Mortgage Group, a 20 year veteran in mortgage lending.

“When I met with Natasha and Marcia, they were worried about their credit and down payment and whether they could qualify”, explained Friedman. “If you’ve never purchased a home before, and you hear all the news about people foreclosing, it can be a pretty intimidating and confusing.” On the one hand, most housing experts agree that this is great year to buy a house, while on the other, wary customers don’t want to end up like so many before them on the foreclosure list. In Hunsaker and Reynold’s case, their combined credit score fell below the minimum requirement for an FHA loan. So now their fears were coming true—they thought they wouldn’t be able to qualify for a home loan.

“Mitch gave us some great advise”, said Natasha, “he showed us exactly how to clean up our credit”. With some persistent phone calls, the two women were able to effectively raise their fico score enough to make the difference. Then came the issue of the down payment and the cost of obtaining the loan, or “closing costs”. They estimated that they would need almost $10,000 to make it all work. Like most first time home buyers, Hunsaker and Reynolds didn’t have much in savings and weren’t sure how they were going to get it.

But that’s where the national and state governments are jumping in to help first time buyers. The federal tax credit, with a maximum of $8000, can be obtained with a simple Tax Amendment, if you don’t want to wait till next year to receive the money. Or, the Colorado Housing & Finance Authority (CHFA) has a program that will allow you to utilize up to $6000 of the tax credit and apply it toward your down payment. The CFHA Jump Start program, as it’s called, is actually a short term second mortgage, which can be repaid once the home buyer receives their tax credit from the federal government.

Natasha and Marcia decided to save enough money for the down payment themselves, and with a clear goal in mind, they were able set aside the money they needed. Now with funds in the bank and a Pre-Approval letter in hand, they were ready to buy a house. “We started looking at houses, but quickly found out that most of the so called foreclosure deals needed a lot of repairs”, commented Natasha. “Then Tammy showed us a cute little house in Thornton that had been totally remodeled”. But the price was higher than their approval limit, which meant it was time for their Realtor to show off her negotiating skills. Marasia recommended that they offer several thousand dollars lower than the asking price and additionally ask the seller to pay for the buyer’s closing costs. The seller countered their offer, but in the end, agreed to pay their closing costs. Bingo. They had a deal.

Then it was time for the home inspection. Being fully remodeled, the house faired well under the scrutiny of the inspector, expect for one major item. The electric panel was mounted incorrectly, which after some persuasion from the buyer’s Realtor, the sellers agreed to fix. The two women were ecstatic; it really seemed like the deal was coming together, thanks to a lot of good advice from professionals like Mitch and Tammy. On March 26, 2009, Marcia and Natasha bought their first home. “We couldn’t be happier, says Hunsaker, we started out thinking we couldn’t qualify for a loan and now we’re home owners!”

Mitch Friedman and Tammy Marasia sponsor a series of First Time Home Buyer classes, which run once a month. The free, no obligation classes are designed to help educate people about the process of purchasing a home for the first time. “I think there is a lot of desire on the part of first time home buyers to educate themselves and learn the correct way to purchase real estate”, counsels Friedman. “With so many incentives, options, and advantages in 2009, we want to give people the resources and knowledge to make good home purchasing decisions.” The next class will be held at the Arvada Public Library on June 23 from 7-8:30 PM. For more information about the free First Time Home Buyer classes, visit www.cfthb.com or call Jim Lyons at 720-581-0342.