First Time Home Buyers Guide on the Web

10 Critical Steps in Finding the Perfect Home Loan

1) What kind of mortgage is right for you?

2) How important is your credit report?

3) How you can buy a home with zero money down

4) How to figure your maximum sales price

5) Why you should get pre-approved for a mortgage?

6) How to write the offer to purchase

7) When should you lock your loan?

8) What are the costs to obtain a mortgage?

9) What to expect when approaching the closing day

10) How you can pay your house off quickly

Introduction

In this E-Book, you�re going to learn how you can buy a home using many different loans that FHA, VA and most conventional lenders allow when buying a home. Also you�ll learn the difference in conforming and non-conforming loans and how it affects you.

The whole purpose of this e-book is to make the process of buying a home simple and easy to understand. Or if you�re refinancing a home, this e-book will help you understand the mortgage process. Furthermore we want you to know what to look for when shopping for a home loan so you can make an educated decision.

First, I�m certain you�re aware that buying a home is the single largest purchase most people make during their lifetime. If this is your first home, it can be very frightening. That�s why you are looking for accurate and reliable information, right? Even if you already have a mortgage, you need this information to understand how to shop for the best loan. You�ve come to the right place. I�ve been able to help many people become proud home-owners for the first time. Many of them with little or no money down. Likewise, I�ve helped many save money on interest, lower their monthly expenses by refinancing.

Furthermore, the mortgage process can be very confusing. Most people have no idea of how the mortgage process works. They have to depend on an expert to explain and help them through the entire transaction from beginning to end. This E-Book is designed to give you step by step instructions on how to shop and pay for your home loan quickly.

Sadly, because the majority of people do not understand the mortgage process, some unscrupulous loan officers have the tendency to take advantage of people thus costing the home-owner much more to buy or refinance their home.

With all the factors involved like interest rates, points, closing costs, pre-paids and third party interests in the transaction, it can very quickly become confusing for you. Don�t worry, you�re not alone. Since you do not work in the mortgage business it�s understandable.

I�ve heard of loan officers that have tried to charge as high as $12,000 in origination points, discount, closing costs etc. for a small $60,000 mortgage. Why that�s 20% of the mortgage!! How absurd!! His reason for attempting this was pure greed on his part. Fortunately the person was wise and went shopping and got their loan elsewhere.

I�m here to help you get answers to questions you may have on how to select the right loan for you. With a little hand holding you�ll soon discover that I can help you overcome the fears of buying a home or refinancing your home and getting a mortgage that you can live with for the rest of your life. Plus as an additional bonus, I�m going to share with you how to turn your 30yr mortgage into 15yr mortgage without refinancing.

Use this E-Book as your personal guide. Very quickly you�ll discover that this vital information will become invaluable to you and your friends. If you have any questions or concerns you can contact me on my cell phone anytime at:

(810) 964-2826 Please keep in mind I�m on New York time.

Thanks again for requesting this e-book. I hope you enjoy it!

Jeffrey S. Ragan

Your Personal Loan Officer

I�ve made special arrangements for you to receive a FREE Credit analysis just to show you how much I value your time. Send me an e-mail at by clicking here I would like a FREE credit analysis please! with your phone number and best time to call. I�ll get right with you to help you out.

Step #1, What kind of mortgage is right for you?

With all the different kinds of mortgages out there, how do you find the one that�s right for you? Good question isn�t it?

FHA, VA, Conventional, Adjustable/Balloon Mortgages, HELOC�s and Non-Conforming, just to name a few. Fortunately for you, the majority of mortgage products out there fall into the above categories so I�ll break them down for you right now to help you decide what�s best for you.

FHA LOANS

The Federal Housing Authority (FHA) has a loan program that works well for first time home-buyers. With a good personal loan officer he can help you find very flexible ways to finance your 3% required down payment, closing costs and pre-paids thus making it easier for people with little or no money to become a home owner. Using programs that offer down payment assistance, seller concessions these government insured loans make the purchase of a home very affordable. Typically mortgage insurance is much less because this is a government-backed loan. Also people who have had some minor credit problems can get FHA loans.

VA LOANS

The Veterans Administration (VA) offers a loan program for war veterans where they have a true NO MONEY DOWN and NO MORTGAGE INSURANCE loan. This makes it very easy for vets to buy and afford a home. The VA insures the loan to the lender so there is no private mortgage insurance (PMI) needed. The no money down makes it attractive also. All they have to do is pay closing costs and pre-paids. If they have a good loan officer and realtor, they can even get the seller to pay for these costs or get them financed into their loan. Credit requirements are much like the FHA standards.

COVENTIONAL LOANS

The conventional loan is typically for the person with good credit and has some money to make a down payment on their home. Many times they put 5%-10% or more of the purchase price down reducing the first mortgage balance. In some cases it may be possible to get a conventional loan with just 3% down. Keep in mind, the lower the down payment, the higher your interest rate may be. Conventional loans most always offering lower interest rates than FHA and VA. Also they require much less paperwork than FHA and VA. PMI is typically higher than FHA loans though. Depending the coverage required by the lender, PMI could add up to 1% to your interest rate for the first 20% of your loan amount. Even more than that if you�re considered a high credit risk borrower. As you pay off the loan the PMI adjusts lower and gradually drops off when you have the first 20% of your loan balance paid down.

ADJUSTABLE/BALLOON MORTGAGES

These type of mortgages offer lower interest rates than conventional loans. However, after 2,3,5,7,10 or 15 years the interest rate could adjust 1-2 times a year depending on what financial instrument the mortgage is based on. The ideal candidate for an adjustable mortgage would be a person who plans on only living in the house for 2-10 years. With this in mind you can have a much lower interest rate and at the first adjustment your rate would increase. If it�s a balloon mortgage, the entire balance of your mortgage becomes due in full. These have 3 important things to watch for. Floor rate, initial adjustment and ceiling rate. You must ask what these are before selecting a product like this.

HELOC�s (HOME EQUITY LINE OF CREDIT)

HELOC�s have a special place for the right person. They can be used along with a conventional first mortgage or even an adjustable/balloon mortgage. To avoid PMI you would get an 80% first mortgage and then a HELOC for the remaining 15%-20% thus giving you 95%-100% financing on your home loan. People with great credit can use this combination saving money on PMI, getting a low interest rate on the first mortgage and the interest rate on a HELOC normally are adjustable rates based on the prime interest rate. Usually prime plus 1% or 2% depending on your loan to value ratio. The nice thing about HELOC�s, they are usually 10 year mortgages. So if a person focuses on getting the HELOC paid off first they accelerate the mortgage payoff process saving thousands of dollars in interest. Also, if you get it paid off early you have remaining a line of credit on your home to use for other purchases or to pay off higher interest credit cards or loans. You can declare the interest paid on HELOC�s on your taxes since it�s a mortgage on your home.

NON-CONFORMING LOANS

Non-conforming loans are typically used by people who have bruised credit. There are lenders out there that specialize in non-conforming loans. The only time you go into a non-conforming loan is when you cannot get a FHA, VA or Conventional loan. These are considered to be higher risk loans. So with higher risks comes higher interest rates. Something to keep in mind is that if your credit scores are low, you�ll pay a higher interest rate on your mortgage. If you must use this type of loan product consider it only temporary. For the first few years of your mortgage, keep your payments on time for your mortgage and all other debts reported on your credit report then refinance your home to lower your interest rate. Many non-conforming loans are 2-3 year adjustable rate mortgages anyway because they expect you to refinance in a short period. The only good thing about non-conforming is that at least you can get a mortgage. Even if you�ve had a bankruptcy in the past 1-2 years, you can still get a mortgage.

REFINANCING

When you already own your home and are considering refinancing, you have only a few things to keep in mind. If your goal is to lower your interest rate and payment, this is called a �Rate and Term�. This means you do not plan on talking any cash out other than the costs of doing your loan. Most loan programs allow up to 2% of the loan amount to cover closing costs without penalizing you for �Cash Out�.

If you need to take cash out of your property to pay off high interest credit cards or other debts, expect to pay a little more in interest. Fannie Mae and Freddie Mac the government agencies that control the mortgage market have set in place higher pricing to the lenders for cash out refinances. Since most lenders sell the mortgage to either of these two agencies they pass the extra costs on to you the borrower in the form of a higher interest rate. Depending once again on your credit score, you could either have a conforming or non-conforming refinance loan.

CONCLUSION

So there you have it. Basically all mortgages fall into the above categories. There are many variations in each category. But what you must decide is where you fit in.

Things to consider are this:

How is my credit? Have I had any late payments over the past 2-3 years? Do I know my credit score?

How much money do I have for a down payment? Will I need seller concessions and down payment assistance?

Am I a veteran? Would the best way for me to buy a home be to use my VA benefits?

Do I have good credit? Am I able to put money down on my new home? Can I avoid paying PMI by using a HELOC and 1st mortgage combination?

Am I going to stay in the home for less than 5 years? Would an adjustable mortgage be good for me?

Are you refinancing? Do I need cash out or do I just want to lower my interest rate and monthly payment?

These are just a few of the questions you need to ask yourself as you consider what mortgage is best for you. If you would like help in deciding what mortgage fits your needs feel free to contact me by e-mail at I would like to learn more about which mortgage is best for me or call me on my cell phone at (810) 964-2826.

Don�t let the different type of mortgage products discourage you. Also, don�t allow people to talk you into a certain kind of mortgage because they can earn more money by going into a product they seem to be pushing.

I�ve met people who have gotten loans from me that said the last loan officer told them their credit was poor and that they would have to pay a higher interest rate because of it. Let me tell you their story.

A lady called me on January 2. She asked if I could help her get 100% financing on the purchase of a $345,000 house. I simply told her it depends on their credit.

To make a long story short, the last person had told them their credit score was low, thus they would pay a higher interest rate even though he could get them 100% financing. I was able to get them a much better interest rate for their first and second mortgage because their credit score was good. They had good income. All the elements where there and 3 weeks later they closed on their new dream home and even had enough money left over from the closing to enjoy a good night out on the town.

What a joy it was for me to help them obtain their dream home. Call me today, I�ll help you also.

Step #2 How Important is Your Credit Report?

First I just want to say that the credit report is really the first and foremost important part of buying your new home or refinancing. I�ve seen credit reports that are so bad that I�m shocked that the person even thought they could get a home loan. If a person has bill collectors calling and trying to get money out of you, if you�ve filed bankruptcy in the past 1-2 years you can be sure that your credit score will not be good. It always amazes me how uninformed people are on credit and how it works. They just do not teach how to be responsible with credit in the schools. Later in step #2 I�ll show you how to read a credit report and under go credit repair if you happen to need help with this.

I�m certain that you have good credit right? Perhaps you�ve had a bump and bruise along the way, but because you�re an educated person, you surf the web and have been trying to understand what�s expected of you to get a mortgage, you already know that credit is an important part in the mortgage process.

So with all of that understood, let�s assume you that your credit is good. Now after giving the loan officer your name, address, birth date and social security number he/she will run your credit with agencies that have gathered your credit information for reporting purposes. Basically there�s 3 main reporting agencies in the USA. Experian, Trans Union and Fair Isaac. Something to keep in mind is that each credit agency gathers basically all of the same information. Also, there are different types of credit reports. In our case we�re only concerned about credit reports that pertain to the mortgage process.

Now when I�m helping a person get a mortgage, I run their credit with all 3 credit bureaus. The reason for this is simple. By having a tri-merge report we get 3 credit scores. So you would have a high, middle and low score. What I do is take the middle score because it represents an average of the 3 reporting agencies.

Now let�s talk about credit scores and how they arrive at them. The lowest score I�ve seen is 485 and the highest is 890. What does this mean to you? Well, if your credit score is below 500, chances are very slim for you getting a mortgage just now. If your score is 660 and above, well you have what�s considered the ideal score and would fit into conforming loans offering you the best interest rates. I�ve had people with high 700�s into the mid 800�s that I tell them we can do just about whatever you want when it comes to your mortgage.

If by chance your score is from 600-660, you�re a good candidate for an FHA mortgage. The reason your score may be lower is because perhaps you�ve had a few credit problems or it might be that you have not yet established credit at all. I�ve seen people who have NO credit scores. Does this mean they cannot get a mortgage? No, but it is much more challenging and could take a little longer.

If your credit score is 500 to 600, you�re into the non-conforming loans and will pay a higher interest rate to get a mortgage. Even though FHA and VA claim that credit score is not important, I�ve yet to see a person with a score below 600 get an FHA or VA loan. If you find yourself in the non-conforming loan don�t worry. Remember how I told you to look at it as a temporary thing? At least we can get you a loan and later, after proving yourself we can get you into a conforming loan with lower fixed interest rates.

So, credit scores are very important during the mortgage process. I caution you not to have your credit scores run too many times. It does cause your score to lower if there have been too many inquires. By too many inquires I mean like 20-30 in the last few months. I�ve seen some people who have gotten on the internet, given their information to over 100 lenders in the past few months and it caused their score to become so low they could not get a mortgage. Avoid giving your information out to everyone you talk to about a mortgage. Find a person you trust, someone who has explained everything to you and will be there for you when you need them. Personal service in the mortgage business did not exists until I came along!! ? Give me a call at (810) 964-2826 or e-mail at jeffrgn@comcast.net anytime for a FREE credit analysis.

If you find out that credit repair is what you need before buying a house or refinancing, e-mail me at CREDIT QUESTIONS to find out how you can join my Credit Repair Academy. The costs are minimal and your time with me would be well spent because the end result would be you buying a home perhaps for the first time or getting your current home refinanced.

Step #3 How you can buy a home with zero money down

Can you really buy a home with �ZERO MONEY DOWN�? Yes you can. The best part is that in most cases, you can do this regardless of what kind mortgage you get. Many mortgage products allow seller concessions, down payment assistance and third party contributions.

If you desire to use a true no money down program, the need for a good personal loan officer is very important here. Why? If the loan officer does not know what program to put you in, how to figure out the transaction, write the purchase agreement to buy the house then it could turn out to be a disaster for you.

I�ve been able to help several people buy their home with little or no money down. To do this takes a combination of many things. First you have the credit issue. You must at least score. People with no credit score will have a much harder time. Also you need a loan program that allows for the use of seller concessions and down payment assistance programs, grants and third party contributions. Then you need a home that�s worth more money than you offer to pay for it. Let�s do an example:

Asking Price of the home is $100,000 (we�re assuming the seller has done market research and knows the home is worth at least the asking price) You offer the seller say, $95,000 (with the use of a good realtor and loan officer we�ve determined that the house is worth more like $103,000)

Now the seller accepts your offer to purchase for $95,000. You then go back with a purchase agreement addendum and offer to pay them say $103,000 for the home providing they allow you to use a down payment assistance program and pay seller concessions. The total of these concessions is $8,000 which also includes your down payment.

If you really look at this transaction, you�re actually financing in the down payment, closing costs and even the pre-paid expenses. Some of the loan programs allow you to do this providing the house appraises for the $103,000 adjusted sales price. Actually this is a legal way to launder money. It involves several parties in the transaction. Normally there�s a charity, the seller, the realtor, the lender and you.

Now I could go on for several more pages on how ZERO MONEY DOWN transactions work. To put it in a simple way, this is how they work.

Things you must realize in this type of a transaction is that you will have a higher payment and interest rate. Why? For one thing you are not putting any real hard cash into the deal. I�ll be honest, you will need at least the money to pay for an appraisal and perhaps a home inspection. Also, you�ll need to buy your first years homeowners insurance as well.

Now let�s look at this deal from the lenders point for view. Since you have not put in a down payment, what�s to keep you from buying the house, making a few payments and then letting the house to go back to the lender? The lender is taking all the risk here, not you. When you put 3%-10% in as a down payment, at least you have taken out some of the risk for the lender. Also, it�s for this reason that you will likely pay mortgage insurance or PMI. This PMI takes out the risk for the lender for the first 20% portion of your mortgage because the risk is passed on to the third party Private Mortgage Insurance company.

The ZERO MONEY DOWN mortgage is not for everybody. At least it�s there for you so you can still get into a house.

Now again, if you have a good personal loan officer and great credit scores you can still buy a house with 100% financing and not have to pay PMI so your payment will be lower and so will the interest rate.

Call me at (810) 964-2826 or e-mail us to learn more on how this ZERO MONEY DOWN process works.

Step # 4 How to figure your maximum sales price

Now we come to a part where things start to come together. You already decided what is the right mortgage for you. You know the credit report is important and have done a good job with that. You have a great personal loan officer who can help you buy that house with ZERO MONEY DOWN. Now you need to decide what is the maximum price you can pay for a house with a house payment you can afford.

Using the link below, go to my website. It has a really neat calculator on it that can help you decide what you can afford. It offers 3 ways to figure it. You can choose by the your annual income, sale price of the house or the monthly payment you feel comfortable with.

Just look at the top of the calculator and click the appropriate radio button. Fill in a few of the other boxes and it will help you decide how much for can afford. Notice that you can enter car payments, credit cards and other debts.

Now look at the graph to see how all of this looks. Click the calculate button and view report. Print it off for future reference.

Play around with this, run different scenarios. Once you get comfortable with your payment, it�s time to get you Pre-Approved for a mortgage. On the next page I�ll explain why this is a very important step to take.

Click here now: http://jeffragan.loans.flagstar.com/

Step #5 Why you should get pre-approved for a mortgage?

So now you have figured out which mortgage is good for you. You understand how important credit is and have even decided that you want to buy a home with ZERO MONEY DOWN or want to do a cash out refinance.

The Pre-Approval you get from your lender is another good tool to have in your pouch when buying your home or refinancing. First let me explain a very important fact here. Some lenders say they can get you approved in seconds. What they really mean is that they can from the information you provide them quickly figure out if you would qualify for a loan. Actually they get you Pre-Qualified not Pre-Approved.

Now let me explain the difference. Let�s say the loan officer has now run your credit, he ask you a few questions about your income and cash reserves. Armed with this brief information he can calculate your DTI or what is an acronym for Debt To Income ratio. It�s real easy to figure this out. You simply take you total debts, i.e. mortgage, car, student loans, recreational vehicles, credit cards and home equity lines of credit. Total all the minimum payments up and divide them into your gross monthly income to come up with a bottom ratio.

You actually will have 2 ratios lenders like to look at. Top and bottom. The top ratio would be your total housing expense and the bottom ratio would be all debts combined.

It looks somewhat like this: 29%/42%. The 29% would be your housing expense only. So 29% of your gross monthly income would be for your house payment. This would include PITI and PMI. Now for some more learning, PITI stands for principal, interest, taxes and insurance. Earlier you learned that PMI stands for private mortgage insurance. So if you grossed $3500 a month, your top ratio at 29% would be $1015 a month. If 42% was your bottom ratio then it would be $1470 a month. This $1470 has to include car payments, credit cards, installment loans, student loans and your housing expenses all combined.

Anybody with a calculator can Pre-Qualify you. The most important thing is to get Pre-Approved. The difference is that in order to get Pre-Approved you have to actually apply for the loan, submit your documents along with your credit report and proof of income to the loan officer and then your loan is processed by being entered into the computer and submitted to an underwriter. The underwriter is a human pair of eyes looking your file over to determine if what you said on your loan application is true and meets Fannie Mae and Freddie Mac guidelines. This obviously will take a little time. Normally 2-3 days depending on how busy the loan officer and loan processor is.

Once you have been approved by the underwriter, now you have the best of both worlds. You have the ability to negotiate your price because for buying a home because having a Pre-Approval letter in hand from your lender is like having cash. Since you have now been approved for the loan, all that�s left are meeting the conditions list given by the underwriter. Most of the time the conditions will be things that a good loan officers will have ask for anyway to help speed up the loan process.

Since it would take a week or even a little longer to gather everything, apply for the loan, enter your loan into the computer, I�m certain you are now beginning to see the importance of being Pre-Approved for your loan. You get some of the paper work out of the way early so you can focus on looking for your new home. With a Pre-Approval Letter to use with your realtor, it makes it easier when he turns in your offer to purchase to the seller. Put yourself in the sellers shoes for a moment. Who would you be inclined to sell your house to? Someone who has to apply for a loan not knowing if they will be approved or someone who has the loan approval of the lender and just needs an address to tie the loan with for a fast closing?

If you�re refinancing, a pre-approval letter is just as important. In some cases, depending on what you need to refinance for, a pre-approval letter will hold off creditors. I did a loan with a gentlemen in California that used his pre-approval to stop lawsuits. He had 3 creditors after him and threatening to sue him in court. He had fallen on some hard times because he worked in Silicon Valley and when the Dot Com bubble burst he was out of a job. He was able to save his home but fell way behind with his credit cards. So I got him pre-approved for a non-conforming loan, we included the creditors in his closing conditions and the title company paid them off from the proceeds of his cash out refinance.

If you work with a good loan officer he/she will help you determine how much house you can afford or how to pay off those creditors. He/she will then get you approved for a little more than what you may need so you can avoid the problem if you found a house that you really liked and it was more than you expected to spend. If you have been approved for a higher amount, it saves time. It�s much easier to borrow less than what you�ve been approved for than to go back and ask for more.

Call me anytime for fast approvals from underwriters. I can be reached at (810) 964-2826 of send me to get a fast pre-approval for a First Time Home Buyer Loan.

Step #6 How to write the offer to purchase

So now you have been able to determine what kind of mortgage is best, your credit report is good and you understand it, you�re going to buy your house with ZERO MONEY DOWN and you�re already Pre-Approved for your mortgage.

With your Pre-Approval letter, you found a good realtor that understands what you�re looking to do. If the realtor is worth their salt, they understand how to write the offer so you can take full advantage of the loan program your personal loan officer has helped you select. Now I always like talking with the realtor before we write the offer to purchase. Also, this way I can help them understand the verbiage we need to use.

So now you�ve found the home of your dreams. We�re ready to write the purchase agreement. Keep in mind the PA (purchase agreement) is a legal binding contract. If not done right you could lose your deposit money. So a delicate balance is needed with your personal loan officer and the realtor. Now you can see how the mortgage process is getting complicated somewhat. Think about how many parties are now involved. We have the seller, the sellers realtor, the buyer, the buyers realtor, your personal loan officer and the underwriter from the lender. This is just the beginning.

Ok, you work together with the realtor and your personal loan officer and write the PA. The seller now accepts your offer to purchase. Now what happens? Well, many more parties become involved in the transaction. Let�s suppose your going to buy the home with an FHA loan. Now we will need a FHA appraiser to inspect the home. You also may decide to have a home inspector do a complete inspection for your peace of mind. The home inspector does not perform the same service the FHA appraiser does. A home inspector works for you. They go through the home from top to bottom giving you a detailed report of the house. The FHA appraiser will help determine the value of the home and if it meets FHA loan guidelines. Don�t worry, the realtors involved will normally list the house as one that allows FHA financing.

Now we may have others that need to get involved. A pest inspection, survey and a title company now come into the picture. Wow, more people, more companies, more costs right??? Yes, but once again, working with a good personal loan officer he/she will show you how to get some or all of these costs past on to others involved in the transaction. Or at the very least, assuming you�re buying the house for a rock bottom price you can load these costs into your mortgage thus creating the ZERO MONEY DOWN deal.

I love being involved in the beginning stages, before the offer to purchase is written. I love negotiations and can help you save money in the process.

Let me tell you a little story. I had a guy call me one day from Chicago. He wanted to buy a new house. So I explained to him some of the options we could explore together. He was surprised at what all could be done. Again, it�s only because he was used to selling cars, not getting mortgages. So I was able to help him see his options and soon he applied for his loan. Now his credit score was in the mid 600�s. In talking with him, during the process of being approved for the loan he had decided to buy the business where he was working at. So I was able to help here as well because I�ve bought out several businesses over the years. Anyway, he now decided that he wanted a ZERO MONEY DOWN deal. At first we had him putting 10% down because he wanted a lower payment. Also the house was for much more than we originally spoke about but guess what? Yes, the great personal loan officer that I am, I had him approved for a higher amount than he requested.

We did a 80/20 combination with a 1st and HELOC. His purchase left him with money to buy his business. Now you can just imagine how happy he was. When I make people happy they tell others and guess what happens to my business? I get more customers!! I love referrals.

So once again, writing the PA is critical. Even though many more parties come into the picture, it all happens automatically and almost completely transparent to you the buyer. Because you were already Pre-Approved, once you sign the PA, the few things left will not take much more of your time. E-mail me at jeffrgn@comcast.net anytime if you have questions or give me a call on my cell phone at (810) 964-2826.

Step #7 When Should You Lock Your Loan?

This step will be simple and short. You only need to remember a few things when it comes to locking your loan. First off, you cannot lock a loan until you have found a property. Once you have a signed PA by the seller, get a copy of it to your loan officer right away. Now the process really begins to move forward. If you�re refinancing, you can elect to lock or float your loan. Floating the loan means you want to take the chance that rates will go lower. Keep in mind they can also go higher. The only time you can lock a loan with refinancing is with the conforming loan product. In the non-conforming loan, even though you cannot lock the loan, the interest rate you�re quoted is the rate you will end up with. Rates quoted in the non-conforming market are good if you have been pre-approved. In nearly every case, the rate is locked once you have cleared all the underwriter conditions. Providing this is done within a timely period, like 30 days you have nothing to worry about. I�ve even seen cases where the interest rate at the closing was a little lower.

With a PA, you can now lock your loan. If your loan officer is on his/her toes they will discuss this with you once again. The loan officer can now look at the market and lock in your interest rate. What I do in the beginning is get you Pre-Approved at a higher interest rate explaining to the borrowers that this will not necessarily be the interest rate you will pay. It depends on how long you take to find your house. Interest rates change daily. I�ve seen them change by �% in a week or less. So when you�re applying for a loan the market could be much different than it is when you find the house. Higher or lower, you can�t really predict it.

In almost every case, I�ve been able to lock my clients loan at a lower rate than what I quoted them at the point of loan application. Often times I lock the loan before the client even thinks about it. By the time you have found your house, the interest rate that�s sticking in your mind is the one on your loan application. Usually your concern is what the payment amount will be.

Once again, if done right in the beginning, your payment will be lower than what you expected because the payment stuck in your mind was for a higher loan than you expected anyway. Remember how you got approved for more than you needed?

Locks on loans come in different increments of time like 10, 30, 50 or 70 days. In most cases, the 30 day lock will be just fine. 10 days is to short and 30 days is almost to long at this point, but we work with what we have. With a lock can come extra costs if you�re not on the look out. Some use lock extension fees so buyer beware.

So to make this short and simple, lock your loan once you have the accepted purchase agreement or in a refinance the loan is in a clear to close status. Be proactive and get the PA to your loan officer and discuss with them the lock at this time. Just simply refuse to pay any lock extension fees. If the loan officer has done their job right there�s no need for this extra expense anyway.

If you have questions, yes you guessed it call me on my cell phone at (810) 964-2826 or send me an e-mail to learn about locking a First Time Home Buyer Loan. I need to tell you this again because I�m running out of steps here to urge you to give me a call!

Step #8 What are the costs to obtain a mortgage?

Now here�s a subject worth going into great detail on. The actual costs to do a loan vary so widely depending on the loan officer, the lender and or mortgage broker you�re dealing with.

First let�s break the costs down into 2 major categories.

1) Closing Costs

2) Pre-Paids

I�m going to address the Pre-Paids first since they are simple to understand. Pre-Paid expenses are really not anything that you or anybody else can control. Basically they are bills you�re going to be paying anyway. Things like taxes, insurance, interest, mortgage insurance all fall under pre-paid expenses. They are prorated depending on the time of the month and year you�ll be closing. For example, if taxes are due in December and you�re closing in June, well the taxes will be figured accordingly. States tend to vary on how they figure taxes. Some taxes are in the arrears and others are paid in advance. The title company will figure these for you. You can expect to pay some of the taxes with your loan proceeds as you set up an escrow account and the remainder will be paid from your escrow when they come due. The same goes for homeowners insurance. In most cases you will need to buy a 1 year homeowners policy before the closing. This would be an actual out of pocket expense for you. In the case of a refinance, you need at least 3 months left on your current policy or you can expect to pay the premium for the next year if you�re using escrows. The escrow account will pay it next year when it comes due. Other than that, pre-paid interest and PMI are part of your Pre-Paids.

Now for closing costs. We can break the closing costs down into 3 categories. You have bank costs, title company costs and then misc. costs by taxing authorities or other 3rd parties in the transaction like pest inspection, survey and appraisers.

In the bank costs you can expect fees like origination, discount, underwriting, processing, commitment, broker fees and even credit reports. What these costs cover are the banks cost to underwrite, process your loan and pay the overhead expenses for the office and the loan officer. It�s not uncommon to see closing costs range from 1%-4% of the actual loan amount depending on the size of the loan. The bigger the loan the lower the costs. It takes the exact same amount of paperwork to process a HUGE $500,000 loan as it does a $50,000 loan. What you watch for here is that the costs are reasonable. By reasonable I mean that for ZERO MONEY DOWN loans under $100,000 it�s not uncommon to see closing cost of 4%-6% If it�s a non-conforming loan the costs could go as high as 7%-8% of the loan amount.

The title company costs involve title search, closing fee, courier and wire fees. The other misc fees from pest inspections, surveys, appraisers are collected and paid by the title company at closing.

In all loans that I�m involved in I ask the borrower to pay the appraiser when the service is performed. By doing this we get better service because they know they will be paid when they show up to do the appraisal. So they come out faster and get the report back to the loan officer quicker. Besides, paying for the appraisal now means less money you�ll bring to the closing table anyway. OR if this is a refinance loan it means you have more money in your pocket at the closing.

A word of caution here. Beware of loan officers that require you to pay advance fees before they will take your loan application, run credit and process your loan and give you that approval. I know of some companies that make their money collecting these advance fees. Many charge like $300 and more. The bad thing about this is that many times they tell the people they cannot get a loan and then remind them that the $300 is non-refundable. How they can sleep at night I�ll never know.

At least with me as your personal loan officer, you will not spend one dime until you have found the house and we know you can get the loan. If you�re buying a home or refinancing, once you have been pre-approved, then I ask you to pay for the appraisal. The only other thing you�ll pay, is to buy your homeowners insurance if it�s a purchase using ZERO MONEY DOWN. Once your PA is accepted and we have an address I urge my clients to begin shopping for homeowners insurance. Again, prices for this can vary from state to state.

Yes, that�s right, call me on my cell phone at (810) 964-2826 of send an e-mail at tell me more about loan costs for First Time Home Buyers.

Step #9 What to Expect When Approaching the Closing Day

Wow, it�s hard to believe but now things are almost finished. Let�s see where we�re at:

1. We decided on the best loan program. 2. You have your credit in order. 3. You know how to buy a home with ZERO MONEY DOWN 4. The maximum sales price and payments have been figured out 5. You have been pre-approved for the mortgage 6. You wrote a good purchase agreement and it�s been accepted 7. You loan has been locked 8. The costs of the mortgage is understood

Now we�re approaching the day of closing. What can you expect? This is where having a good personal loan officer is very critical. Why? Your emotions will be involved. They have been all along. Now things are beginning to build up.

You�re about to make a very serious financial commitment. You will be moving soon. You life is about to turn upside down. Things will be out of routine for a while so get ready.

As closing day gets nearer, you�ll feel the pressure building. Your realtor and loan officer will be in daily communication with you. Something you did not realize is all the things that have been going on behind the scenes before you get to the day of closing. Appraisal, title work, underwriters, tax agencies, credit bureaus, down payment assistance, banks and many more have been working on your transaction. All of this in getting ready for you to sign the closing documents. Soon all these people will now be focusing on you.

Almost an entire forest has been destroyed creating the mountain of paper work you�re about to sign. Many times people begin to have �Buyer Remorse�. They start to think �what am I getting myself into here?�

It�s OK. Everyone has these feelings. You must remember why you started this process anyway. It�s the idea of home ownership that started you down this path. Keep in mind also how owning a home will be much better than making your landlord rich. At least you will begin to build equity instead of throwing your money down the drain in rent.

You�ll be able to take advantage of one the best tax breaks in the country. Your rent was not tax deductible, but the interest on your home is. Also you can paint, make changes and do whatever you want with your new home and do not have to ask for permission.

Emotions tend to run high, especially the day of closing. Expect this. I�ll be there for you. The day before closing we will have discussed in great detail what to expect at the closing table. If you have a small amount of money to bring, you�ll know that figure and will have gone out and gotten a certified check. Also, you�ll be prepared mentally for the closing statement. If possible, you have been able to look over the closing statement the day before. The closing statement will be the first document you sign. It contains all the figures for this purchase transaction. You�ll see all of your costs and the sellers costs. All the third parties involved will have their costs on this sheet as well.

When you sit down to sign, most of the time it will be just you, the realtor and the closer for the title company. Sometimes you may have the sellers at the table. I think it�s best not to have the sellers there just yet. You may want to discuss this with your realtor ahead of time. After signing all the documents it�s always nice to meet the sellers to ask any questions you may have about the house. Exchange phone numbers in case you think of something later.

Soon the pressure will be off. A feeling of joy will begin to come over you. You just bought your first home!! Congratulations your now a home owner!

Step #10 How You Can Pay Your House Off Quickly

Ok, we made it through the closing, you�re all moved into your new house. Now you need to focus on paying for your house. For one thing, never, never be more than 30 days late on your mortgage payment. If you go past 30 days it gets reported on your credit report. This 30 day late payment will haunt you for the next several years.

Late payments can and will hinder your success in the next purchase of a home or if you ever refinance. Don�t go there. Don�t go out to eat as much or waste money on unimportant things. You must budget for that house payment.

Allow me to give you a bit of advice here. With every paycheck, pay yourself first! Pay yourself at least 10% of what you earn and put it away and do not touch it. I don�t care how much or little you make you can and must do this. It may mean you go without a few things, but it�ll be worth it. A few years from now when you look at your savings, you�ll feel very good. Put it where you feel safe. 410K at work, mutual funds, whatever just be sure to put it away.

Now let�s look at the mortgage payment. Go back to my website again and play with the mortgage payoff calculator. Here�s the link:

http://jeffragan.loans.flagstar.com/

Follow the Mortgage Calculator link.

If you look at this, you can put in an extra $50, $100 or whatever each month. It�ll calculate for you how soon you will pay off your home. Also it�ll show you how much interest you�ll save. Go on and check it out.

Once you arrive at a monthly amount you want to pay extra, budget this in and do it every month. Build the equity in your home faster. It�s like putting money in the bank. In most cases real estate never goes down in value. Only up, unless you bought a home in a bad area. You realtor will help to make sure you do not do that.

As you pay extra down on your home, you�re saving money on interest and putting money in your pocket. When you go to sell your home the money all comes back to you. Sell my home you say!! Yes, you will sell that home you just bought. Chances are in the next 7 years you will be repeating the mortgage process again. Statistics show people move on average every 7 years.

Well, that�s about it for this E-Book. I hope you enjoyed reading it as much as I did writing it.

My desire is to help you feel comfortable with the whole mortgage process. No matter if you�re buying a home for the first time or refinancing, it�s not so bad. People go through this process everyday. If you have surrounded yourself with the right people, a good personal loan officer like me, good realtors you�ll soon find the stress level dropping off.

Communication is the key. If you�re dealing with people who do not return calls promptly or seem to be very hard to reach find someone else. I make myself available to my client�s everyday of the week during daylight hours. That�s why I�ve given you my cell phone, e-mail and even my personal website with the bank.

I�m happy to serve you. Call me anytime at (810) 964-2826 or send me a e-mail I want to apply for a First Time Home Buyer Loan.

Thank you for requesting this E-Book. Please help someone you love by telling them about this E-Book. I love it when happy people tell others about my services and I build referrals.

Best Regards,

Jeffrey S. Ragan Your Personal Loan Officer