They’re back! In many markets around the country Agents and Investors are reporting a flood of buyers, most coming in under the First Time Homebuyers program.  The flood is expected to continue until the federal money runs its course December 1, 2009.  The National Association of Realtors® new home sales report showed an 11 percent gain in June, the best since 2000.  The new home sales are strongest in the Midwest and West. The direction is right; we’re moving up more rapidly than economists had predicted.

 Now is the time for every Investor to fill up their Buyer lead funnel with qualified people and to match the needs of the Buyers, most of whom will be First Time Homebuyer program participants, with the starter homes that are coming into play in the Short Sale and REO markets.

 The First Time Buyer will often be unfamiliar with the loan process and what it will take to get a loan.  Answer their questions with this information, which is available at the HUD site for First Time Homebuyers: 

 Lenders look at job history, credit history, length of time in current home and job, and assets that can be used to pay for the loan in case of job loss, and the amount of down payment available.  Lenders will ask for 10 percent down or more unless the property qualifies for an FHA (3.5 percent) or VA loan, in which case much lower down payments are possible.  It will take a credit score of 740 or better to qualify for the best rates, but most residential lenders can find programs that will qualify people down to a credit score of 680. 

 It may be possible to qualify a First Time Homebuyer with a lower credit score or a short credit history if someone will co-sign on the loan, or if hard money (private money loaned at a higher interest rate, with points and a balloon payment due in a few months to a few years) is sought while the Buyer is working on the things that will prepare them to refinance into a conventional loan.

 To determine whether the Buyer qualifies, encourage them to seek a prequalification letter from a Lender, or a HUD-approved Housing Counselor.  The letter will generally reveal the upper limit on the loan that the individual will qualify for, and will save lots of time by avoiding the tire-kickers who won’t qualify.