Mortgage Loan Programs

    Mortgage Loan Programs

    Oct 31, 2017

    Happy Halloween. Here is a treat. As you know, your credit ratings are more important than your bank accounts in the qualification of a loan for you and the rate & terms of that loan. With the recovery of the market and passing of time, the guidelines for loans have been much relaxed than when we first came out of the massive foreclosures mess. There are also more loan options to choose from again.

    For first time buyers, most think because they don't have much for down payment, their only choice is an FHA loan. That maybe true if your credit scores are a challenge. FHA loans were created by the government to help more people buy homes. Through the years, there has been a few changes. In recent years, the monthly mortgage insurance (MMI) required due to the less than 20% down payment, will no longer go away after you gained sufficient equity (22%) in the home as it used to. Recently, FREDDIEMAC & FANNIEMAE came up with an alternative program which only requires 1% down payment with lender contributing 2% of the down payment as a grant to the borrower. The caviar is only available to select lenders and the borrower must have 700 or better mid credit score.

    This program is basically the FANNIEMAE & FREDDIEMAC's 3% down payment program with lender contributing 2% towards the down payment. It is a fabulous loan for qualified borrowers as there is no additional cost to the borrower. The lenders which charged borrower additional fees for this program are no longer qualified to do them. The benefit to the borrower/buyer is not only the reduced down payment, the option to choose a higher interest rate so the lender will self insure the loan & not charge a monthly mortgage insurance, saves borrowers quite a nice amount of money every month, plus they get to write off the mortgage interest from their income tax, provided the tax reform is not passed or they choose to use standard deduction if the tax reform passes.

    There are lots of things to think about and know so it is always a good idea to use a trustworthy professional to help you through the process. Interest rate for a 30 year fixed conventional, conforming loan is possible at below 4% again with no origination charge to the borrower. Now is the time to act.

    Happy Halloween.