New Home Mortgage Loan Process for First Time Buyers

Are you a new home-buyer wondering what the process is for obtaining a mortgage?  It is not as complicated as it seems especially if you have a lender working as a partner with you.  At 1st Alliance Lending we will be on your team as you navigate the loan process.

Submit a Loan Application

The first step is to submit a loan application.  You will need to include proof of your income by submitting 30 days worth of pay stubs.  You will provide your drivers license and social security card so a credit history can be examined.  Tax forms and W-2s from the past 2-3 years are also requested.  You may be requested to provide bank statements and a list of your addresses for the past 7 years.  If you have had a financial hardship in the past that you would like to explain you can include a Hardship Letter.  Many financial institutions will not take into account job loss or illness of a family member impacting previous credit performance.  At 1st Alliance Lending we want to know the details and will take information provided in a Hardship Letter into account when evaluating your application.  

If all of this documentation seems like a lot of work just realize that after you submit your loan application your homework is done.  Now it is time for 1st Alliance Lending to do the work.  

)

Application is Processed

After your application is completed we will provide you a Good Faith Estimate (GFE), which gives our best estimate of the fees and costs you will incur to obtain a mortgage.  We provide the GFE within 3 days of application as required by law.

Processing the application typically takes 1 week and includes verifying it has been filled out completely and accurately.  We evaluate public records to see if there are any liens.  Occasionally additional information or documentation may be requested.

Options Presented

You will be presented the rate and loan options that you qualify for.  In general, better credit history equals a better interest rate and more options available.  Keep in mind that 1st Alliance Lending doesn't just rely on your credit number but looks at the whole picture to determine which loan is appropriate for you.  We strive to provide you with a mortgage you can afford long term.

If you are ready to partner with 1st Alliance Lending to procure a new home mortgage loan contactus.  We would be happy to be on your team and walk you through the mortgage process.

Check Your Credit Before Buying Your First Home

Like most first time home-buyers, you don't have the money to pay the full price in cash for your purchase. So you'll need to depend on a mortgage to finance the deal. Lenders look at the price of the house, down payment, and monthly dues to partially qualify you for a loan. However, they also look at your credit report and credit score to determine your payment rate and terms.

While you can't get your score without paying for it, you can look at your credit report, so you know what the lender is examining. The report reveals your financial obligations, your payments to merchants and institutions, and whether you pay on time or not. You're entitled to one report every year from each of the three major credit agencies, which are Equifax, Experian and Trans Union. You can get each document for free from AnnualCreditReport.com, without any obligation or without having to sign up for financial services.

Check out your listings as soon as you download them. Make sure everything is correct, especially the merchant name, account number, amount owed, monthly payments, transaction history, and your record of payments. Find any discrepancies? Then let the merchant and reporting agency know as soon as possible. They're legally obligated to address any issues, however, that may take several weeks for the fix, so you want to start looking at your report many months before you apply for a mortgage.

Red flags for lenders include foreclosures, bankruptcies, or late payments. You can't do too much about these issues if they are accurate, but you can develop explanations of why they exist. For example, perhaps you lost your job and missed a few payments during that time.

If you're interested in obtaining a mortgage or want to find out more about the financing involved, please contactus. We will put your first and be your partner through the process.

How Prequalification Helps with Buying Your First Home

You've spent many months visiting models at new housing developments, visiting open houses, and arranging appointments to see existing properties for sale. You and your spouse have finally found the house of your dreams. It's in a perfect location, has enough square footage and bedrooms for your family, and boasts a host of excellent features like a gourmet kitchen and spa tubs. You apply for a mortgage to buy your first home and are denied. The lender says your down payment and income do not put you anywhere close to affording what you want.

You could have spared yourself the embarrassment and wasted time by undergoing prequalification before buying your first home. Going home-shopping without this prerequisite, as you've discovered, is like taking a long taxi ride and realizing you left your wallet at home. The process essentially looks at your income and expenses to determine how much home you can afford.

After you have been prequalified, you can use this knowledge to look for properties that are within your price range. Once you make an offer, the lender then examines your finances in detail before issuing you the mortgage. After prequalification, this examination is often just a formality because the lender already knows the state of your finances in advance.

To make the process go more quickly and efficiently, do what you can to clean up your finances before you apply. Pay off as many bills as possible to reduce your outstanding balances. You'll be able to afford more house if you have fewer monthly obligations.

Why don't you contactus today to find out more about obtaining a mortgage or getting prequalified?

Do You Qualify For The New Back To Work Lending Program?

With the new back to work lending program, lenders are all set and ready to help people who have gone through an adverse economic event. If this describes you, then there is no reason why you should miss out on this program. This HUD mortgage plan is aimed at giving you a new start if you have recently recovered from an economic downturn. In order to qualify you will need to prove that the economic event was caused by events that were not in your control. In addition you will need to show that the event reduced your household income by twenty percent or more for as long as a six month period. The FHA understands that sometimes life happens and you can’t do much about it.

If you have suffered foreclosure, pre-foreclosure, bankruptcy (either chapters 13 or 7), needed a loan modification or deed-in-lieu or forbearance, then you are a prime candidate for these loans. After you have documented your loss of income satisfactorily, your credit history will pretty much be forgiven and you can borrow money to buy your family a home.


One of the things to note, to the FHA’s credit, is that the loans are written with regular FHA standards. In fact you can get your new home with just a 3.5 percent down payment. The interest rates have also not been inflated but are the same as those of other FHA products. This has all been set up like that to ensure that the borrowers are not in any way penalized for an event that they could not have done anything about. Of note is that not all lenders are offering the back to work loan. Only specific ones have signed up with the FHA to provide this product.

In order to get approval with the new back to work lending program you will also be required to attend an hour of housing counseling or home ownership education or both. If you do not go through this counseling your loan will be denied. It is important that you have all of your documentation well put together and make sure that every requirement outlined by the FHA has been met. It is in your best interest to find an underwriter who is both confident that you can repay the loan and also one who is confident with your documentation.

With this loan you will be well on your way to getting your life back to the place it was before you suffered the economic event. We all understand how important it is to own a home. It is indeed a landmark event in the life of any person. Don’t let anything stop you from owning your dream home. Just get your documentation together, attend housing counseling and speak to a lender near you.

Want a Loan from Back To Work Mortgage Lenders? Get HUD Counseling First

Now that the FHA has a loan product to serve those who have been through a negative economic event it is important that you find out what the requirements are to qualify for the said loan. Loss of income, employment or both is what has been termed as an economic event. However, it needs to have reduced the income of the borrower’s household by at least twenty percent for more than 6 months. Back to work mortgage lenders have received instruction not to approve any loans unless the borrower has been through housing counseling.

If you are to get approval for a back to work home loan you need to have sat through a homeownership counseling and education class. Each borrower hoping to get an approval will need to have sat with a HUD approved counselor and had an hour of one-on-one counseling. This counseling is meant to review and analyze why the economic event occurred and to also find out what steps have been taken by the borrower to overcome the event. In addition, the counselor will also want to know what measures have been put in place to ensure that a reoccurrence is unlikely.


FHA back to work program lender by 1stalliancelendingllc

The counseling must be carried out by a housing counseling agency approved by HUD, or by intermediaries and sub-grantees that have been approved to do so. Finance agencies that work with state housing are also allowed to offer housing counseling. The counseling can take place online, by telephone or even via the internet, so long as HUD has approved of the method. It is also a requirement that the housing counseling session take place between 1 month and 6 months before the loan is applied for.

The borrower will need to provide the back to work mortgage lenders that he/she approaches with the certificate of participation that he/she has received from the HUD counseling agency. Unfortunately if this certificate is not submitted along with the other loan application forms, the borrower will not get the financing.

This loan is a great opportunity for those who have gone through bankruptcy – both chapters 7 and 13 - forbearance, pre-foreclosure, deed-in-lieu, foreclosure and loan modification- to get a fresh start. In fact, the long waiting periods before one could get a mortgage (2 years for bankruptcy and 3 years for foreclosure, deed-in-lieu and short sale) have been completely waived. Now if you can show proof that for the last 12 months you have been in economic recovery, gone through the necessary counseling and met your financial obligations, you can get a home loan easily and start on the path of becoming a home owner again.

Back to Work home loan requirements

The FHA and “Back to Work” mortgage lenders agree to set up home loan requirements

Beginning a new home loan can be an intimidating task because it seems there is so much to worry about. There are mortgage rates, premiums, fees at closing, waiting periods and credit requirements. Many lenders turn families away if their situation isn’t up to par.

Fortunately, the Federal Housing Administration (FHA) stepped in last August to make beginning a new home loan easier for the fearful. Back to Work mortgage lenders cut down extensive waiting periods, which can be up to three years. Through the program, borrowers can begin a new loan only 12 months after losing their home.



The program is designed for families who have faced an unfortunate economic event, such as foreclosure, deed-in-lieu, short sale, bankruptcy or any other financial downturn that significantly affects a household’s income.

“An economic event is any occurrence beyond the borrower’s control that results in loss of employment, loss of income or a combination of both, which causes a reduction in the borrower’s household income of 20 percent or more for a period of at least six months,” Mortgagee Letter 2013-26 states.

In the program, mortgage rates are the same as any other FHA loan and borrowers may put down only 3.5 percent on a new mortgage with no premiums nor other fees at closing.

The FHA requires at least one hour of one-on-one housing counseling, which allows borrowers to receive more information on their loan options, obligations and how to set up a household budget.

Housing counseling must be approved by Housing and Urban Development and must address the cause of the family’s reduction in income. Counseling is to be completed a minimum of 30 days, but no more than six months prior to beginning a new loan.

“Housing counseling is an important resource for both first-time home buyers and repeat home owners,” Mortgagee Letter 2013-26 states.

Another requirement by the FHA is satisfactory credit, where many may begin to cringe. As long as the borrower’s credit history is clear of late housing and installment debt payments, and the borrower’s credit score is above 500, there shouldn’t be anything to worry about. If a borrower has no credit score whatsoever, he or she remains eligible.

And if a borrower is facing Chapter 13 bankruptcy and has not yet been discharged, he or she must obtain written permission from the Bankruptcy Court to begin a new Back to Work home loan.

Mortgagee Letter 2013-26 states, “FHA is continuing its commitment to fully evaluate borrowers who have experienced periods of financial difficulty due to extenuating circumstances.”

How to get a Back to Work mortgage loan after losing a job

The FHA’s “Back to Work” home mortgage promises a more stable financial future

Losing a job is tough in our economy — there are car payments, cell phone bills, the rising cost of gas, and most importantly, house payments. No family wants to worry about losing where they call home, and for those that have, it’s devastating.

August 15 of last year, the Federal Housing Administration (FHA) launched its Back to Work mortgage loan, in which borrowers facing an unfortunate economic event can apply for a new home mortgage loan only 12 months after losing a home.

The FHA defines an economic event as “any occurrence beyond the borrower’s control that results in loss of employment, loss of income or a combination of both, which causes a reduction in the borrower’s hold income of 20 percent or more for a period of at least six months.” This applies to everyone in the household, not only one member.

To verify a loss of employment, the lender must receive a document evidencing the termination or loss of business.

The Back to Work home mortgage waives lending agencies’ traditional two or three year waiting periods and replaces them with only 12 months. Instead of waiting around, borrowers can now look for a new home and mortgage almost immediately.

However, the FHA does place some requirements. To be in the program, borrowers must agree to attend at least one hour of one-on-one housing counseling. The counseling must address the cause of the economic event, as well as enable the borrower to better understand loan options, obligations and how to manage money in his or her home.

Counselors assist borrowers in creating a household budget, as well as provide tips on avoiding scams and better preparing for future financial shocks.

The counseling must be Housing and Urban Development approved and completed between 30 days and six months prior to submitting a new mortgage application. This may be completed in person, via telephone or online. A list of participating agencies can be found at www.hud.gov.

“Housing counseling is an important resource for both first-time home buyers and repeat home owners,” the FHA said. “FHA is continuing its commitment to fully evaluate borrowers who have experienced periods of financial difficulty due to extenuating circumstances.”

Another requirement is satisfactory credit. This means the borrower’s credit history must be clear of late housing and installment debt payments. Credit scores below 500 are not allowed, but borrowers with no credit score are eligible in the program.

If your current lender is not taking part in “Back to Work” home mortgage, it’s not too late to switch. The program does not end until September 30, 2016. Once in the program, borrowers may put down only 3.5 percent on a new mortgage with no premiums nor additional fees at closing.

1st Alliance Lending, LLC from David Horgan