Pam Simpson
Broker-Assoc., GRI
(662) 560-8402
mshomeinfo@yahoo.com

Financing your home purchase can seem like an intimidating task - especially to a first-time homebuyer.  But, it does not have to be such an overwhelming experience.  There are generally six (6) items that a lender will look at that can affect your ability to finance your home purchase.

• Credit, referred to as FICO score. 
  Your FICO score is an indication to the lender about your bill-paying history.  A number of things determine your FICO score, but one of the primary factors is paying your bills on time.  Late payments will bring your score down.

• Job History
  A lender wants to see a steady employment history.  They will look at how long you have been at your present place of employment, but this may not be as big a factor depending on the other items.

• Income
  You not only must have sufficient income to pay your home loan back, but also to pay your other ongoing monthly bills.  This is one of the factors that will determine what price range of homes you should be looking at.

• Debts
  As mentioned above, the lender wants to make sure you have sufficient income to pay existing ongoing debts as well as your home loan.  The lender will look at existing debts such as student loans, credit cards, and car loans.

• Type of Loan
  There are many types of loans, all with different downpayment requirements, income restrictions, and home condition requirements.  Some of these will be discussed in more detail below.  

• Condition of Home
  Once you find a home and have signed a contract to purchase it, the lender will want to be assured that the condition of the home meets their loan guidelines.  They do this by obtaining an Appraisal.  This report will tell them the market value of the home as well as any condition factors that should be corrected before they can issue the loan.
  

It is EXTREMELY IMPORTANT to get pre-qualified with a reputable lender prior to beginning your house search.  The lender will do a preliminary credit check and ask you about your job and income.  Based on this information, you will know what price range of homes to look at, what type of loan you will need, and if there are any credit issues that need repair.

Some of the most commonly used home loans in Northwest MS are:

FHA:  Most lenders offer FHA loans.  These loans are good for home purchases below $271,000.  The house will have to meet FHA's minimum property standards in order to qualify for this loan.  The current downpayment requirement for an FHA loan is 3.5% of the purchase price.  The downpayment can be obtained from a gift, a state bond program (such as Mississippi Bond), savings, retirement account, or a few other allowed sources.  This is a great loan and is one of the most frequently used loans in our area.  

VA:  The VA loan is offered by most lenders and is available for United States veterans.  There are service requirements for this loan and the borrower must obtain their Certificate of Eligibility from the Dept. of Veterans Affairs before applying for this loan.  The downpayment requirements are $0 but a downpayment can be made, if desired.  There is a "funding fee" requirement for this loan which normally runs around 2.15% of the loan amount, but can be as low as 0 for certain disabled veterans.  The funding fee can be financed into the loan.  The home must meet certain minimum VA standards and requires a special VA appraisal.

USDA:  Many portions of Northwest MS qualify for the USDA Rural Development loan.  This is a great loan for homebuyers because it carries a $0 downpayment requirement and there is no mortgage insurance required.  There are income restrictions and the home has to meet certain minimum standards.  There is a 2% funding fee which can be rolled into the loan.  Not all lenders are equipped to do these loans.  You can contact me for a list of lenders who can do these loans.  

Specialized Loans:  Additionally, there are some specialized loans that are specific to certain houses or condition issues.  There are FHA loans with a reduced downpayment for HUD home purchases.  Buyers who are thinking about a fixer-upper may wish to look into the special rehab loan known as the FHA 203(k).