First Time Home Buyer Answers
Your first time home buyer answers are here! I had the privilege of sitting down with one of our preferred lenders Sosi Avila of Neo Home Loans last week and his talented team and asked him the questions that I felt needed to be answered for our current clients and those against our advice that are still waiting, and chasing the ever elusive perfect time to get into the market.
Q & A With Mortgage Lending Professional Sosi Avila of Neo Home Loans
Question: What incentives and programs for first time home buyers are available? Which ones are you guys utilizing that have been effective?
In California there are predominantly two first time home buyer programs available, CALHFA and GSFA. These are fantastic programs that either come in the form of a forgivable grant or a second and even third repayable lien. Many counties throughout California in addition have affordable housing programs that provide assistance in a similar fashion, please note these do vary and you would want to confirm your counties options specifically.
Here are 5 things every first time home buyer should know. The last is the most surprising!
- There is no “free” money. What I mean by this is that when you compare these loan programs, there is typically a higher cost in rate, fees, or a repayment in some form due. Yet that doesn’t mean the cost is higher than the benefit. Many of these programs allow you to enter into a home with very little out of pocket and from there using the right strategy, you can leverage that first step into a much more profitable overall move.
- Qualifications can be viewed as a three legged stool. From a pre-approval stand point there are typically 3 categories looked at: income, credit, and assets. If one of the legs on that stool, which in cases for many first time home buying programs are the assets, the other legs need to be stronger. This effectively means that many programs (not all) will require a higher FICO score or a lower debt to income ratio to qualify.
- The most common restrictions for these types of programs are income and loan limits. Before moving forward with any program ensure that the loan officer has confirmed this for you or confirm it independently via the program’s details.
- With most of these programs, there is still some money you have to come out of pocket with. What you want to keep in mind is that depending on the market, your realtor and lender can possibly create an offer strategy to have the seller provide credits to cover the amount you need.
- First Time Home Buyer for most programs is not defined by NEVER owning a home. It’s typically defined by not having ownership of a home within the last 3 years.
Question: What has history shown that works when mortgage rates put a squeeze on your clients monthly house payment?
Affordability is one of the most important factors to healthy homeownership. From a historical and practical standpoint when rates increase, affordability can become a great challenge. Yet there can be options to explore before throwing in the towel.
Here are 3 loan programs (assuming qualifications-please confirm with your loan officer) that can help the consumer have a more affordable payment:
- Buying down the rate permanently or temporarily. There are loan programs available that allow your rate to be lower not just permanently but temporarily, meaning that on year one is can be up to 3 % points lower, then year 2 it would be 2% points lower, year 3 it would be 1% point lower, and then on the 4th year be the note rate you originally locked. There are many pros and cons to examine before deciding on an option but the most important piece to consider, in my opinion, is trying to get the seller to provide credit for the rate buy down costs.
- Reviewing the option of using an adjustable rate mortgage. This would be a loan where the rate is locked for a certain amount of years (typically: 3, 5, 7, or 10) and then adjusted (depending on the investor) bi-annually or annually.
- Note that many times qualifications for this product are more difficult, yet an interest only payment can help bring the monthly bill to a more affordable number. These can be great short term but we would suggest ensuring you create a proactive long term strategy to ensure you get as many savings as possible from a holistic standpoint.
Question: What language can you share to help frustrated renters paying 15-20% more this year in the midst of a recession to channel the frustration into action, and from the mythical dream home into a first step and plan to their present home?
Renting for many can be one of the most frustrating areas of life. I know for me and many of my family members, I have seen it cause so much more headache than we originally anticipated. In my opinion, this country is turning into a renter nation and the aspect of being a homeowner is slipping from the grip of the average American at a terrible pace. The reason for this is many times incorrect information.
Consumers decide to not buy because they are assuming and being told unintentionally to analyze whether they should make a move or not based on current terms. They are not shown how much they need to save or budget for in predictive terms. Meaning they aren’t shown an analysis to answer the questions: what happens if I don’t buy for 2 years and rates go up? What about buying in two years with rates and prices going up? Would I be able to buy my family home faster by saving now and waiting or buying a condo and then leveraging it? The analysis of appreciation, examining true costs, and overall just planning are not the common practices consumers get from real estate professionals.
Consumers are not to blame, the industry should be providing higher education to every person who has the questions: “should I buy?” People deserve better points of data as they analyze for themselves what to do with these decisions that can impact not just their living circumstances now but the wealth of their heir’s children. If you are reading this and thinking I need an analysis like this and want my questions answered with data I can independently confirm. Know that there are professionals in our industry wanting to provide this information to you. Don’t settle for anything less.
Sosimo Avila Jr has always had a passion to help people. From a young age, he connected with not-for-profit organizations to provide assistance to those in need at a global level, including American Samoa, Mexico, and Japan. After graduating from High School, he continued his education for humanitarian aid by completing Bible College at campuses worldwide. Once graduated, he was hired to establish new Bible Colleges across the globe. During that time he taught, developed curriculum, and oversaw the financial aspects of over 30 domestic institutes and over 12 international college campuses.
Education and aiding people in life have always been two of his great passions which have carried him through all his careers and still drive him in lending today. In addition to his genuine care for people, another motivating factor that fuels Sosimo’s lending career is rooted in a personal experience. The place he called home was lost, after his mother received misleading financial advice on a home loan. Seeing first-hand a single parent loses her property, which could have been avoided by the correct mortgage education, drove Sosimo to take his desire for education and aid to a new industry.
He was trained and mentored by some of the best in both the real estate and lending sides of the industry. His skills in financial responsibilities and being a professor of a variety of courses are now used to serve families in all of California. Coming from a family of five who had the opportunity to enjoy a home, even just for that short period of time, makes it his personal goal to ensure all qualifying or future qualifying families can enjoy that same blessing but for much longer.
Sosimo’s license covers all of California and he has been able to use it to help many families throughout the state and in a variety of different situations. From first-time homebuyers to move-up buyers, investors, education, and aiding people in life have always been two of his great passions which have carried him through all his careers and still drive him in lending today. and those choosing to downsize; Sosimo is able to provide each client the educated mortgage experience they deserve.
His attention to detail makes the process seamless, starting with an initial conversation to determine each individual client’s hopes and dreams and ending with either a funded loan or strategy on how to move forward in the future. Sosimo and his team have the knowledge and financial tools to ensure every customer is taken care of throughout each transaction and scenario. Regardless of what stage you are in, whether it’s just starting to research your options or getting a second opinion before placing an offer, Sosimo and his team will be ready to help you. Their mobile and web-based method of assisting you in gathering your documentation and their face-to-face no-cost consultation process give you an experience you should never move forward without. Don’t miss out on getting the exact help you deserve from an individual who will provide you with an unparalleled experience. Sosimo will be more than happy to bring you the education and help you deserve every step of the way.