Best Resources for First Time Home Buyers

What is a deed transfer tax?

The State of Pennsylvania imposes a "deed transfer tax" on property sales in the state (there are a few exceptions). Consider it a sales tax on real estate. One percent of the sales price is paid to the State of Pennsylvania and 1% is split between "most" school districts and the local government, for a total cost of two percent of the sale price. There are a few exceptions. Read more

What is debt to income?

Lenders use a simple calculation to determine the amount of money that you can borrow for a home. Read more about debt to income ratio

What is a seller assist?

Emoticon help wantedDid you know that the seller may cover a portion of your closing costs? For example, if you ask the seller to pay some of your closing expenses (seller assist), you will need less money at closing. The mortgage regulations allow the seller to contribute a percentage (or a set cash amount) to your closing expenses. The mortgage type determines the overall amount of seller aid. 
Read more

What is title insurance and why do I need it?

Title insurance will be required if you purchase a home with a mortgage. But what is title insurance? The best way to explain title insurance is to use an example:

Let's say you purchased a 60-year-old home, and during those 60 years, the house was sold and resold a number of times. Back in 1955 Mr. and Mrs. Jones purchased the home and after a few years, Mrs. Jones ran off and joined the French Foreign Legion without divorcing Mr. Jones. After a few years, Mr. Jones remarried and Mr. Jones and the new "Mrs. Jones" sold the house to Mr. and Mrs. Smith.

The Smiths lived in the home for a number of years and one day, the original Mrs. Jones showed up at their door after retiring from the Foreign Legion and told the Smiths' that since she never signed the deed over to them, she was still the rightful owner of the house. Now what? The title insurance policy protects you against this problem and other issues that can arise while you own the house. Read more

What is a stated income loan?

The stated income mortgage is ideal for self-employed borrowers. The self- employed borrower is required to have owned a business for a least 24 months. A certified public accountant must verify the self-employment.
The CPA writes a letter stating how long he or she has been the Borrower's accountant, what ownership percentage the Borrower has in the business, and how long the Borrower has been self-employed. Read more

What is a HUD home?

A HUD home is a repossessed house (or condominium) that was funded with an FHA loan.

When the homeowner(s) fails to make the monthly mortgage payment, the lender seizes possession via foreclosure.

The bank is "insured" against failure by the Federal Housing Administration (FHA).
This implies that the FHA will compensate the lender for the loss.  Read more

Home-buyer information

Here's a collection of interesting file and articles to help you with your home purchase. Useful Downloads

What is per diem interest?

Lenders charge interest on the loan amount from the settlement day to the end of the month. For example, let's say your mortgage amount is $100,000 and the interest-rate is 5% and you are closing on July 1st. The bank will charge you 31 days "per diem interest". Here's the formula:
Loan amount X interest-rate = Total interest cost divided by 31 days which equals the daily interest amount. Now multiple the daily interest by 31 days.

X 5% = $5,000
divided by 365 days = $13.70 (per diem cost)
$13.70 X 31 days = $424.66
Read more about per diem interest and calculator

What does PMI and MIP stand for?

Private mortgage insurance is abbreviated as "PMI." For conventional (also known as conforming) house loans with less than a 20% down payment, a private mortgage is needed. Private mortgage insurance is often paid on a monthly basis until the homeowner lowers the mortgage amount by 20% or less.

MIP is often confused with PMI, however, MIP stands for "mortgage insurance premium". MIP is required with FHA and USDA insured home-loans. The monthly insurance payment is part of the FHA and USDA loan programs and never goes away unless, the mortgage is paid off. The VA mortgage program does not require monthly mortgage insurance, or private mortgage insurance. Read more

HUD home buying videos

Watch these home buying videos from the Department of Housing and Urban Development and learn how to avoid problems buying and financing a home.
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