Then credit is pulled and they are shocked to find late pays on loans they have never heard of that are in their name. Most tend to be student loans that parents have co-signed and defaulted on but I’ve seen car and credit cards in the kids names that the children have either never known about or thought they were being paid by parents on time and in good standing.

Even the parents have been shocked a time or two because they thought the debt was rolled into a bankruptcy or debt reduction plan. The truth is many student loans cannot be included in bankruptcy procedures and most debts will revert to the other name holder at some point.

What this means for the person or persons trying to purchase their first home is that they can’t qualify due to debt ratios, late pays or default and can put them back for years financially. While this is normally seen in families, I have also seen it in past roommates and friends that have tried to help or helped and have gotten burned.

It’s extremely important that if you need a cosigner or have been asked to co-sign any type of loan, be aware of the downfalls to your own credit that can take place if you or the other party ever defaults. Starting from zero is a lot easier than starting in the negative and could take years to recover. No one wants this to happen so make these choices carefully.

HUD offers help and advice from experienced housing counselors that are available to answer a variety of questions from first time homeowners. From figuring out how much you can afford, to helping you sort out your mortgage payments and closing costs, HUD can give valuable advice to those just starting out. What’s more, HUD has a plethora of information on their website including interesting articles ranging from topics like how to avoid predatory loans, to what type of loan is right for you. The U.S. Department of Housing and Urban Development wants to help you find the right home at the right price. If you’re thinking about buying a home, speak to professionals who are dedicated to helping you. Contact HUD today to learn more about how they can help you.

You should be prepared to put a sizeable down payment on your house. While many first time homeowners are not required to pay a down payment, it is important to be prepared to do so. Closing costs should also be considered when purchasing a home, and many times first time buyers forget this. Closing costs are often 10% of the overall house value. Similarly, lender fees, and inspection costs should be planned for, as these costs can often add up. If you’re buying a home for the first time, the term “mortgage payment” may be a scary one. However, with the right lending professional you can find a mortgage payment and interest rate you feel comfortable with. If you’re buying a home for the first time, it is vital that you are prepared for these costs to avoid unrealistic expectations.

Before doing anything you should sit down with a life insurance specialist (someone who only sells life insurance) and talk to them about ways to insure against your passing. You will find out that these guys know a thing or two that can really help you plan for your future and protect your family and home just in case something unexpected happens to you or your spouse.

No one likes to talk about life insurance, wills or funeral pre-payment but these are things you need to consider when doing your financial planning for your family. If you don’t, what could end up happening is a free for all where no one knows what’s going on and everyone left behind has to pay or sell what’s left. This is the last thing you would want for your family to go through.

Also in the new legislation is a tax credit for those selling their existing home and moving into another. You must have used the home as your primary home for five out of the last eight years and the tax credit is for $6,500. You will have to attach your closing statement, also called the HUD, to your income tax paperwork to get the credit. The same income and price restrictions as the first time home-buyer credit applies. If you have additional questions, make sure you call either the IRS or your accountant as this is a tax question.

Today, most of you don’t have this type of relationship with a banker and, even if you do, he has a bunch of rules and regulations that has to be followed and really has no say about what you can or can’t borrow for a house or anything else. Part of the system to judge whether you are good for the payment is by judging your credit. Many people have either made a mistake or two or had a period of bad times that hit and have affected their credit score so even if they are not serial non-payers, they will have a hard time getting loans under these regulations. It’s a flawed system but so far it’s what we have to judge mass borrowing. Most banks will lend to those with a 640 mid score or better and mortgage companies a 620 mid score or better.

One of the reasons for this is that, most of the time, we don’t get all the information until the last minute from the closing attorney’s office and the homeowners insurance company’s. This will have to change in order for us to comply with the new rules. The basic thing you need to remember is if the APR is 1/8^th a percentage point higher or lower than the latest GFE disclosed, another GFE has to be disclosed and you must wait 3 days if emailed or 7 days if mailed before you can close the loan. This could be a problem if this all happens right before the loan lock expires so you need to be aware that this is now a variable in the process. Everyone I know who is in the mortgage loan business is doing everything possible to create a succinct process so that we can all benefit from these new rules; especially the buyers.

When we can close a loan it will already have an appraisal and the client has given us all the documentation along with an appraisal that can be easily transferred.  Other than this scenario, loans take at least two to three weeks to even think about being closed. If you could sit with a processor and underwriter and see how many times they touch each file to order, clear and calculate you would be amazed they turn the loans as quickly as they do. While loan officers are the fuel, it is all the people that work on the backend that make up the engine that allows your mortgages to get processed, underwritten and funded. These people are amazing at what they do and deserve more credit than ever given.

I have already been called this morning and asked if interest rates are going to fall again.  My answer, I have no idea.  Interest rates are not following normal historical indicators so no one that I know feels confident in predicting what might happen.  It also takes anywhere from 6 to 12 months for a rate reduction to work itself through the system.

We all feel strongly that the long term recovery will come and it is apparent that the world banking systems are doing all they know to do to get us turned around and moving in the right direction.   Personally, I feel fear is the worst place we can go right now as fear tends to paralyze people in thought and creativity and I don’t think we can afford to go there.

Here’s what I do know, I am doing mortgages and getting great rates as are my associates.  If you are a first time homeowner, there are still great programs in the market for you.  If you own a home and have an ARM loan that is going to reset, there are options for you through FHA and THDA.  There are programs and people who are here for you but you must do your part as well.  You must have a good payment, work and income history and be responsible to do your homework as to what is expected from you.

If you do nothing else, find and take a first time homeowner class.  Also find a deal with a lender who cares about you and doesn’t sound like a used car salesman.  You know the type; “What will it take to get you into a loan today?”  You must be careful.

PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… C: wait… SD: wait…