Home Buying 101: Workshop provides consumers home financing details

  • Published
  • By Tech. Sgt. Mary Davis
  • 71st Flying Training Wing Public Affairs
VANCE AIR FORCE BASE, Okla. --  Finding a place to call home can be a dream come true, but figuring out how to finance it can be a confusing nightmare for first-time home buyers. 

The Airmen & Family Readiness Center held a Home Buyers Workshop Aug. 22 to clarify the financing options available, so buyers can obtain the American Dream without going broke. 

"There are a lot of different financing options," said guest speaker Linda Brezina, assistant vice president, retail services - mortgage lending at Central National Bank of Enid. 

Home buyers need to know the difference between the various loans, Ms. Brezina said. Secondary market loans include VA loans (guaranteed by the Veterans Administration), FHA loans (insured by Federal Housing Administration) and conventional loans. 

VA loans are guaranteed against default by the borrower by the U. S. Department of Veteran Affairs. They require no down payment and are offered exclusively to U.S. servicemembers who are active, separated from the military or retired. Sellers can pay all of buyers closing costs and prepaids for a VA loan. 

FHA loans are insured by the Federal Housing Administration against default by the borrower. FHA carries guidelines allowing a seller to pay 6 percent of the sales price in buyer closing costs and prepaid items not to exceed actual closing costs and prepaids. Securing an FHA loan is one way to move in without a large down payment, but loan caps are in place and vary depending on location. 

"Appraisals will be performed on the home and deficiencies will be reported," Ms. Brezina explained. "Repairs to the property will be performed by the seller before closing." 

Conventional loans are offered by most financial institutions and are available up to 100 percent of the purchase price with private mortgage insurance required on loans above 80 percent. The seller can pay up to 3 percent of the sales price in buyer costs and prepaids, and the buyer can get a gift for a portion of their costs, but they must put at least $500 of their own money into the transaction. If the buyer puts at least 20 percent down, no PMI is required. 

Some lending institutions offer in-house loans, Ms. Brezina explained.
"Lenders operate by their own guidelines. Percentage rates may be higher, but closing costs may be lower, because certain factors may be different." 

For adjustable rate mortgages, the interest rate may be lower, she said. This is a good way to go, for people who will only be in a house for three to five years. There is also the option to refinance the loan without penalty, for individuals owning the property longer. 

"Your best bet is to sit down with a lender to prequalify," Ms. Brezina said. "This will determine approximately how much buyers qualify for." 

To prequalify, buyers would need to provide current pay statements, W-2 forms and other documents to show how much they earn opposed to how much they owe.
Prequalification is not final approval for loans, and sometimes buyers will pay a small fee for this to be performed. 

For 2nd Lt. Drew Ebner, 71st Operations Support Squadron, buying a home is something he would like to do in the near future. 

"I had no idea how to buy a house. I didn't know the terminology or what types of loans were available," said the future student pilot of Class 09-07. "I thought the workshop was very beneficial for people like me who have never purchased a home." 

For more information about this and future workshops, contact the Airman & Family Readiness Center at 213-6330.