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If you are tackling the home buying process for the first time, there are a few things you should know about financing your purchase before you start to look. Your mortgage professional can help.

Get Prequalified

This may sound obvious, but you don’t want to fall for something beyond your means. You’ll want to know what your credit looks like and what you can afford before you start looking.

You can get free credit reports, but your best bet is to have a licensed mortgage professional run it for you, as the information and scores he or she can pull are often different from the reports you may be able to obtain yourself. Plus, lenders will use only credit reports they pull themselves, so you will need to have them run the report eventually.

Pay Your Bills on Time

It’s amazing the number of buyers who don’t realize the importance of paying bills on time.

Lenders place a lot of importance on your ability to pay bills in a timely manner, especially over the past 12 to 24 months; this recent payment history is most likely to reflect your ability to make monthly mortgage payments.

Never Get Attached

Borrowers often fall in love with a property when they submit an offer, only to find it has been sold to another bidder. It’s usually not their fault; this happens. But especially in the current market, there are lots of homes available; take time with the process and find what’s right for you.

Buying a condo can be a great choice for many, as it offers lower-maintenance living and other advantages not available in a single-family home.

However, there are things that you will want to keep in mind when starting to look for a condominium. Not the least of them is to ensure you have a great team of experts behind you, including your mortgage professional, your real estate agent and your real estate attorney.

Association Dues

Condos differ from single-family homes in that maintenance for the entire development is managed by the association. This includes landscaping; painting; snow removal, if applicable; and often such items as roof replacement, if required. While this may result in a significant monthly fee, you are spared the burden of having to deal with these issues; this is very much worth the expense for many buyers, especially those who are less able to perform these tasks themselves.

Financing

If you are planning on financing a condominium through the FHA, the development needs to be included in the FHA Approved Condo Listings. This means that the FHA has examined the rules and regulations that govern the development and approved it as one that can be financed through the FHA. Your team can help you find whether the condo property you’re interested in has been approved by the FHA.

Association Financials

You and your attorney should look closely at the financial statements of the association. You need to find out if there are any financial or administrative challenges with this particular property that may result in either significantly higher dues at some point or even the folding of the association itself. This is rare, but  it does happen. And you don’t want it to happen in your case; prevent this by being an informed consumer and listening to your team.

Discuss financing your condominium with your mortgage professional.

With an FHA streamline refinance loan you can refinance your existing FHA mortgage into a new FHA mortgage in order to take advantage of historically low interest rates. In some cases, an appraisal won’t be required, and the process can be completed relatively quickly.

Is it for you? Here are some things you need to know before you can make this important decision.

First, don’t count on walking away from the process with money in hand.

The FHA Streamline is a non-cash-out refinance, meaning that you can refinance the principal and some of the costs but can’t obtain cash. You must have what is called a net tangible benefit such as a lower interest rate or payment.

As with other types of mortgages, credit scores will drive this process. Depending on the lender, you will likely need a score in the 640 range.

Some lenders may go lower but will have other conditions. You also must be current on your FHA mortgage and must not have missed a payment in the last 12 months. Last, you need a debt ratio that is in line with guidelines.

Income is important in the process; in addition to good credit, your lender will want to know that you have the means to pay back the mortgage long term, even though you will have lower payments once the process is complete. That means you’ll have to provide the lender with pay stubs and tax returns, as you would with other mortgages.

Lenders will also want to verify your assets, as you may be asked to have money at closing for things like tax escrows.

Lenders are allowed to hold escrow money, often for 30 days. This means that you may have to give your new lender escrow money at closing, while your old lender will refund the money you’ve already given them.

If you have tried to refinance but were unable to do so because the value of your home has declined, HARP 2.0 may be just the program you’ve been looking for.

What is it?

The new version of the Home Affordable Refinance Program (HARP) is a refinance program for mortgages that were sold to Fannie Mae or Freddie Mac on or before May 31, 2009. You may not have refinanced your mortgage under any HARP program, unless it was between March and May of 2009.

HARP 2.0 is an enhanced version of HARP 1.0. In HARP 1.0, the maximum loan-to-value ratio was 125%, which sounds good. However, for people living in areas that were particularly hit hard by depressed market values, the program was out of reach of many who wanted it. HARP 2.0 has more liberal ratios.

Qualifying?

While some terms of the program are more relaxed, these are still full documentation loans; you need to show income and assets as you would with other type of mortgages. You also must be current on your existing mortgage and have been so for the previous 12 months.

Unlike HARP 1.0, if you currently have mortgage insurance, you may still be able to qualify for HARP 2.0.

Who offers HARP 2.0?

Most lenders offer HARP 2.0, and you don’t have to go to your original lender to use the program. If you would like more details on HARP 2.0, your mortgage professional is a great place to start.