Fannie Mae launched a new First Time Home Buyer program called HomeReady designed to encourage home ownership. For those clients looking for larger properties or that have higher credit scores, HomeReady is an excellent choice. As a home buyer, our team will provide you with all the tools and a customized analysis to ensure you are getting the best loan program at competitive rates to suit your needs. We are dedicated to you – the home buyer – and to the principle that all transactions should be on time and as agreed. As a top McKinney lender, we have options for you. The Richard Woodward Mortgage Team of Service First Mortgage does offer this loan program to eligible home buyers in Texas, Florida, Kentucky, Ohio, and Arizona.
There are many benefits for a borrower using HomeReady mortgages. Besides that it is accessible and the financing is practical here are a few more borrower benefits:
• There is a low down payment. The down payment is only 3% for loans up to $424,200 in McKinney Texas and all of the Dallas Texas.
• The down payment can come from the borrowers’ own funds or as a gift from a relative or fiancé.
• HomeReady has an online home ownership education that helps buyers prepare for what is required as a homeowner. Completion of the home ownership course is mandatory. You can start the Framework Home ownership course here.
While it is less difficult to get a HomeReady loan than a more traditional loan it is also important to understand all the requirements and responsibilities that come with buying a McKinney Texas home. Here are some common concerns and questions for HomeReady Mortgages:
• “How does a HomeReady mortgage make it easier to qualify?”
• “Why Should I Own Rather Than Rent?”
• “Home Much Can I Borrow”
• “How Much Will I Save In Taxes?”
• “Can I own any other homes with HomeReady?
• “How Much Financial History and/or Documentation Do I Need?”
“How does HomeReady mortgage make it easier to qualify?”
The most notable difference is that HomeReady uses flexible rules to determine applicants’ debt-to income ration. The HomeReady program’s requirements are more flexible in whose income may be included in your mortgage application– For instance, you may be able to rely on income:
• from another adult living with you, like an adult child, who also contributes to the income in the household
• Family and friends who might be helping you pay the mortgage, but don’t live with you
• rental income from leasing a basement apartment to help pay the mortgage?
“Why Should I Own Rather Than Rent?”
Homeownership has many benefits. Some of them include having a home where you can do whatever you want with it — paint it, decorate it, you name it! Besides making it your home, there are other benefits related to your home purchase loan. You may, for example, be able to claim income tax deductions for interest payments under your mortgage. Plus, by making regular monthly payment under an amortizing loan, you will build up your own equity, and not your landlords.
“How Much Can I Borrow”
Most loan programs require that your total debt be less than 45% of your gross monthly income. That percentage includes the new mortgage payments, any car loans, student loans, credit card, and any other debt you have occurred. It does not include expenses like cable bills, utilities, gym memberships and such. However, HomeReady does have flexible debt to income guidelines. If you have a history of paying your bills on time, then you may qualify for higher debt to income ratios up to 50% of your income.
You also need to think personally how much debt you can live with. Take time to determine how much debt you prefer to manage and if it is an amount you can one day pay off.
“How Much Will I Save In Taxes?”
Talk with a professional CPA or tax preparer to understand your deductions, but you can usually deduct from your income the amount of property taxes and interest you have paid for the year. This reduction in your federal taxes can make buying more affordable than renting.
“Can I own more than one home with HomeReady?”
No, because the occupant borrowers may not have an ownership interest in any other residential property at the time of loan closing.
“How Much Financial History and/or Documentation Do I Need?”
The following documentation will need to be provided to conduct the necessary due diligence for issuance of a mortgage:
• Last two months (60 days) of your actual statements from all depository accounts listed on your application: retirement fund(s), stock, mutual funds, checking, savings, etc.-all pages – transaction histories are not acceptable
• Your driver’s license
• The last 30 days of your pay stubs;
• The last 2 years of your W-2’s
• The last 2 years of your tax returns all pages all schedules
• If you own any real estate and wish to retain it past your closing date please provide the most current property tax bill, insurance declaration page, and HOA bill if applicable.
• If you own more than 25% of a business or LLC, the last 2 years of business returns and K1’s are required.
• A Profit and loss statement for your business
• A Balance sheet for your Business
• A copy of your bankruptcy discharge papers if applicable
• A copy of your divorce decree or child support order if applicable
The following list highlights some of the characteristics of a HomeReady mortgage:
• Borrower eligibility – Income limit of 80% of area median income. Eligibility is also provided for properties located in low-income census tracts with no borrower income limits, and up to 100% of AMI for properties located in high minority census tracts or designated disaster areas.
• Underwriting enhancements – Non-borrower household income from a family member is permitted as a compensating factor to support a higher debt-to-income (DTI) ratio in DU. The lender must obtain a written statement from the non-borrower that he or she intends to reside with the borrower in the subject property or can use the HomeReady Non-Borrower Household Income Worksheet and Certification (Form 1019) that has been developed to assist lenders in capturing the non-borrower household income requirements.
• Non-occupant borrowers are permitted for qualifying purposes.
• Boarder income guidelines have been updated to provide documentation flexibility.
• Rental income from an accessory unit may be considered in qualifying the borrower.
• Homeownership education – This is required for at least one borrower
• Mortgage insurance – Standard mortgage insurance is required on loans with LTV ratios at or below 90%, and 25% coverage is required for loans with LTV ratios above 90% to 97%.