As a first time Pittsburgh home buyer, you may feel that everyone around you is speaking a foreign language when they talk about financing your home. Relax. Things aren’t nearly as scary as they seem, once you understand the basics. Below is everything you need to know to get the financial ball rolling, explained in plain English. As always, you can email me or call me at 724-941-3344 x 125., if you need additional information.

Before you even begin your home search, I’ll connect you with a trustworthy, experienced lender who will evaluate your financial situation and come up with a price range that fits your budget. The lender will issue you a letter of pre-approval, which helps establish you as a serious buyer when you submit an offer.

Fixed Rate Mortgage: A loan in which the interest rate and monthly payment remain the same throughout the length of the loan. 

Adjustable Rate Mortgage (ARM): A loan in which the interest rate adjusts at pre-determined time intervals. When you take out an adjustable rate mortgage you will learn the maximum and minimum interest rates possible within the parameters of your loan.

Zero Down Loan: A loan which does not require a down payment. 

VA Loan: A long term, low-or-no down payment loan guaranteed by the Department of Veterans Affairs. It is available to people who have served in the military.

FHA Loan: A loan insured by the Federal Housing Administration that allows qualified borrowers to obtain home mortgages at lower rates than those available on the open market. FHA loans require a 3.5% minimum down payment; that money may be given to you as a gift by a family member.

GFE (Good Faith Estimate): Your lender is required to give you a GFE of all the costs, in addition to the mortgage payment itself, associated with buying your home. These may include charges for inspections, taxes, title insurance, recording fees, attorney fees, points, surveys or property appraisals, among others.

PITI:These initials stand for principal, interest, taxes and insurance. When lenders underwrite a loan, they will factor in each of these to come up with your total monthly payment.

Seller Assistance (DPA):A program that allows sellers to pay between 3% and 6% of your down payment, depending on the type of loan.

Interest Rate Lock: A lender’s guarantee that the mortgage rate you are quoted will be the rate you receive, providing that you qualify for the loan in a timely manner.

Comparison Shopping (sub head)

It’s a good idea to consult with more than one lender when researching your first mortgage loan. Lenders offer a variety of loan products; some may fit your circumstances better than others. A word of warning: lenders who advertise interest rates that are substantially below average usually have some built-in surprises along the way.

Uncle Sam’s gift to you, the tax credit, is available for first time home buyers (defined as someone who has not owned a principal residence in the previous 3 years). The credit is available for homes purchased between January 1, 2009 and April 30, 2010. In cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.  Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

The Pennsylvania Housing Finance Agency offers a number of programs to help you succeed in buying your first home in Pittsburgh. The Keystone Loan Program, Keystone Loan Plus and Keystone Assistance Loan Programs have various eligibility requirements. Under these programs you may qualify for a low-interest mortgage, purchase price limits or interest-free second mortgages. All of PHFA's loans have a fixed interest rate for 30 years, and there is no early payoff penalty.

For complete details about the Keystone Loan programs visit http://www.phfa.org/consumers/homebuyers/khlprograms.aspx

Mom knows best. Follow these tips to ease the way to qualifying for your first mortgage.