Think About Registering for a House!
By Brian Kelly
The truth is that registering for a house might be a lofty aspiration for a wedding gift. However, helping you and your new husband make the down payment on a new home might be right up your guest’s alley. The Bridal Registry Account is a little used but very powerful program offered to aid couples in the purchase of a home and it goes a long way toward handling one of the 5 C’s, cash.
When you think of purchasing a home one of the first things that comes to mind is how much money (cash) am I going to need? Along with Cash there are 4 more C’s that need to be addressed as part of what I call your MortgageReady process.
Capacity (#1) is a measurement of your ability to pay back your home loan. Banks will be looking at the likelihood of your continued employment and we will also look back two years into your work history. If you have been in school during that time and you are now working in the field that you studied for that too will count as work history.
Collateral (#2) is the value placed on the property that you are purchasing. Once you and your husband have come to an agreement on a home to purchase you will want to validate that what you are paying is in fact what the home is worth.
Credit (#3) is the numerical measurement of your pattern of paying bills and the use of your available credit. The measurements scores range from 450-850. A better than average score is 700 and above and that should be your target score. As far as the 5 C’s are concerned credit is one that is highly valued. The higher your score is the lower your interest rate will be. In addition, there is often a direct correlation to the cost associated with the loan. MyMortgageready.com is a resource that is perfectly suited to help you maximize your credit scores and as a result assist you in getting the best rate/lowest cost mortgage.
Character (#4) still matters, even in this high tech fast paced world. When you have some hiccups on your credit report or spotty employment history it could be the strength of your character that makes the difference. If the underwriter who is working to approve your loan sees multiple judgments on your credit report and numerous NSF’s on your bank statements your character will immediately be brought into question.
Lastly we come back to where we started, Cash. It is the last of the 5 C’s and the one that prompted me to write about the Bridal Registry Account. You will be using a FHA loan in conjunction with your account. The down payment needed on a FHA loan is 3.5% of the purchase price. Putting together this 3.5% down payment is where the Bridal Registry Account comes in.
The true intent of this program is to give couples planning to get married the opportunity to amass monetary gifts from friends and family for the specific purpose of making the down payment on a home. This program has been in place since 1996.
Funds may be deposited by friends and relatives directly into the Bridal Registry Account, or given by cash or check to the couples or individuals for deposit. This account will take the guesswork out of gift selection. These gifts can be given with the assurance that the donors are providing the couples or individuals with an opportunity to purchase their first home.
Bridal couples or individuals are not obligated to use the money in the Bridal Registry Account for a down payment on a home. The couples or individuals control how the funds will be used, and if their plans change, they can simply withdraw the money and use it for something else.
In closing as you embark on the journey called marriage make sure you are MortgageReady through addressing the 5 C’s and don’t be shy, register for a house. If you would like further details and help addressing the 5 C’s and help setting up your Bridal account please call me Brian Kelly at 856-625-8679. Congratulations!
“Recently a couple applied to refinance their home. They had a credit score of 697. We had them approved for a 30 year fixed rate loan with an interest rate of 5.25%. However, armed with an approval in hand, the client enrolled in the Mortgage Ready process. After a short period of time their score was up to 742 and we locked them into a rate of 4.875% saving them $3,181 over the next five years.” - Kevin Phillipson