Nick Peacock, Beazer’s Vice President of Lender Choices, answers your questions about shopping for a mortgage.
In this edition of “Ask Nick”, Nick answers questions about getting a mortgage after a short sale. He also answers his very first question submitted via Twitter. The firm Bradbury & Partners wanted to know what advantages the current mortgage market has for first time homebuyers.
Q: David: Who are the best lenders to work with if you’re trying to buy a new mortgage after short sale?
A: Most lenders will have the exact same guidelines with respect to short sales. Different loan types (FHA, Conventional, VA) have different “seasoning” requirements for short sales. Seasoning refers to how long you are required to wait before qualifying to get a mortgage after a short sale. The circumstances of the short sale are also a factor that will be considered. Any reputable lender will be able to answer your questions and advise you on your options based on your personal circumstances.
Q: Monica: What kind of interest rate can I expect if I’m trying to get a loan after a short sale? Would the lender require a minimum down payment?
A: The interest rate is not adjusted due to a previous short sale. Your credit score can impact the interest rate because it takes the short sale into account, particularly on a conventional loan. The down payment for a new home is determined by the type of loan program you select. Once you have met the minimum waiting period after your short sale, you should be eligible for an FHA loan with a 3.5% down payment, or a conventional loan requiring between 3-5% down. Talk to a lender to get more information based on your exact circumstances.
Q: Bradbury and Partners: Do you, as a homebuilder, see the current mortgage market as an advantage for first-time homebuyers?
A: Despite a recent uptick in interest rates, and a fairly healthy increase in home prices over the past 12 months, many markets still offer excellent affordability for first time buyers. From a mortgage perspective, the first time buyer still has access to loan programs that allow for small down payments (3% on conventional loans, 3.5% on FHA loans, and no money down for VA or USDA loans) and carry interest rates below 5%.
From a historical perspective, buyers in the current housing market have an excellent opportunity to purchase a home. It is true that mortgage guidelines have tightened, and not everyone can get a loan. However, the reality is that people who have reasonably good credit, adequate income to cover the house payment and their other monthly obligations, and access to 3-5% for a down payment can probably get approved for a mortgage.
Common sense has returned to mortgage lending, placing the focus on making sure that borrowers get a mortgage that is appropriate for them- one that they can afford both when they buy a home and in the future. It’s all about looking out for the borrower’s financial well being.
So, all in all, I would say yes- the mortgage market today does present advantages for the first time buyer: loan programs with small down payments, historically low interest rates and underwriting standards that help ensure long term financial success.
We’re always taking your questions! You can email them to us at AskNick@beazer.com. Nick answers every question, so you’ll be sure to get a personal response. Every week, we’ll post some of the “Ask Nick” questions and answers on our blog, Facebook, and Google Plus. Don’t forget to follow along on Twitter with the hashtag #AskNick.
* Beazer Homes is not acting as a mortgage broker or lender. Home buyers should consult with a mortgage broker or lender of their choice regarding mortgage loans and mortgage loan qualification. ©2013 Beazer Homes