April 12, 2024 • 16 mins
Take a crucial step towards owning your dream home in this episode of 'Fire the Landlord'. Join our host, Bill Lutz, along with financial gurus, Jerry Lutz and Jesse Smith. Discover top advice and strategies to pave your way towards financial independence and a home of your own.
Jerry initiates the conversation by stressing the importance of credit scores in determining the type of mortgage programs available. Uncover various credit requirements and how understanding your status will guide you better in choosing the program best suited for your needs.
Next, delve into understanding your income and its affordability. Recognize the significance of assessing your income, acknowledging your monthly bills, and understanding your debt to income ratio. The discussion debunks the misconception of counting subscription-based expenses towards your affordability calculation.
Explore alternate pathways for people with zero credit. Expand your understanding of a ‘manual build’ on credit scores. Recognize the importance of showing a reliable track record of regular payments and gain your chance at becoming a homeowner.
Grasp the basics of leveraging additional income sources like "gig jobs" and compare how these incomes are considered differently from regular W-2 employees in the eyes of lenders. Learn about the concept of down payments and gift funds, how they're sourced, and requirements for acquiring them.
Potential homeowners will gain clarity on various community programs and grants available for down payments and how they can affect your loan. The conversation also sheds light on key advantages of having higher down payments to save on mortgage insurance payment.
Begin your transition from a renter to a homeowner with 'Fire the Landlord'. Reach out to our experts at 513-655-3473 and get the start you need to achieve your dream of homeownership today.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Hi, welcome back to Fire the Landlord. I'm Bill Lutz, and I'm here with Jesse Smith and Jerry Lutz.
Hey, we're going to talk today about what are maybe those first steps that a
renter has to do when they decide to buy a home. So, Jerry, let's start with you.
You know, let's say I'm a renter and I decide to go out and I'm tired of renting
(00:20):
and I'm going to take those first steps.
What's the first thing that I should do if I'm looking to buy a house?
Give us a call here at Fire to Landlord at the 513-655-3473.
And the reason why is because we're here to help you get through this process.
One of the first things we want to look at is what kind of credit we've got to work with.
(00:42):
You know, depending on your credit score will depend on what kind of program
that we have available to put you in to help us out.
That at least gives us a starting point there.
Second is to talk about your income, because we want to make sure that you have
enough income to afford all the debts.
Different programs have different guidelines, whether your debt to income would
(01:05):
be, say, 43%, 48%, up to 50%.
So that's why we take a look at income and see where we're at there.
And the third thing that we look at is how much down payment do we have?
Do we have anything saved up that we're going to immediately use?
Are we going to be getting gift funds or do we have to rely on a down payment
(01:25):
assistance program of some kind?
Jesse, you want to add anything to that there? No, those are the three because
you want to look at those three, highlight those three things.
So then you can kind of help the customer know where they can go.
So that's the main thing.
So just let me ask you, when they first call in and you take a look at the credit,
(01:47):
Jerry had mentioned that, I guess, different programs require different levels
of credit. that, you know, can you talk a little bit more about that?
What's your expert, you know, what, what have you seen on that?
Yeah, it's definitely, it can, you know, credit is king, honestly.
So, you know, if you're in the low sixes, you might not qualify for X,
Y, and Z program, but there may be other programs that you qualify for. So.
(02:11):
You know, what Jerry said, you know, we want to get that information so we can
give the customer the best picture to see where they can move forward. Okay.
I've seen some, some lenders, you know, even go down into the five hundreds.
Have you seen that? I mean, that's, I mean, I know those are different programs,
but I have seen them out there.
Yeah. It may be some out there that way. I know a lot of, because of the market,
(02:32):
I feel like a lot of lenders have lowered their requirement.
So that's kind of been good for the customer.
Yeah. I just don't want somebody to get scared off if they think that maybe
their credit score isn't quite where it needs to be.
So now some people have gone out to like Credit Karma and things like that to
find out their credit score.
I know I've seen some of those advertisements on TV and things like that.
(02:53):
Is that a good place for them to really start?
Or do you just recommend them give you guys a call and talk to a lender first before doing all that?
I mean, if they know, kind of have an idea, That's going to help them.
So credit karma is something I would definitely recommend.
But also you want to call the lender because they're going to give you a hard
(03:13):
number and they're going to be able to give you a hard plan.
So I would definitely call, but I'm not discouraging credit karma because then
a customer may see something that can help them, you know, eliminate something
or something could be wrongfully on there. So I would definitely recommend using Credit Karma.
But when it's time to really have both feet on the ground, you want to get a
(03:35):
mortgage rep involved. off.
Okay. Yeah. And just like, like Jerry said, make the call, right?
And again, that number is 513-655-3473.
Again, 513-655-3473 at Fire of the Landlord here.
So let me ask you, you know, if I'm a new, let's say I'm a little bit younger,
I'm fresh out of college, maybe a year or two.
(03:57):
You know, and I look at Credit Karma and it says, I don't have any credit,
you know, is, is that, you know, tell me a little bit about that,
Jerry, is that a deterrent or is Or is that something I should still give us
a call and give you guys a call?
Actually, believe it or not, you don't really technically need a credit score.
You may actually be able to still move forward by building what we call a.
(04:21):
Outside trade lines. So like, say you're making your cell phone bill that's
not showing up on your credit report, your cable TV bill, those kind of things,
memberships that are monthly that you do.
We can get in there and take a look at it and do what's called a manual build
on a credit score so it can help you out. So there are possibilities.
(04:44):
So just because you don't have or just because you're not showing any credit
doesn't mean that you're completely wiped out.
But that's the other thing that we can do too, is we can take a look and we
can help guide you in the right direction, what you need to do to build your
credit if you have zero and what kind of trade lines and things like that,
that we, that we need to work with.
(05:07):
So let's say, you know, I'm, you know, I'm a renter and thinking again about,
you know, buying a house here, but with my rent, I've been paying my landlord either cash or, or,
you know, maybe with a money order, you know, is that something you can use
or do you recommend me switching to something different when paying the landlord?
(05:28):
I mean, you know, is that, will they look at that as a credit line, Jesse?
I mean, that is something that can help for sure.
But I think, honestly, cash would be a deterrent because it's kind of hard to
prove that you paid unless they they giving you a receipt, you kind of want
something that you can physically tag and have something, you know,
(05:49):
if you're paying them via Venmo,
something where you're paying them via bill pay, that's something that you can
actually tag and you have a receipt.
So if you have a, you know, a year or so of that, that's going to look better
than if you were just paying them cash and maybe your landlord doesn't give
you a receipt because they might just say, hey, it's fine.
But if you have nothing that you can go back on and actually pull on like a
(06:10):
statement or or something is kind of like, it's hearsay more so than anything, so.
Yeah, so you're saying I should just make sure I have some type of paper trail,
showing that I have proof now.
Jesse, one of the things that I've seen in the past, and I'm just asking you
guys this, is I have had a couple of clients that have paid with money orders,
(06:31):
and then the lenders asked about where did the money come from.
Again, is that why you're suggesting Venmo, or maybe I need to make sure that
I'm using the same bank account just to show proof of where it comes from?
Is that what you were talking about? Yes, yes.
Because it's going to be less hassle on the customer to prove that they're just
not grabbing the money out their mattress, you know, other things that could,
(06:54):
you know, deter one of their non-traditional trade lines.
So you definitely want it to be as clean as possible. And if you're doing a
Venmo or a cash app or a bank's bill pay, it's a lot easier.
Actually, physically writing checks, I know that's kind of a taboo thing now in 2024.
But if you're writing a physical check, it's going to be a lot easier than doing
(07:15):
a money order or just paying your landlord cash.
Okay. So I guess what we're saying is the important thing there is make sure
that if you're paying your landlord, make sure you're paying them with Venmo
or something where they can show that it's coming out of your checking account, your banking account.
That way, we're just making sure that there's a paper trail.
(07:35):
Is that right? Yep, exactly.
Awesome. So, Jerry, talk a little bit more about what you look at as far as
income and things like that.
Well, it's real important for us to take a look at the income and see what kind
of deductions It may be coming out of your paycheck every week,
every other week, however you get paid.
(07:56):
Make sure that there's no child support or alimony payments that are coming out of those checks.
Or possibly other things that you could have done that will show up on your
pay stub would be loans from your 401k.
We have to take all that into account when we're calculating your income for your affordability.
(08:18):
So it's important for us to get a good idea of exactly what you have to pay
out every month and those items that you may pay that you don't really think
about because they're directly taken out of your check before you even see it.
So it's real important for us to get a look at those.
Or at least you tell us up front, hey, look, I got child support I got to take out.
(08:41):
This is how much they take it out every week. And alimony, if that plays into
it as well. So it's important for us to see your pay stubs and go from there.
And we look at your, what's called your debt to income.
So whatever your gross monthly income is, we'll multiply that by that.
You know, say 40, 43% or 45% to get a rough idea of where we stand as far as
(09:07):
what we have availability for your overall debt.
That includes car payment, credit cards, student loans, personal loans,
those kinds of things all factor into what our debt to income is.
So do they, do they look at those things like Hulu and Netflix and all that
stuff as well, or do they, or is it just more of your, your typical like harder
(09:29):
accounts like car loan loan, stuff like that.
We don't really look at the optional type of bills that you have.
So if you go spend your $20 on a subscription to Hulu, no, that doesn't count
because you can cancel that.
That's an optional thing. You can cancel it right away. You don't have to continue with it.
We look at the things that continue that you're going to be obligated for in the future.
(09:54):
Even though you might have a credit card that you pay off every month,
if you have whatever balance it's going to show on your credit card statement.
It'll show on your credit report. It'll give us a minimal monthly payment.
If you didn't want to count it into your ratios, you're going to have to leave
that account with a zero balance for two or three months so that it shows up
(10:15):
on your credit report as a zero payment.
Okay. So what I hear you saying is we just need to make sure exactly where we're
at with that and make sure what number counts.
And especially in today's road where people are doing those second,
third jobs where they might be an Uber driver or Lyft or, you know,
you might be a door dasher out there. I know.
(10:36):
So, Jesse, talk to me a little bit about the difference between one of those
jobs where maybe they're, I guess, they're like a 1099 employee.
And if you don't know what a 1099 employee, that's somebody that's considered
self-employed compared to if you were to get a W-2, which is a regular employee.
(10:57):
So, tell me a a little bit about those. Do you see those a lot when it comes
to people looking at buying a house? Do you see those extra incomes in there?
Yeah, that's one of the new streams, Uber drivers.
DoorDash, you know, Lyft, you know, so those are, that's a common thing. So it's commonality.
And, you know, a lot of people, they do have regular nine to five jobs.
(11:18):
They do that as a hobby or extra, you know, extra source of income and,
you know, banks can use that.
So that's something that if you have a track record and you you've done it for
a couple of years, you definitely can use that income and it can help your buying
power for sure. If you're consistent with it. Yeah.
So they definitely want to make sure that they're talking to you guys and,
and really just getting the big picture when it comes to the income.
(11:41):
And again, guys, the phone number for Fire the Landlord is 513-655-3473.
Again, that's 513-655-3473.
And so, you know, if you have questions, it's important to make the call. Just make the call.
Let's talk through it and see where we can start there.
(12:03):
So, Jerry, I want to talk to you a little bit about, like, down payment.
And I know in our last broadcast, we talked about down payment assistance and things like that.
You know, talk to us a little bit about the importance of a down payment.
I know you don't absolutely have to have one, but let's talk about the importance
of that and how you guys determine what's available.
(12:25):
With your down payment, with the Fannie and Freddie's programs,
the minimum is 3% as far as a down payment.
And this can come from, you know, as gift funds. When it comes to gift funds,
they need to be coming from an immediate family member to make things easier. So like mom and dad or?
Brother, sister, that kind of thing works as far as gift funds go.
(12:48):
And you also have some community programs where you can get down payment assistance.
Sometimes those are in the form of a grant where you don't have to pay them back.
Those will vary. So most of those grants are going to be around the $5,000 range.
They usually have a cap to them. them.
So you not necessarily the whole program for your down payment.
(13:10):
Usually you have to make some sort of commitment.
It's usually like a minimum of $1,000 of your own money that needs to go into
it. So, you know, but the- Is there, I'm sorry, I didn't mean to interrupt you.
Is there a timeframe with some of those programs that they have to stay in the house or-
It can be. There are different programs out there. Some have a five-year,
(13:31):
10-year repayment program.
There are some out there that are going to be for the life of the loan.
So if you ever refinance it, sell it, that kind of thing, that down payment
assistance is going to be paid back.
Some of them are prorated. There's quite a bit.
And at the end of the day, the thing to do is call in, And call us and find
(13:52):
out what you qualify for, because those all are going to be predicated on your
credit score and your income, because a lot of those programs have income limitations.
So if you exceed them, then they're not going to help us.
The other real big thing is if you can hit crack the 10% down or even the 20%
down to eliminate your mortgage insurance payment on the loan,
(14:17):
that's going to be quite a difference in affecting your affordability.
So, any gifts that you get from your parents or if you're going to buy your
mom and dad's house out from them,
they can do what's called a gift of equity and give you those funds as a gift
so that you maybe can avoid mortgage insurance.
(14:37):
So, Jesse, Jerry's talking about gift of funds.
You know, let's say grandma and grandpa want to help out with a down payment.
What kind of verification do you guys need when it comes to gift funds from a family member?
Honestly. What if grandma just says, hey, you know, we've been saving this for
(14:58):
a while. You know, I know...
We got this five grand and it's been sitting in a cookie jar on top of the shelf.
And they say, hey, here you go. You can use this.
Is that the type of gift we're talking about? You want the gift arguably to
be something that's in their account that they can have a paper trail.
(15:20):
Because certain programs, you may have to see the person that's giving the gifts,
you know, bank statements to show that it just didn't come from the mattress.
So that is key. Sometimes it's very minimal. They just have to sign a paper
and, you know, the other person signs it as well and you get it.
But you don't want it to come from the mattress just because that could harm more than it can help.
(15:41):
You kind of want it in circulation. It makes it a lot easier.
So I would always recommend that. And then just because I've seen some situations
where money has come from the mattress gift or just from a regular from the
person that's buying and it's messed up a deal.
So you want it in a circulation and that just makes it a lot easier for everybody involved.
(16:02):
Sort of like your rent payments and that. You just have to have a paper trail
nowadays, right? Yes, yes, you do. Paper trail, more paper trail, the better.
Awesome. Well, hey guys, you know, that's the first steps of stepping out and getting that home.
You know, it's sometimes a little bit scary when you're not sure where to start,
what to do. but as these guys said, you know, the first thing is just make the call.
(16:27):
Give us a call at Fire the Landlord, 513-655-3473.
Again, that's 513-655-3473.
Let's get the discussion going. Let's build out that roadmap to helping you
achieve that dream of homeownership.
Again, this is Fire the Landlord. Thank you, Jerry. Thank you,
Jesse. You guys have a great day and look forward to next time. thank you thank you.
Hi, welcome back to Fire the Landlord. I'm Bill Lutz, and I'm here with Jesse Smith and Jerry Lutz.
Hey, we're going to talk today about what are maybe those first steps that a
renter has to do when they decide to buy a home. So, Jerry, let's start with you.
You know, let's say I'm a renter and I decide to go out and I'm tired of renting
(00:20):
and I'm going to take those first steps.
What's the first thing that I should do if I'm looking to buy a house?
Give us a call here at Fire to Landlord at the 513-655-3473.
And the reason why is because we're here to help you get through this process.
One of the first things we want to look at is what kind of credit we've got to work with.
(00:42):
You know, depending on your credit score will depend on what kind of program
that we have available to put you in to help us out.
That at least gives us a starting point there.
Second is to talk about your income, because we want to make sure that you have
enough income to afford all the debts.
Different programs have different guidelines, whether your debt to income would
(01:05):
be, say, 43%, 48%, up to 50%.
So that's why we take a look at income and see where we're at there.
And the third thing that we look at is how much down payment do we have?
Do we have anything saved up that we're going to immediately use?
Are we going to be getting gift funds or do we have to rely on a down payment
(01:25):
assistance program of some kind?
Jesse, you want to add anything to that there? No, those are the three because
you want to look at those three, highlight those three things.
So then you can kind of help the customer know where they can go.
So that's the main thing.
So just let me ask you, when they first call in and you take a look at the credit,
(01:47):
Jerry had mentioned that, I guess, different programs require different levels
of credit. that, you know, can you talk a little bit more about that?
What's your expert, you know, what, what have you seen on that?
Yeah, it's definitely, it can, you know, credit is king, honestly.
So, you know, if you're in the low sixes, you might not qualify for X,
Y, and Z program, but there may be other programs that you qualify for. So.
(02:11):
You know, what Jerry said, you know, we want to get that information so we can
give the customer the best picture to see where they can move forward. Okay.
I've seen some, some lenders, you know, even go down into the five hundreds.
Have you seen that? I mean, that's, I mean, I know those are different programs,
but I have seen them out there.
Yeah. It may be some out there that way. I know a lot of, because of the market,
(02:32):
I feel like a lot of lenders have lowered their requirement.
So that's kind of been good for the customer.
Yeah. I just don't want somebody to get scared off if they think that maybe
their credit score isn't quite where it needs to be.
So now some people have gone out to like Credit Karma and things like that to
find out their credit score.
I know I've seen some of those advertisements on TV and things like that.
(02:53):
Is that a good place for them to really start?
Or do you just recommend them give you guys a call and talk to a lender first before doing all that?
I mean, if they know, kind of have an idea, That's going to help them.
So credit karma is something I would definitely recommend.
But also you want to call the lender because they're going to give you a hard
(03:13):
number and they're going to be able to give you a hard plan.
So I would definitely call, but I'm not discouraging credit karma because then
a customer may see something that can help them, you know, eliminate something
or something could be wrongfully on there. So I would definitely recommend using Credit Karma.
But when it's time to really have both feet on the ground, you want to get a
(03:35):
mortgage rep involved. off.
Okay. Yeah. And just like, like Jerry said, make the call, right?
And again, that number is 513-655-3473.
Again, 513-655-3473 at Fire of the Landlord here.
So let me ask you, you know, if I'm a new, let's say I'm a little bit younger,
I'm fresh out of college, maybe a year or two.
(03:57):
You know, and I look at Credit Karma and it says, I don't have any credit,
you know, is, is that, you know, tell me a little bit about that,
Jerry, is that a deterrent or is Or is that something I should still give us
a call and give you guys a call?
Actually, believe it or not, you don't really technically need a credit score.
You may actually be able to still move forward by building what we call a.
(04:21):
Outside trade lines. So like, say you're making your cell phone bill that's
not showing up on your credit report, your cable TV bill, those kind of things,
memberships that are monthly that you do.
We can get in there and take a look at it and do what's called a manual build
on a credit score so it can help you out. So there are possibilities.
(04:44):
So just because you don't have or just because you're not showing any credit
doesn't mean that you're completely wiped out.
But that's the other thing that we can do too, is we can take a look and we
can help guide you in the right direction, what you need to do to build your
credit if you have zero and what kind of trade lines and things like that,
that we, that we need to work with.
(05:07):
So let's say, you know, I'm, you know, I'm a renter and thinking again about,
you know, buying a house here, but with my rent, I've been paying my landlord either cash or, or,
you know, maybe with a money order, you know, is that something you can use
or do you recommend me switching to something different when paying the landlord?
(05:28):
I mean, you know, is that, will they look at that as a credit line, Jesse?
I mean, that is something that can help for sure.
But I think, honestly, cash would be a deterrent because it's kind of hard to
prove that you paid unless they they giving you a receipt, you kind of want
something that you can physically tag and have something, you know,
(05:49):
if you're paying them via Venmo,
something where you're paying them via bill pay, that's something that you can
actually tag and you have a receipt.
So if you have a, you know, a year or so of that, that's going to look better
than if you were just paying them cash and maybe your landlord doesn't give
you a receipt because they might just say, hey, it's fine.
But if you have nothing that you can go back on and actually pull on like a
(06:10):
statement or or something is kind of like, it's hearsay more so than anything, so.
Yeah, so you're saying I should just make sure I have some type of paper trail,
showing that I have proof now.
Jesse, one of the things that I've seen in the past, and I'm just asking you
guys this, is I have had a couple of clients that have paid with money orders,
(06:31):
and then the lenders asked about where did the money come from.
Again, is that why you're suggesting Venmo, or maybe I need to make sure that
I'm using the same bank account just to show proof of where it comes from?
Is that what you were talking about? Yes, yes.
Because it's going to be less hassle on the customer to prove that they're just
not grabbing the money out their mattress, you know, other things that could,
(06:54):
you know, deter one of their non-traditional trade lines.
So you definitely want it to be as clean as possible. And if you're doing a
Venmo or a cash app or a bank's bill pay, it's a lot easier.
Actually, physically writing checks, I know that's kind of a taboo thing now in 2024.
But if you're writing a physical check, it's going to be a lot easier than doing
(07:15):
a money order or just paying your landlord cash.
Okay. So I guess what we're saying is the important thing there is make sure
that if you're paying your landlord, make sure you're paying them with Venmo
or something where they can show that it's coming out of your checking account, your banking account.
That way, we're just making sure that there's a paper trail.
(07:35):
Is that right? Yep, exactly.
Awesome. So, Jerry, talk a little bit more about what you look at as far as
income and things like that.
Well, it's real important for us to take a look at the income and see what kind
of deductions It may be coming out of your paycheck every week,
every other week, however you get paid.
(07:56):
Make sure that there's no child support or alimony payments that are coming out of those checks.
Or possibly other things that you could have done that will show up on your
pay stub would be loans from your 401k.
We have to take all that into account when we're calculating your income for your affordability.
(08:18):
So it's important for us to get a good idea of exactly what you have to pay
out every month and those items that you may pay that you don't really think
about because they're directly taken out of your check before you even see it.
So it's real important for us to get a look at those.
Or at least you tell us up front, hey, look, I got child support I got to take out.
(08:41):
This is how much they take it out every week. And alimony, if that plays into
it as well. So it's important for us to see your pay stubs and go from there.
And we look at your, what's called your debt to income.
So whatever your gross monthly income is, we'll multiply that by that.
You know, say 40, 43% or 45% to get a rough idea of where we stand as far as
(09:07):
what we have availability for your overall debt.
That includes car payment, credit cards, student loans, personal loans,
those kinds of things all factor into what our debt to income is.
So do they, do they look at those things like Hulu and Netflix and all that
stuff as well, or do they, or is it just more of your, your typical like harder
(09:29):
accounts like car loan loan, stuff like that.
We don't really look at the optional type of bills that you have.
So if you go spend your $20 on a subscription to Hulu, no, that doesn't count
because you can cancel that.
That's an optional thing. You can cancel it right away. You don't have to continue with it.
We look at the things that continue that you're going to be obligated for in the future.
(09:54):
Even though you might have a credit card that you pay off every month,
if you have whatever balance it's going to show on your credit card statement.
It'll show on your credit report. It'll give us a minimal monthly payment.
If you didn't want to count it into your ratios, you're going to have to leave
that account with a zero balance for two or three months so that it shows up
(10:15):
on your credit report as a zero payment.
Okay. So what I hear you saying is we just need to make sure exactly where we're
at with that and make sure what number counts.
And especially in today's road where people are doing those second,
third jobs where they might be an Uber driver or Lyft or, you know,
you might be a door dasher out there. I know.
(10:36):
So, Jesse, talk to me a little bit about the difference between one of those
jobs where maybe they're, I guess, they're like a 1099 employee.
And if you don't know what a 1099 employee, that's somebody that's considered
self-employed compared to if you were to get a W-2, which is a regular employee.
(10:57):
So, tell me a a little bit about those. Do you see those a lot when it comes
to people looking at buying a house? Do you see those extra incomes in there?
Yeah, that's one of the new streams, Uber drivers.
DoorDash, you know, Lyft, you know, so those are, that's a common thing. So it's commonality.
And, you know, a lot of people, they do have regular nine to five jobs.
(11:18):
They do that as a hobby or extra, you know, extra source of income and,
you know, banks can use that.
So that's something that if you have a track record and you you've done it for
a couple of years, you definitely can use that income and it can help your buying
power for sure. If you're consistent with it. Yeah.
So they definitely want to make sure that they're talking to you guys and,
and really just getting the big picture when it comes to the income.
(11:41):
And again, guys, the phone number for Fire the Landlord is 513-655-3473.
Again, that's 513-655-3473.
And so, you know, if you have questions, it's important to make the call. Just make the call.
Let's talk through it and see where we can start there.
(12:03):
So, Jerry, I want to talk to you a little bit about, like, down payment.
And I know in our last broadcast, we talked about down payment assistance and things like that.
You know, talk to us a little bit about the importance of a down payment.
I know you don't absolutely have to have one, but let's talk about the importance
of that and how you guys determine what's available.
(12:25):
With your down payment, with the Fannie and Freddie's programs,
the minimum is 3% as far as a down payment.
And this can come from, you know, as gift funds. When it comes to gift funds,
they need to be coming from an immediate family member to make things easier. So like mom and dad or?
Brother, sister, that kind of thing works as far as gift funds go.
(12:48):
And you also have some community programs where you can get down payment assistance.
Sometimes those are in the form of a grant where you don't have to pay them back.
Those will vary. So most of those grants are going to be around the $5,000 range.
They usually have a cap to them. them.
So you not necessarily the whole program for your down payment.
(13:10):
Usually you have to make some sort of commitment.
It's usually like a minimum of $1,000 of your own money that needs to go into
it. So, you know, but the- Is there, I'm sorry, I didn't mean to interrupt you.
Is there a timeframe with some of those programs that they have to stay in the house or-
It can be. There are different programs out there. Some have a five-year,
(13:31):
10-year repayment program.
There are some out there that are going to be for the life of the loan.
So if you ever refinance it, sell it, that kind of thing, that down payment
assistance is going to be paid back.
Some of them are prorated. There's quite a bit.
And at the end of the day, the thing to do is call in, And call us and find
(13:52):
out what you qualify for, because those all are going to be predicated on your
credit score and your income, because a lot of those programs have income limitations.
So if you exceed them, then they're not going to help us.
The other real big thing is if you can hit crack the 10% down or even the 20%
down to eliminate your mortgage insurance payment on the loan,
(14:17):
that's going to be quite a difference in affecting your affordability.
So, any gifts that you get from your parents or if you're going to buy your
mom and dad's house out from them,
they can do what's called a gift of equity and give you those funds as a gift
so that you maybe can avoid mortgage insurance.
(14:37):
So, Jesse, Jerry's talking about gift of funds.
You know, let's say grandma and grandpa want to help out with a down payment.
What kind of verification do you guys need when it comes to gift funds from a family member?
Honestly. What if grandma just says, hey, you know, we've been saving this for
(14:58):
a while. You know, I know...
We got this five grand and it's been sitting in a cookie jar on top of the shelf.
And they say, hey, here you go. You can use this.
Is that the type of gift we're talking about? You want the gift arguably to
be something that's in their account that they can have a paper trail.
(15:20):
Because certain programs, you may have to see the person that's giving the gifts,
you know, bank statements to show that it just didn't come from the mattress.
So that is key. Sometimes it's very minimal. They just have to sign a paper
and, you know, the other person signs it as well and you get it.
But you don't want it to come from the mattress just because that could harm more than it can help.
(15:41):
You kind of want it in circulation. It makes it a lot easier.
So I would always recommend that. And then just because I've seen some situations
where money has come from the mattress gift or just from a regular from the
person that's buying and it's messed up a deal.
So you want it in a circulation and that just makes it a lot easier for everybody involved.
(16:02):
Sort of like your rent payments and that. You just have to have a paper trail
nowadays, right? Yes, yes, you do. Paper trail, more paper trail, the better.
Awesome. Well, hey guys, you know, that's the first steps of stepping out and getting that home.
You know, it's sometimes a little bit scary when you're not sure where to start,
what to do. but as these guys said, you know, the first thing is just make the call.
(16:27):
Give us a call at Fire the Landlord, 513-655-3473.
Again, that's 513-655-3473.
Let's get the discussion going. Let's build out that roadmap to helping you
achieve that dream of homeownership.
Again, this is Fire the Landlord. Thank you, Jerry. Thank you,
Jesse. You guys have a great day and look forward to next time. thank you thank you.
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