Hi, I am Bob Rutledge with New American Funding a progressive and customer oriented Mortgage Company. I have been a Mortgage Loan Officer for over 2 Decades, I have closed 1000s of mortgage, I have experience as a Mortgage Underwriter too. I specialize in First Time Home Buyer Programs, Renovation and Construction Mortgages, and knowing the best mortgage options, programs and guidelines to provide the best to my clients. I concentrate on making more options available to home buyers! When we work together you will find that I answer all questions, sometimes before they are asked. I prefer to be available to you as much as my family and life will allow, I am accessible to you via my cell 314-913-9678, text, or email email@example.com, or you can visit my website at www.bobrutledge.com.
(1) Shopping for a
house before a mortgage
It is so much more
fun to look at homes than it is to talk about your finances with a lender. So
that’s what a lot of first-time home buyers do: They visit properties before
finding out how much they are able to borrow. Then, they are disappointed when
they discover they were looking in the wrong price range (either too high or
too low) or when they find that right home they scramble to get financing, and
the mortgage is not something you want to rush or put too little of time in to.
In today’s housing market you want to show home sellers you are a serious buyer
and able to make a serious offer when you find that right home.
How to avoid this mistake: Talk to a mortgage
professional about getting pre-qualified or even preapproved for a home loan
before you start to seriously shop for a place. The pre-qualification or
preapproval process involves a review of your credit, income and expenses. Having
a per-qualification/pre-approval letter in hand will make your offer more
competitive, and most offers today must have this letter.
(2) Not looking for first-time home buyer
As a first-time
home buyer, you probably don’t have a ton of money saved up for the down
payment and closing costs. But don’t make the error of assuming that you have
to delay homeownership while saving for a huge down payment. There are plenty
of low-down-payment loan programs out there.
Besides low down
payment mortgage programs there is a lot of down payment assistance programs available
to first time home buyers. Many times the funds that are available to you from
DPA (down payment assistance) Programs will cover your entire down payment.
Even if you have saved enough for a low down payment mortgage program keeping
your savings in your pocket will allow you to pay with cash for the items you
need for your new home. I see too many home buyers use credit to purchase new
home items, increasing your monthly credit obligations just after purchasing a
Visit my website
at http://www.bobrutledge.com/MODPA to learn more about what is available in the State of Missouri!
How to avoid this mistake: Ask a mortgage lender about
your options. You might qualify for a Veterans Administration or U.S.
Department of Agriculture loan that doesn’t require a down payment. Federal
Housing Administration loans have a minimum down payment of 3.5%, and some
conventional loan programs allow down payments as low as 3%. Ask about down
payment assistance programs as well. Do your own homework too, search for DPA
programs in your area.
(3) Not hiring a buyer’s agent
Too many home buyers
make this mistake! Do not make the mistake of working directly with the
seller’s real estate agent, who was first hired and obligated to secure the
best price and terms for the seller. Do not be persuaded that a Real Estate
Agent can negotiate in all fairness to both sides, it is impossible. As a
novice home buyer, you could be overmatched when negotiating with an
experienced agent who’s working on the seller’s behalf.
How to avoid this mistake: Work with an exclusive
buyer’s agent, who has a duty to work in your best interests. If you do not know
a real estate agent, seek out referrals from your friends and family. But, if
you are working with a Mortgage Lender they will know many qualified real
estate agents in the area and especially an agent who will fit your needs.
(4) Using up all of your savings
If you buy a
previously owned home, it almost inevitably will need an unexpected repair not
long after. Maybe you’ll need to replace a water heater, repair a crack in the
chimney or get rid of hidden mold.
Having money in
your account after you close is one of the best situations for any home buyer.
Besides the home repairs that will come, what about the small items that will
be needed for your new home the moment you move in.
Using your own funds
and not your credit cards will keep you from increasing your debt loan. You
have a new house payment, normally at or higher than your previous rent, try
not to add to your monthly debt with additional credit card purchases if you
don’t have to.
Read about my ZERO
PROGRAM at http://www.bobrutledge.com/zero-down-payment-closing-costs and how easy it is for new home buyers keep their savings in their
to avoid this mistake: Save enough money to make a down payment, pay for closing costs
and moving expenses, and take care of unexpected expenses. This is easier said
than done. But you can buy a home with a down payment of much less than 20%,
allowing you to conserve your savings.
(5) Ignoring a home’s flaws and drawbacks
A lot of
first-time home buyers fall in love with one of the first properties they look
at. They ignore the negatives of the house and its neighborhood.
But you can’t disregard
the downsides forever. For example, you might think you’ll be OK with a
long commute, but after a few months of spending too many hours stuck in
traffic, you’ll wish you had bought a house closer to work.
How to avoid this mistake: Do two things. First,
resolve to visit many of houses before
making an offer, you’ll be less likely to fall in love with the first or second
or third home you look at.
Second, write a list of the
attractive and the unattractive qualities of each house, and pay attention to
each home’s downsides.
(6) Being indecisive
The flip side of
choosing a place too quickly is acting too slowly when you find the right home.
In a market with more buyers than sellers, you have to move fast.
I see this a lot when I first
pre-approve a home buyer, they needed some time to think about it and made an
offer two or three days after viewing a house, only to discover that another
buyer had swooped in and made a successful offer. This will only happen to you
after the first couple times, but by then you will know what you want in a
home. If this happens to you know that it is normal and simply a part of the
learning process of being a first time home buyer…..all things happen for a
How to avoid this mistake: Once you look at multiple
houses, and you get a feel of the market and you know what the market is like
and where the prices are at, and you see something you like, don’t hesitate to
make an offer, because you and 10 other people will be interested in that same
property, this is today’s housing market.
(7) Overpaying for a house
home buyers tend to pay more than experienced buyers would pay for the same
house, according to research conducted by two economists with the Federal
Housing Finance Agency. In their analysis of appraisal data from more than 1.7
million home sales, FHFA economists Jessica Shui and Shriya Murthy concluded
that first-timers overpay by an average of 0.79%, which was nearly $2,200 per
house, according to the data set they examined.
and Murthy pointed to the inexperience of first-time home buyers. Real
estate agents say newbie buyers let their emotions take over, too. First Time
Home Buyers tend to overlook potential negatives and only look at the positives
of a particular house. I tell me home buyers to act with their heads and not
with their heart, but I know I am asking for the impossible so just use as much
of one as the other.
How to avoid this mistake: Ask your agent for
a competitive market analysis, a report that looks at the prices of comparable
nearby homes that have been sold recently. And it helps to fully understand the
real estate process, so seek out as much information as possible. If you
have friend that recently went through the process or are currently seek out
(8) Skipping the home inspection
markets, a lot of buyers compete for a small number of properties for sale. In
these strong seller’s markets, buyers are tempted to waive a home inspection.
It gives them a competitive edge over smarter buyers who wouldn’t dream of
forgoing an inspection before plunking down hundreds of thousands of dollars
for a home.
It’s a HUGE
mistake to buy a previously owned home without an inspection because there
could be expensive, hidden damage that you wouldn’t spot but an inspector
How to avoid this mistake: Simple: NEVER EVER ALLOW
THIS TO HAPPEN. Hire a licensed home inspector. Your real estate agent will
gladly make a recommendation, but it’s better to hire an inspector of your own
choosing who doesn’t depend on your agent for referrals. Plus, require that a
home inspection contingency is included in your sales contract, your BUYER AGENT
who represent you will help you get this negotiated in the sale contract.
(9) Underestimating the costs of ownership
After you buy a
home, the monthly bills keep stacking up. This can come as a surprise if you’re
Keep in mind it’s not just
your mortgage payment, you’re going to have the utilities bills that you did
not or may not have been paying when you rented.
Renters may have been paying
these kinds of bills, too. But the new home could very possibly have
higher costs simply because your new home is bigger. Your house may come with
entirely new bills, such as homeowner association fees.
How to avoid this mistake: Work with a real estate
agent who can tell you how much the neighborhood’s property taxes and insurance
typically cost. Ask to see the seller’s utility bills for the last 12 months
the home was occupied so you have an idea how much they will cost after you
move in. Ask for a seller disclosure for every house you are interested
in, many times this will help you.
(10) Miscalculating repair and renovation
First-time home buyers are frequently surprised by high repair
and renovation costs. Buyers can make two mistakes: First, they get a repair
estimate from just one contractor, and the estimate is unrealistically low.
Second, their perspective is distorted by reality TV shows that make
renovations look faster, cheaper and easier than they are in the real world.
How to avoid this mistake: Assume that all repair
estimates are low.
Seek more than one estimate
for expensive repairs, such as roof replacements. A good real estate agent
should be able to give you referrals to contractors who can give you estimates.
But also seek independent referrals from friends, family and co-workers so you
can compare those estimates against ones you receive from contractors your
purchasing a home in need of repairs with a renovation mortgage program that
will allow you to use your mortgage to purchase your home as well as fund the
repair/renovation costs all in one new home loan. Want to learn more about
renovation mortgages visit my website to Learn More About Renovation Mortgages at http://www.bobrutledge.com/HomeStyle-Renovation-Mortgage
Pros and Cons of a Low Down
When it comes to a down
payment on your home, are you aiming high or low? The down payment is the
number one reason most buyers wait longer than they’d like to buy a home. In
fact, many sidelined buyers have the income and qualifications to make the monthly
mortgage payment, but lack the down payment.
But, there’s also a
misperception about 20 percent down. In a NerdWallet study,
44 percent of Americans believe you need 20 percent or more to buy a home. The
reality is that about 60 percent of homebuyers financed their purchase with a 6% or less down payment,
according to the National Association of REALTORS®.
But, how low is too low
for your down payment?
The fact is there are no
cookie cutter mortgages — your home financing will be as unique as you. FHA is
known for their low down payments for first-time homebuyers, but many
conventional fixed rate loans offer lower than FHA’s 3.5% down.
What about zero down? VA
loans for armed service members and qualified veterans provide a great value,
including no down payment, relaxed credit requirements and no mortgage
insurance. (Plus, down payment programs may help with closing costs and even an
In certain areas there is
the USDA Mortgage that also provides a zero down payment option, low interest rates,
relaxed credit guidelines, but with income restrictions depending on where and number
of people to live in the new home.
Some lenders offer grants
to buyers to overcome the down payment hurdle. But, according to guidelines
from Fannie Mae and Freddie Mac, lenders can make contributions to a borrower’s
down payment or closing costs only after the borrower has contributed a minimum
3% down payment.
“To meet that 3%
threshold, the borrower can still come with funds from a relative, a government
agency — such as grants from a housing finance agency — or from an employer
housing program. That has not changed,” says Lisa Tibbitts, a spokeswoman for
Let’s take a look at the pros and cons of a smaller down payment.
You can buy a home
sooner. With a lower down payment, you’re putting less down and not
saving as long before you get in a home. It can help you secure a loan at
today’s low rates and avoid any rent increases that may be on the horizon.
You’ll have more reserve
funds on hand. When you buy a home, there are many other related costs,
including home repairs and improvements. With a smaller down payment, you’ll
avoid being “house poor” as soon as you leave the closing table and can enjoy
using some of your hard earned dollars to make the home your own.
Down payment programs can
help. Don’t overlook down payment programs as part of your home
financing. These programs can help boost your down payment savings or even
provide a tax credit for the life of the loan. Some programs provide affordable
first mortgages with a very low down payment.
Your monthly payment will
be larger. When you put less down, your home loan — and monthly payment —
will be larger. Work with your lender to ensure you are comfortable with the
You may be required to
pay mortgage insurance premiums. Some down payment
programs may waive mortgage insurance (MI), but in most cases if your down
payment is below 20 percent, you’ll be required to get MI — it helps manage risk for your
lender and protect them if you fail to repay
the mortgage. It’s important to note that with a conventional, fixed rate loan
and borrower paid MI, you can cancel your mortgage insurance when you reach 20% equity in your home. With an FHA loan,
you must continue to pay MI for the life of the loan.
Could hurt in a
competitive market. Unfortunately, some sellers see smaller down payments as a
negative, although it’s not necessarily true. In fact, the seller may actually
earn less on the home from an all cash buyer with a lower offer. Plus,
some down payment programs will fund your closing costs — something you won’t
have to negotiate with the seller. Put the seller at ease by getting your
financing set up early and documenting it in a letter accompanying your offer.
The bottom line? The
right down payment for you depends on your situation. Weigh the overall pros
and cons of a low down payment and talk with your lender, Bob Rutledge, about what is the best
fit for you. Visit www.bobrutledge.com to learn about low down payment options, VA and USDA zero down payment programs, and down payment assistance.
With significant changes to the tax code taking effect this
year, homeowners and prospective buyers are revising their plans to take
advantage of its sweeping changes. Here’s an analysis based on information from
the National Association of Realtors and NerdWalllet.
Tax Rate Reductions. Joint filers with incomes of $77,400 to
$400,000, which will include most first-time buyers, will see their tax rates
decline from two to four percent when they file their 2018 taxes next year.
Mortgage Interest Rate. Changes in the mortgage interest
rate—lowering the cap to mortgages worth o $750,000 from 1 million and
excluding interest paid on home equity loans— would affect only the wealthiest
first-time buyers directly. The changes will make second homes and equity loans
more expensive for first-time buyers in the future.
State and Local Taxes. The new law limits the amount of
property taxes and other state and local taxes to $10,000 a year. First-time
owners, as well as current owners, will lose the ability to deduct thousands of
dollars that they can deduct in 2018, increasing the cost of homeownership,
especially in high tax states like New York and California. In the State of
Missouri most First Time Home Buyers homes will not have an annual property tax
anyway near $10,000.
Student Loan Interest Deduction. Potential first-time buyers
and their parents who have been burdened with student loan debt will lose the
ability to deduct the interest they pay on their loans. As a result, it will
cost them more to pay off their debts to reach a DTI that would qualify them
for a mortgage.
Personal Exemptions. Personal exemptions for filers and
their dependents, worth $4,150 each in 2017, was eliminated in the new tax law.
Moving Expenses. Taxpayers have been able to deduct some
moving expenses related to their employment, but this deduction is eliminated
in the new act.
Standard Deduction. Taxpayers must decide whether to take
the standard deduction or itemize their deductions. In the past, most
homeowners have itemized to take advantage of the mortgage interest deduction
and the deduction for state taxes, including property taxes. The new law
doubles the size of the standard deduction from $6,000 to $12,000, or $24,000
on a joint return. According to Zillow’s Alexander Casey, under the current
setup, roughly 44 percent of U.S. homes are worth enough for it to make sense
for a homeowner to itemize their deductions and take advantage of the mortgage
interest deduction. Under the new law, that proportion of homes drops to 14.4
Impact on First-time Buyers: NAR’s research department
modeled examples of homeowners as different income levels, mortgage sizes, and
A single first-time buyer who purchases a home costing
$205,000 and takes out a 30-year fixed rate mortgage at 4% interest. She puts
down 3.5 percent. Assuming she buys early in 2018, her first-year mortgage
interest would total $7,856, and she would pay real property taxes of $2,050.
Under the old law, her taxes for 2018 would fall by $2,098; Under the new law,
her taxes would rise by $30. Moreover, the difference between renting and
owning was $2,098 under the prior law but shrinks to $637 ($6,060 - $5,423), or
$53 per month.
A family of five with an income of $120,000 that buys a
$425,000 home with a 10 percent down payment on a 30-year fixed mortgage at a 4
percent. Under the old law, they would save $3,219 by buying. Under the new law
their taxes would decline only $100, but if they had remained renters, they
would receive a tax cut of almost $2,400. Under the prior law, the tax benefit
of buying a home was $3,219. Under the new law, they will get a tax cut $948
($8,999 - $8,051), a much weaker incentive to buy.
MINIMUM DOWN PAYMENT OPTIONS:
There are two great mortgage programs that allow for a ZERO down payment, that's right zip, nada, nothing, etc. The USDA Rural Development and the VA Mortgage Program does not require a down payment along with the added value of super low interest rates in normal conditions.
The FHA Mortgage is referred by many as the first time home buyer home loan, not only because of the easier underwriting, lower required credit scores, and higher debt ratios but because of the minimum down payment requirement of only 3.5% of the sales price!
Conventional mortgages are those insured by either Fannie Mae or Freddie Mac, this is the loan program that many think requires at least a 20% down payment. For the most part conventional mortgages have a minimum down payment requirement of only 5%! Recently, Fannie Mae came out with a new mortgage program that has very relaxed underwriting guidelines that only requires a 3% down payment.
Down Payment Assitance or Grants:
In the St. Louis area including St. Charles and Jefferson County there are basically 2 down payment assistance programs available though one of the down payment assistance programs is coordinated with your mortgage lender through several different groups.
MHDC; some time referred to as First Place Loans. This program is offered through the State of Missouri and is provided throughout the state and not just the St. Louis Mo area. This program is strictly for First Time Home Buyers, a first time home buyer is basically anyone who has not owned a home or had the advantage of home ownership over the past 3 years.
This down payment assistance program can only be provided through approved mortgage lenders, not all lenders in the area want to work with the MHDC program.This program will provide up to 4.5% of the loan amount for down payment and closing costs assistance. This makes this a very good program to work with the FHA mortgage minimum down payment requirement of 3.5% and then you have a little extra to apply to closing costs.
1st Home Program;This payment assistance is also only for first time home buyers. The program is available in St. Louis City, St. Louis County with Florissant having their own separate version of the same program, Jefferson County, and St. Charles County plus with nearly every city/entity in the county having a version of this program.
There are income restrictions, guideline restrictions, underwriting restrictions, and more that I highly suggest that you only work with a mortgage loan officer very experienced with down payment assistance. Don't lose the money that is available to you or create delays that can happen because of lack of experience.
More Options to Help
23 Down Payment Options! There are a lot of options listed within the FHA and Conventional mortgage underwriting guidelines that tell mortgage loan officers where home buyers can obtain their down payment. The FHA mortgage programs lists 23 options that may be something you can do already, here are some favorites and some not so well known;
These are just a few of the ideas and options available to you to help fund you down payment.CLOSING COST HELP; there are always closing costs involved in the process of buying and financing a new home purchase, over and above your down payment. Having those closing costs paid for by you is sometimes as much as the down payment but always a cost that can be avoided.There are many options available to you to have most if not all of your closing costs paid for by others and not you. It takes a consolidated team effort of your, your mortgage lender, and your real estate agent to make this happen. But it is possible that through your mortgage program, down payment assistance, seller concessions, and lender credits that it can become possible to purchase a new home with little to zero out of pocket expense.
YOU BUY YOUR NEXT HOME WITH LITTLE TO ZERO OUT OF POCKET! Down P