November 11

First-Time Home Buyer Guide On Down Payment Assistance

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As a first-time home buyer, the ability to afford a home in the Tampa area, as we go into 2023, can be challenging to some.

Increasing interest rates and high home prices put a damper on potential buyers' plans to own a piece of the American dream.

But not all is doom and gloom.  

Luckily, there are down payment assistance programs available to help first-time home buyers own a home.

Below is a transcript of my interview with an affordability housing specialist - Ruth Principe at Synovus Mortgage.

I highlighted the different questions I asked her about the different down payment assistance programs available to first-time home buyers...along with a video of it.

Down Payment Money

Me: Go ahead and tell us a little bit about yourself, what it is that you do?

Ruth-Principe-Synovus

Ruth: My name is Ruth Principe I’m with Synovus Mortgage. I’m an affordable housing specialist with the bank. So I deal with all things down payment assistance related, first-time buyer related. 

While I can do everything that the bank offers, I can give any loan program, I can work any loan program.

My focus is first-time buyers with down payment assistance. So I’m very well versed in all the programs that are going on in the area and the state bond and all of that stuff. 

And I promise that there's money out there. So if you're talking to a lender and they're telling you there's no money, that is not true; and please don't use your 401k.

There's just too much money out there for you to use a 401k.

Me: Are you finding people having to use 401k to help with the down payment?

Ruth: No I usually stay out of their money unless I like to stay out of their savings and their 401k because that's a "someday fund" and I want to make sure that I set them up to succeed, not to fail.

So if we wipe out everything they have in their world to get them in the house, there's no stress like money stress.

So my concern having them in the house and now they're trapped and they're concerned this is the first time out...I don't want anybody worrying like that because then the next moment, you know if something one little thing goes wrong, it can just turn your world upside down.

Yeah, try to stay out of the borrower's money with the exception of earnest money deposit, appraisal cost, that kind of thing, their inspections of course are something we can't cover...if there's anything left over that they need to bring in it will be minimal.

Me: That's good news and a lot of people I think especially first time home buyers' number one...they may have little to no knowledge of the home buying process and then almost absolutely they're flabbergasted when they hear like there's money available that can help me out with my down payment.

So Ruth why don't you go ahead and just tell us a little bit about what DPA (down payment assistance) is initially.

What Is Down Payment Assistance?

What-is-down-payment-assistance

Ruth: DPA we refer to is down payment assistance. Meaning, money that's offered by a state or local municipal program.

It will give you basically the down payment and part or if not all of your closing costs.

For instance, there's a $15,000 program available through Hillsborough County. I can use some of that for down payment and some of it for closing costs.

If we run short on the closing cost side that would be the only time that we would need you to bring any money in, or maybe the seller, to help or get a gift from a family member.

But I try to cover everything and they've moved their assistance up to $15,000 because of what's going on in the market to help our first-time buyers be more competitive with offers.

So it's very helpful.

Down Payment Money

Does down payment assistance have to be paid back?

Me: And down payment assistance, is it free money?

Ruth: Not necessarily free money...It's zero interest money so there's only a few of them that are forgiven.

City of Tampa is one of the ones that's forgiven but the other programs are not forgiven. So it's just gonna sit there in second place and hang around and not do anything...it's not incurring interest, it's not doing anything.

If you sell, you refinance, or you move out of the property (it's not your primary anymore), that's when that loan becomes due and payable.

So it's technically a loan, it's recorded but it just sits there in second place and it waits until one of those triggers happens.

So if you refinance your house in five years, that money that was given to you in the beginning of this, for instance Hillsborough County that $15,000, would be repaid back to the county so that they could circulate it out to another buyer.

That's how that one works.

There's a couple of them that are grant programs that are forgiven. But, the forgiving part of it, if you are on a loan that does forgive, it forgives 20% per year over five years.

It doesn't immediately...it'll go 20% per year over five years.

If you move out in the third year, then you only owe back that last portion...40%-ish.

Me: So the DPAs, most of them have to be paid back?

Ruth: Correct, eventually.

Me: The one caveat is that zero percent. Are all DPA's zero percent interest?

Ruth: Yes. But, there's one through the state bond program that's amortized at 3% but that's a true second mortgage. So you start making payments on it immediately and it goes away in 15 years once you're done paying it.

Or, you can prepay it and get rid of it faster. That one has an amortizing payment rate on it. The rest of them do not.

How does down payment assistance work? 

Ruth: Most of the programs come through the bank. My underwriter is going to underwrite Hillsborough County's loan or the Florida state bond to their guidelines.

But it's one underwrite with us if you're layering programs, like Hillsborough County and City of Tampa.

There's a reservation number that you'll obtain from the City of Tampa before you write your contract...they've done an underwrite on their side, they have a set of inspections they want done and then they approve their side of it.

Then we come over to my side and we add their money to the Florida bond and then my underwriter makes sure one more time that it meets all of the guidelines for both programs and then we move on.

It's really very simple and a lot of lenders that don't work with the programs, mind you, will tell a borrower they're a big hassle...don't use them...

They're not a hassle, they're basically a 'glorified gift' is what I call them. That's why they're very user friendly...

We do all the heavy lifting on my side at the lender.

All you have to do is give me your documents and we take it from there. So, the money's out there to be used and it's really not hard to obtain.

Down Payment Money

Household income thresholds for down payment assistance

There are some requirements, of course. Most of them are household income driven. Anyone earning income in the house, even if they're not on the loan, we have to make sure we don't go over that household income threshold.

Again, I’ll go back to Hillsborough county's program. Their $15,000 program, you can go up to I believe it's $69,000 in household income for two people.

If you're a single person and you're making $55,000, that program is perfect for you.

Do all lenders offer DPAs?

Do-All-Lenders-Offer-DPA

Ruth: Honestly, I’m just going to be harsh I think it's laziness in my opinion. They're extra work but you know what it's so worth it.

Because you're helping somebody get money and not raid their 401k to get them in a house we do have to go through certifications and trainings and that kind of thing but it's worth it.

Some lenders just don't want to deal with down payment assistance because of the extra work involved. For me, I mean show me a new program and I’m all over and I’ll work on a weekend to get certified in it because it's more that I can offer somebody to help them get in that house and not mess with their savings.

I think that's the biggest thing.

And then if you're a mortgage broker, mortgage brokers can't use the state bond or the Hillsborough county money.

They can only use the municipal money. So again they have to get certified in it and you know be on the lender list for the municipal programs and they just don't want to take the time.

And the reality is there's a lot of explaining that goes into down payment assistance and first-time buyers they don't know because they've never done it before.

So they have a lot of questions and if that lender is not patient and doesn't want to answer all the questions and only wants to deal with Mr. $280,000 and up there, they're gonna discourage the use of the program just to keep the dea,l which for me is just irresponsible...just my opinion.

I don't mean to be harsh on anybody I won't name drop but if you don't want to go through the certification...there's loan officers at Synovus that don't deal in down payment assistance...

So you can't really walk into any random Synovus and find somebody that's certified in these programs.

There's only a few of us that have taken the time and want to do them, so I guess that's the big thing is they want to keep the deal so they don't really communicate that there's more out there.

At Synovus, our loan officers that don't do the down payment assistance programs will call or email and say hey I have somebody in my office that really needs down payment assistance. Can you help them because we want to do the right thing.

And everybody's been basically trained...our loan officers...if you get one like this send them to somebody that can give them the program.

Don't you know you have to offer what's out there?

That's just being a responsible lender.

If I’m working with a buyer and they already have a lender.

What happens if a buyer is already working with another lender?

Ruth: It depends on the lender. Like brokers mortgage brokers typically don't. The state bond doesn't have any kind of an approval process for a mortgage brokerage...for a bank so those programs would not be something that they could work with. 

And then if the lender wants to take the time and get certified, absolutely.

So my first question normally when I have a client come to me and say my realtor told me to call you, I already have my loan in process with another lender...

My first question is "did you ask them if they do down payment assistance?"

Because again, I don't want to hit their credit again if they can get the same thing, right, where they are already at.

I don't want to disrupt anybody's process and I don't like to step in on anybody's dance just because I expect another lender not to do that to me.

So typically my first question is did you ask them if they do these programs. If they say I did and they don't deal with them and they said they have no way to give me this then I ask them...remember you're already in process over there...have you ordered the appraisal?

I just want to make sure that we are all on the same page that we start over if they come over here. But of course I’ll help anybody that wants if they need to change lenders for that reason.

But again my first question is going to be "are you sure that they don't do these programs?" because even somebody in their bank...if they're not certified on it, someone else might be and they can just take over the loan and not disrupt the process.

Me: So why does it matter what status they are in the process of the loan process? For example, you just mentioned appraisals. Why is that important?

Ruth: Well because if they've already spent upwards of $500 on an appraisal at another lender, in order to move over here, it would...it is entirely possible unless we can get it to transfer over that they may need to order a new appraisal, okay.

It's also another credit pull, which can sometimes...that, to me, it's detrimental to hit somebody's credit multiple times for no reason.

So if we can resolve what they need at that lender I’m happy to leave the loan where it is and try and help them find a loan officer at that organization.

It's not because I don't want to do the work and I don't want the loan but I don't want the customer disrupted and have another.

We're trying to make sure we don't harm them if they need to switch programs or move so if it comes down to it then they just come here and we work with the other lender to get the appraisal if we can and that kind of thing.

But it's typically...they move...they end up coming over because they're with a lender that does not deal with this stuff.

Down Payment Money

Who offers down payment assistance programs? 

Who-offers-DPA-programs

Me: I know you mentioned it inadvertently when you're answering different questions but if we can just kind of identify who offers these DPA programs.

Ruth: Banks are your first option...with the state bond or Hillsborough County, most of the banks in the area.

If you're with a credit union, they do not deal with these kinds of programs. So if you bank with a credit union, chances are, your loan officer can't give you these programs.

When you're asking the questions, make sure you call and have a conversation with a lender and ask them do you deal with down payment assistance.

If they don't, they're gonna...the first thing out of their mouth is gonna be "don't worry about any of that...or we have a program here that will help."

You listen to what their program is.

But then call another lender and ask them about if they work with the assistance programs, just so you can compare the two...and you can do that without having your credit pulled.

Yes you can.

That's another big thing.

"Well until a credit report, I can't talk to you."

That's not true.

I can have a conversation with you all day long and I like to talk if you can't tell.

I can have a conversation all day long and tell you all about the area programs and then you can figure out which direction you want to go and then come back to me.

I’m not going to pull your credit until you're sure you're coming here because that's not fair to you.

Now I can't give a pre-qualification letter without pulling.

I can have the conversation and explain the programs and all that stuff, that's easy. And that helps you get all the information so you can make your own decision about your finances.

That's the name of the game.

What kind of DPA programs are available in FL?

First-Time-Homebuyer-Options

Me: I know different counties might have different programs but generally speaking what programs are over here?

Ruth: Hillsborough County has several. Hillsborough County Home Sweet Home that one is only available in Hillsborough county.

The Florida state bond has four or five different options under their umbrella. That one can be used anywhere in the state of Florida.

City of Tampa has the two programs.

One is east Tampa CRA. That's $15,000.

The other one is the DARE program and that is $30,000. It's forgiven. That's a grant...it's forgiven. 

Pasco county has a program...not a ton of money up in Pasco, but there's some. And we can layer that with the bond because the bond can go anywhere.

Pinellas county has the regular Pinellas county loan. That one's taking a really long time to process through though.

So that's going to be a tough one in this market.

It's a lot of money but you know at the end of the day it's very hard to get to move fast enough for this market. That one's $40,000.

If you have a seller that'll wait they're at least a sixty day...that's tough...that's hard to sell that to a seller.

So there's that one and then there's Pinellas County Housing Finance Authority. There is again the state fund you can use over

There is City of Clearwater and City of Largo...both of those are $45,000.

And then City of St Petersburg has two different programs one is the CRA program Community Reinvestment Act meaning that's a census tract driven program.

What is a census tract or CRA? 

So I’ll go granular…this is a lot of information. 

Every city is broken up into little grids and when they send out that census tract questionnaire, this is how they break up the city into those tracts.

So they're asking you income information because they want to figure out how many people live in this area at this income level.

When they assign a census tract low, moderate, middle, upper, that's what they're gauging that with, is the census information.

One of the programs at the City of St Pete is specifically for low or moderate census tracts.

Now don't let low or moderate census tract worry you.

There's nothing to worry about there.

There are pockets of low to moderate census tracts right around International Plaza in Tampa.

You would think International Plaza it's got to be an upper census tract. It's all rich people live there.

That's not true.

There's a couple of pockets of low to moderate right around that area that we have a 100% program at the bank that you can get... 100% financing if you're in that low or moderate tract.

You can make half a million dollars a year and still get that program!

So that the income cap goes away on that specific program when you're in that census tract.

Same with city of St Pete.

They have income restrictions on their city program but if you buy in their census tract, that income requirement goes away.

I just did one for a client a month ago and they collectively made about $70,000...so they made too much for the city program.

But I used Florida bond and the St Pete CRA and they ended up with that's a $10,000 one so I combined the two and they got $17,500.

Now the state bond program has moved their FHA one to $10,000. So that same client could have potentially gotten $20,000 with that example.

Things that we can stack up...there's ways that we can you know move this around so that you'll get the most for your money.

Do DPA's work with all types of mortgage loans? 

DPA-and-Mortgage-Loans

Me: So you just mentioned FHA...does it work with conventional loans as well?

Ruth: Yes so they're one complete package.

For instance, the state bond they have an FHA program...it's their first mortgage that we originate on my side and the down payment assistance so they create their own first mortgage.

So I can't use just the DPA on one of my loans it has to go in conjunction with theirs okay.

The municipal programs city of Largo city of St Pete those I can attach to that 100% program if we need to...so those can attach independently.

Down Payment Money

Who qualifies for down payment assistance programs?

Me: Meaning who would qualify for these different programs?

Ruth: Well the reality is there's something for everybody because they're all income driven.

So the Florida bond has a program that goes all the way up to $103,000. If you make $103,000 you can still get some form of assistance.

So it gauges...it's based on your income [as to] how much, how far we can go.

If you're over the income for one program, you may be able to qualify for another one.

So the reality is if there's such a wide range of programs available that it's hard to pinpoint a specific answer to that...so anywhere between you know $30,000, $20,000 all the way up to a $103,000 we can find a program for.

How do you qualify for DPA?

Me: What sort of qualifications does a buyer have to meet in order to qualify for a DPA?

And then we'll go into at the actual homes of the actual property itself if there are requirements for the property.

Ruth: The borrower, they're household income driven, so we need to know how many people are working in the house and how much they make...that's the first step to figure out what program we're going with.

Okay so borrower requirements. Most of the programs require at least a 640 score in order to obtain the down payment assistance.

City of Tampa is a little bit of a lower score so if you qualify for an FHA loan at 620, we can still use their program so that would be not a bond program, that would be a straight FHA program with the City of Tampa on top of it.

The Hillsborough County Florida bond, Pinellas County needs a 680. If you have a 680 with the other municipalities...I’m sorry if you have another 680 score with the other programs you can get we can go all the way to 50% of your income as far as qualifying you for a mortgage.

So it'll let you go a little further if you have a 680 score but the reality is we need 640.

That's a good threshold to get to.

Will higher credit scores get you a better interest rate? 

Ruth: And then if a lot of borrowers ask me...well if I have an 810 credit score will I get a better rate? 

On some of the programs yes, but all of the state bond, all the bond programs are...all their interest rate is driven by the servicer.

We can't change the rate.

So if you have a 640 or an 840, you're gonna get the same rate on the bond programs.

It's also the same program lender to lender to lender.

So when they say go out and shop rates, we all get the same rate.

It's the same program.

So be careful going to different lenders asking for the same program because we're all going to hit your credit and give you the same exact answer okay.

Be careful of that.

Do DPA programs have limits on the home's purchase price?

Down-payment-assistance-home-limits

Me: We talked about the buyer requirements now what about the property requirements?

Are there certain properties that they can, in terms of price, you meant...you did touch upon area.

Ruth: Yes.

Hillsborough County has a cap on their program of $283,000 and a little bit maybe $283 I can give you the income caps or the excuse me the purchase price cap.

Most of them have a purchase price cap.

I think the bond is at $311,000.

So they're a little bit higher as far as areas...you can go anywhere as long as like Hillsborough county's program you can only use in Hillsborough county.

The property itself has to be able you have to be able to move in and live there.

Your property requirements...

The house needs to be in livable condition.

So we can't do rehab loans with this product.

We can't buy a house that needs to be fixed up and use the down payment assistance program to facilitate that.

The house needs to be able to be lived in.

It also needs to be either a single-family home if you're using an FHA program or a townhouse.

Condos are harder to finance on FHA programs simply because not all condo complexes are approved with FHA.

If we have to go out and get that approval on the FHA that can take 45 days by itself to do that.

So I usually say stay away from condos if you're using an FHA loan.

If you're using a conventional loan, no problem.

If you're using conventional bond you can open the door to the condos.

If you're using FHA bond or anything having to do with FHA I would stay away from condos.

Mobile homes we cannot finance. FHA will [finance] that's true.

But down payment assistance won't.

So we need to stay away from mobile homes.

Anything that is in distress, like major distress...there's a hole in the ceiling or the roof...that kind of thing. It can't be in disrepair.

You have to be able to literally move in and live there.

If it's ugly...it can be ugly as long as it's livable because you're going to go in there and probably do something to change.

But it just seems to be able to be lived in.

Foreclosed properties are fine...again, as long as they're in livable condition.

Short sales are fine as long as they're in livable condition.

Do you need 20% down payment to buy a home?

Me: One of the questions that I get a lot is well I don't have enough money and I need to come up with 20% down? So I need to save I can't buy right now because I need to save, is that a myth?

Ruth: That's a myth.

We need 3 or 3.5% and we're going to get that from the program.

So if we're using the state bond, we're going to take that 3 or 3.5% out of that $10,000 that we have...or Hillsborough county we're going to take the 3.5% that's required for the down payment from the money from the bond authority.

At this moment, I can usually put more money down out of the Hillsborough county program because there's that additional $5,000 that they added.

So we have $15,000 available in the Hillsborough county program.

What I normally do is I take the required amount, put it down on the down payment, save the rest for closing costs.

If we find a house and they would rather put more money down, I’m going to try and make that bottom line zero [out of pocket]. 

We push enough over here with the bond money to the down payment and save just enough for just to cover the closing costs and make sure that they come to the closing table with little or nothing.

I just did one yesterday.

The girl would be coming in with like $250.

I’ve had clients where we zeroed them at the table...where they didn't bring anything.

They brought their earnest money, their appraisal paid for, their inspections and that's it.

And I love doing that because then their money stays in their bank account where it belongs so there's no financial stress very nice.

Down Payment Money

How can buyers take advantage of this program?

Me: What would be the steps?

Ruth: The first step would be to contact a lender that works with the programs.

The only way to do that is either to ask your realtor if they know someone or always you can call me and I will help you...that's the first step

If you are a true blue Wells Fargo client and you want a Wells Fargo loan officer then go into Wells Fargo and ask who in your establishment works with these programs, because not everybody does and they have to be on the list.

So Hillsborough County has a list. Florida state bond has a list. So the way to access those I can give you a link - Floridahousing.org can give you the list of approved lenders. 

Anyone on that list has done at least four loans in the last quarter.

So that if they're on the list they're actively working with the program.

If they're not on that list but they say they're certified in it, I would maybe ask a few more questions, just because if they're not doing them actively you could run into some problems.

But that's the way to take advantage of it. Literally, I mean please call me.

But if you don't find my personality to be sparkling, then ask your bank if they have someone that works with down payment assistance and first-time buyers.

Are DPA loans competitive as other loan programs?

Me: In today's market with sellers, you know it's a seller's market. There’s literally no homes up for sale, so the process itself is moving very fast.

Can buyers who take advantage of DPA programs still compete in a hot seller's market like today?

Ruth: Absolutely, because we move as fast as we can on my side. So you can write a 30-day contract and I will move heaven and earth to get it done in 30 days.

If for some reason we need a tiny extension, we'll either ask the seller for it...usually it's the TRID requirement at the end that'll trip me.

So if it's a TRID requirement, where we can't get the cd [closing disclosure] out in time to meet the state, but we need 2 or 3 days after (there's a clause in every real estate contract that gives you up to ten days if it's TRID related)...so we could play that card.

I typically have a conversation with the seller's agent and just say hey look we just need a couple of days...this is final approved.

I just need to get my cd out or there's one more condition I need to get. Can we just can cut me a break and give me a couple of extra days?

I haven't gotten a lot of pushback on extensions...knock on wood.

But the reality is at that juncture it would be very hard for that seller to just up and walk away in my opinion.

Now that being said, we do have the constant threat of "I have backup cash offer" waiting...there's always that constant threat.

The reality is we will go as fast as we can.

My struggle normally is getting the documents from the client. So if you're listening and you're a borrower, please send me...I’ll send you a list...send me everything.

And once you have a contract, I may need to just update paystubs or a bank statement or something little like that and we can move right into underwriting.

I’ve had the last two that I’ve gone under contract with, they were in underwriting within a day and their documents, they have to sign their documents before I can order the appraisal.

But we were ahead of it because they sent me everything up front.

I load it all in send it in for disclosures and then move it on to underwriting and it's...we're turning files back out of underwriting in about 3 or 4 days.

So I have a conditional approval before I even have the appraisal.

Me: Can you send us a list maybe we can have a link to it or something the list of documentation that I need?

Ruth: sure yeah we can have

Me: That way they can have that ready because it's going to be more advantageous for the buyer to go into an offer when they have the underwriting approval already done.

Ruth: Exactly.

Me: ...that much work and that much time...so the only thing that we'd be waiting on essentially would be the appraisal.

Ruth: Yes the appraisal and any other maybe something small my underwriter might ask for, like please explain this deposit over here. Yeah, not a big deal.

How to handle cash when under contract? 

Buying-homes-and-money-deposits

One word to the wise about deposits.

If you sell your couch, don't put the money in the bank.

Take that money, put in your pocket, buy your groceries, buy your gas...do your day-to-day stuff with that cash.

If you put it in the bank, I need to try and explain it...where did it come from?

Cash money that you have in your house, in a shoe box...first of all that's very dangerous game to play to have thousands of dollars in your house...that's just my opinion.

Everybody's different but I have buyers that say "but I’ve been saving this money for my house and the only way I can save money is to put it in this shoe box because I won't spend it..." please don't do that.

If you've done that, it needs to get in the bank.

If you're already in the process of buying the house, we'll need to figure out...can someone give you a gift for that same amount of money?

We document it with their bank statement...don't deposit it yet... don't give it back to them yet...we'll get a gift from aunt Milly.

She writes a gift letter, gives you the $2,000 that's under your bed... we document it with her bank statement and then after you close, you take your shoebox money and give it back to aunt Milly.

There's ways we can work around that stuff.

You have to be careful with cash deposits because it's a Patriot Act thing. They make us source everything down to $100 deposit because that's just the rules now.

They're in place simply because years ago buyers would go to an ATM with their credit card, after I pulled their credit, take $2,000 cash advance at 30% interest...makes my head explode...take that money, put it in the bank and call it a gift or give to aunt Milly.

Aunt Milly then filters it through her account and back to the buyer and it's really not a gift, it's borrowed, because now it's on the credit card.

So this is...they put stops in place for that kind of thing because it ends up messing us up at the end because now there's more debt that I have to account for because they took a cash advance.

What steps do lenders take to secure a loan today?

Me: What do lenders do in terms of looking at the buyers funds, bank accounts, bank statements, and checking on their employment history that sort of thing?

Processing

Ruth: So processing...once I have everything and I’ve loaded it into the file, I’m going to go over the bank statements and make sure there's nothing in there that the underwriter is going to ask me for an explanation of this $100 deposit...

Or your borrower's name is Mary Smith but who is Joan Jackson that's listed as an account holder with her. Then I need to get a joint checking access letter and have Joan sign it and we're good to go.

Little things like that I try to catch on the front end so that the underwriter doesn't have to ask...it's one more line item that I don't need to have come back as a condition.

Verifications 

So I’m going to go through those...processing is going to double check me, then we're going to order out our verifications, verification of employment, verification of rent... 

Sometimes we'll need...we're going to contact your landlord.

If your landlord doesn't want to talk to me because he only will accept cash from you, then we just have to make the effort to get a hold of him and we have to explain that I pay cash for my rent...here's where it comes out of my account.

My landlord won't give me a verification.

Some landlords think that I’m the FBI and I’m going to turn them in because they're not paying tax on the money. I don't really care what he's doing with the money.

I just want to verify that my client pays on time but sometimes they won't answer the question so there's that.

So my processor is going to go through all that.

Order Tax Transcripts

They're also going to order out tax transcripts. Meaning, what you give me in your tax return copy needs to match what internal revenue shows as the return.

The reason we do it that way is again, many years ago before probably half of you were born, there were people playing games with their tax returns, where they would give me a copy of a 1040 but file something entirely different with internal revenue.

That's a problem.

So we need to make sure that those two things match. That's why we ask you for your tax forms up front, your 1040 tax return, we're going to have you sign them and then we match it to what's with the tax transcripts.

For first-time buyers, we need three years taxes. We need that because that's how they show that you have not been a homeowner for three years.

What is the definition of a first-time homebuyer?

First-time-homebuyer-definition

Ruth: So HUD's definition of a first time buyer is someone who has not owned a home in the last three years.

So if you owned 10 years ago but you haven't owned since and you don't still own, you're a first-time buyer.

The only exemption on that is veterans are exempt from that.

They can sell a property last week and buy another house in a month and they're considered a first-time buyer...that's just a another caveat...thank you to our veterans...that big exception.

First-time homebuyer tips

Me: Do you have any last-minute thoughts any recommendations into giving first-time homebuyer you know first time home buyer tips so to speak from a lender perspective?

Ruth: Big things to stay away from:

  • car dealers and 
  • furniture stores 

Don't buy furniture for a house you don't own yet. It's a bad idea and it will get you in trouble with us because even if we've run your credit now...the car dealer thing, we'll start there…

Car dealers are going to tell you don't worry about it, it won't show up on your credit for 30 days. Well the loan won't, but the inquiry does, which leads me to have to ask you "did you buy a car?"

So let's go back to the car. A car dealer's going to tell you "you're fine, you're safe...lender already ran your credit...don't worry about it."

Well we're going to run a refresh at the end. 3 to 5 days before you close, we run a credit refresh and any inquiries that you've done from the first time I pulled your credit to that moment, they're gonna pop up.

So I’m gonna ask you why were you at Brandon Ford right.

If you bought a car it's going to stop us dead in our tracks even though the payment hasn't started yet you opened a new line of credit.

Here's why this is vitally important guys...you're going to get to closing and you're going to sign an affidavit that says nothing has changed in your financial picture.

That can be construed as bank fraud if it's not true.

So we had a client that wasn't my client, it was a co-worker, she comes flying in my office...this is years ago...one of my bond loans, we have to take it back and I said what happened.

The girl bought a car the day before closing and then decided to sign the affidavit saying nothing had changed. Well when we moved it on to the servicer, US Bank, they sent it back saying there's an inquiry on here, what's with the car?

We ask her, she owns up to buying the car. Now instead of having, at the time, a $15,000 forgiven loan, she's paying it back to the bank now because the bond servicer wouldn't take it.

She was over the ratio.

She did it after the fact. Had we found out about it before, she wouldn't close.

So these are things where you're floating down the river in your canoe, don't shoot a hole in it because that I can't help you.

Once you do something like that, my hands are tied...I can't do anything about it and it will stop you.

Furniture stores...you guys if you go to a furniture store or a car dealership...if you've seen the movie jaws...you should hear that theme song playing in your head...don't do it!

Furniture stores are gonna watch what you're looking at, $5,000 worth of furniture...they're going to offer you a $5,200 credit line until 2090 right and 0% interest till 2090.

Well it's a great deal but they're going to only offer you $200 more than the package that you want.

So you're going to tank your credit score and max that card immediately.

Please don't do this...it'll stop you because now I have to add the furniture payment onto your debt to income ratio...bad idea.

Those are tips and I promise it happens every single day...every single day. And I say it and then I put it on the bottom of my email - don't open any new credit.

Target...if you're watching this video and you work at Target, I mean no disrespect. They ask you every time you check out "would you like to save 10%?"

I’ll give you $3 not to do it because it's an inquiry on your credit report and we're gonna ask you and it could change your score. Don't do it okay.

Utilization of credit cards...try and keep your utilization, your usage to 50 % or less. 25% is optimal...50% at the bare minimum.

So if you have a $1,000 credit card line and you're at $800 right now, we need to whittle that back until you're just under $500.

It's going to help your score and it's going to help your debt to income ratio because the closer you are to your limit, the more it's impacting your score.

Now don't pay it off...not asking to pay it off...just whittle them down. Continue to use them but pay...you know, use them, pay them, use them, pay them.

So your credit score keeps moving forward and doesn't stagnate; but you're not maxing things out.

That's it.

That can create problems too, absolutely, be super careful with your credit is the big one.

Me: Now what about the employment piece of it do you check that as well right before closing?

Ruth: We do and it has come up. It just happened last week not to me thank you where they lost their job 3 days before closing and they had no intention of saying anything either.

So this is where honesty becomes a big huge part of this.

We need to know if something happened because we can work with the agents and get it fixed.

I had a girl that got furloughed because of covid.

We were within her week of closing...she called me, absolutely hysterical. I said okay let's we'll fix this hold on.

We put the loan on the shelf I said when do you expect to go back to work...she said 3 weeks from now...this is back when the market wasn't crazy town.

Seller wasn't living in the house, it was an investment property for him.

He knew we were good to go the moment she went back to work.

He not only allowed her to move in the house but waited until a week after she was back at work and we closed a week after she went back to work.

Not a big deal but we need to know about it.

So if she would have called the agent and said I got furloughed he may have said well I’m not gonna wait but because the buyer's agent, her agent and myself spoke to the seller and assured him that we are good, we're cleared, we're in closing, but we have to stop because she got furloughed and I can't move forward until she goes back to work.

We can work on just about anything but I need to know about it in order to fix it.

It's teamwork makes the dream work. 

Down Payment Money

How does marriage separation affect buying a home?

Marriage separation during home buying

Ruth: Oh there's one more thing I wanted to mention...

The state of Florida has specific laws in place as far as married or not married.

So if you're separated, the state of Florida does not recognize separation as a legal form of marriage.

If you're separated and you have no intention of getting back with this person, you need to make that final divorce before you buy a house unless the person is very cooperative because you need to understand that, by Florida law, it's their house too.

So they need to sign all the documents even though they're not on the loan because you're still legally married to them.

Yes, they can also move in the house which if you're separated I’m pretty sure you don't want them to move in.

By law they can. So that's...I’m all in favor of love and marriage...but the reality is, in the state of Florida, there's no...you're either married or you're not.

It's pretty down the middle.

There's no gray area there.

So typically in my classes that's where I see a few people are about to pass out and fall off their chair.

I’m like well...and if they're incarcerated...that's an easy one...we just need access to them, send them the documents to sign...that's not a big deal if they're incarcerated.

But if you don't want them in your life and you don't want them to have anything to do with the house, then that's the conversation you need to have with your lender because we do find out that you're married...it's not something we can hide.

Me: So how can people get in touch with you? 

Ruth: Okay my phone number is (813) 440-7377 I’ll say it again (813) 440-7377 my email is ruthprincipe@synovus.com

Or you can ask Randy because he has my information.

Me: When they reach out to you, they're not obligated to work with you? You don't even necessarily pull their credit?

Ruth: Not unless they're ready.

If they say I want to go ahead and do a credit pull, then we'll do a credit pull but that doesn't...I can have a conversation without doing that.

And even if I’m not your lender, I’m going to give you the information that you need because you need to have the correct information so you can make the right decision.

So if you're already with a lender and they don't work with the programs, I can talk to you tell you all about the programs and then you decide...

Is it worth it at this moment in my transaction...should I or shouldn't I move over?

If you want to do that, then of course we're going to help you go as fast as we can and that's a conversation you might want to have your realtor too.

I mean ask Randy if he thinks it's a good idea at this moment to move. I mean, if the seller is going to be a pill about it and not extend or help us out, that might create issues that you don't want to have to deal with

Me: Ruth you've dropped a lot of knowledge here you dropped a lot of great tips especially for first-time homebuyers. 

I really want to thank for your time again. So this is...for everybody again...this is the second take that Ruth was able to do this with us.

So thank you so much. I really appreciate it.

Ruth: You're very welcome. You have a fantastic day. I can't wait to see the video without my coughing!


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