What? Interest Only Loans Are Back!

Just when you thought the mortgage environment was safe….Oh NO! According to USA Today Interest Only loans are back!  This can be seen as both a good and bad thing. The fact that Interest Only loans are being offered means that the higher ups in the lending world think that the real estate market will stay flat or go up. The fact that banks are betting on that reminds me of 2006, that makes my insides flip and that’s not good.

What’s an interest only loan you ask? I’ll tell you…An Interest Only loan is a type of balloon loan. Each month you are only required to pay the interest on your loan, not the Principal & Interest. Why is this scary to me? If you only pay the interest, you will not be paying down the principal of the loan. So, in 10 years you will still owe the exact same amount as when you started. Most of the Interest Only loans require that the interest start being paid in five or ten years. That means a big payment increase for you; OUCH! Or possibly your entire loan coming due; OUCH OUCH! Be extremely careful and consider all your other options if you are considering this type of loan.

Is there a benefit to an Interest Only loan? Yes, when you pay over the interest required any principal is applied to your loan balance and the loan is recast. What does that mean? The extra you pay towards your principal is applied to the outstanding balance and your new payment reflects the updated balance. If you are disciplined and want to pay down your mortgage faster, an Interest Only loan may help you achieve that goal. An interest only loan can also be beneficial to those of you on commission. If you can pay your Interest Only payment with your draw or base and when you get your commission or bonus and you put that towards your loan balance that may also benefit you in paying off your loan quicker.

Keep in mind that this type of loan is not for everyone and you need to clearly understand what you’re getting into with this type of loan product.

For more information on loan types, check out my #1 Best Selling book on Amazon.

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Is Now a Good Time to Buy a Home?

We are in the midst of Spring Home Buying season and there are quite a few positive indicators that it’s a good time to buy a home. There are many factors to consider before deciding if it’s a good time to buy a home, such as the economy, interest rates, supply & demand, the cost of renting vs. buying and your own personal situation.

Where are interest rates?

Interest rates are hovering around all time lows (again!) right now, so that’s one important factor to take into account when considering buying a home.  What does this mean to you in real numbers? Well, let’s say you are considering purchasing a home with a sales price of $300,000.  In a perfect world, you put down 20%, which is $60,000. That leaves you with a loan amount of $240,000. Don’t worry; there are many other loan programs available with much smaller down payments, such as 3% and 3.5%, which would be $9,000 and $10,500 respectively.

If your interest rate is 4.0% for a 30 year fixed mortgage with a loan balance of $240,000, your monthly principal and interest payment would be $1145.80.

Let’s say your interest rate is 5.0% for a 30 year fixed mortgage for the same $240,000 mortgage; your monthly principal and interest payment would be $1288.37.

See the difference? That’s $142.57 a month you save on interest alone! Let’s look at it over the long haul…$1710.84 a year = $51,325.20 over the course of a 30 year loan!

Now, of course there’s more than one way to look at this.  That same $142.57 could also be a tax deduction for you.  Be sure to check with your CPA for interest deductions. The $142.57 a month could also be the same amount as one of your student loans. Only you know what’s comfortable for you when it comes to a monthly payment and what makes sense. Keep in mind that you are also responsible for home owners insurance, property taxes and any monthly home owners or condo association fees in addition to the principal and interest on your loan.

If you are a first time home buyer, you can save yourself time and money with my first time home buyer video tips at https://www.youtube.com/watch?v=YsL6BuJ8b-M

See what DS News has to say about buying a home now, "Analyst Says Buying a HomeNow Is a Solid Investment"

How long do you plan on staying in your area?

I think your own personal situation is the most important thing to consider when buying a home. Do you like the area? How long do you think you’ll be there? How long do you think you’ll be at your job? I bought my first home about two years after I graduated from college. My Mom was so nervous for me, but I wasn’t scared at all. I knew I liked the area (dear old Baltimore, MD my heart goes out to you) and wanted to be there for a while. I had moved around quite a bit in my early years and was looking forward to growing roots in the Baltimore community. I ended up living in that house for eight years. I rented out my house for the last two years I owned it when I moved down the road to Arlington, VA before I sold it. It became my first rental property. Since then I have owned and rented homes as I moved around the East Coast. Whether I bought or rented depended on all the factors I am sharing with you here; the economy, interest rates, the cost of renting vs. buying and my own personal situation.

CNN Money also says it’s a good time to buy, "Home Buyers In These Markets Have the Upper Hand"

What’s the cost of renting vs. buying?  

Does it cost more or less to rent than to buy? Any licensed loan originator as well as real estate agent should be able to help you with this calculation in your local area. Basically you take your total estimated monthly mortgage payment including property taxes, home owners insurance and any monthly home owners association or condo fees and compare it to the cost to rent something similar in location and size. To make it more complex, factor in your down payment and estimated closing costs spread over the time you think you will be in that location as well as any interest deduction your CPA thinks you would benefit from by owning. Other factors to consider are leverage and appreciation. For more help with this calculation feel free to contact me at bestmortgagebook@gmail.com.

Julian Castro, the Director of Housing and Urban Development is positive about buying a home in 2015.

***Please keep in mind this is only an example for illustration purposes.  These interest rates may not be available and/or you may not qualify for this loan type.

To get on our waiting list for my new book, How To Get Approved for the Best Mortgage Without Sticking a Fork in Your Eye™, go to our website www.bestmortgagebook.info

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3 Monumental Mortgage Money Mistakes to Avoid

As the Spring home buying season heats up, I want to share with you 3 mistakes that can cost you BIG MONEY. I know it's natural to go house hunting, tour your dream home and then meet your realtor to write an offer. But before you embark on that american dream to home ownership with enthusiasm and your check book, be sure to plan correctly.  Here are my top 3 Monumental Mortgage Money Mistakes to Avoid that can save you thousands of dollars:

☑  Not getting pre-approved

☑  Not understanding your loan options

☑  Not planning/asking the right questions

Not Getting Pre-approved

This can easily cost you $1000 right off the bat. Ugh! Not fun for your wallet. Lets say that you go home-shopping and make an offer on a new home and you are pre-qualified, but not pre-approved. If the lender calculates your income differently than you did during the pre-qualification process, you may not be on the same page when it comes to actually closing the loan. That puts your earnest money deposit (aka binder) in jeopardy and can cost you home inspection and appraisal fees. Appraisal, home, and pest inspections can easily total $750-$1,000.

Not Understanding Your Loan Options

What down payment options do you have? Will a small difference in down payment equate to saving, or paying, tens of thousands in PMI? What about property type and foreclosure properties? There are certain loans that are for those properties and certain loans that are not for foreclosures and condos. What if you made an offer on a HomePath property, but your lender didn’t offer that type of loan? What will that cost you? Higher down payment, unnecessary appraisal costs, and, possibly higher mortgage insurance; again this can be $1,000s that you don’t have to spend! See Chapter 13 for a full discussion on Loan Programs, and Chapter 14 for a full discussion on Loan Terms.

Not Planning/Asking the Right Questions

How much seller credit can you receive for which loan types? What? Yes, certain loans allow for maximum seller help for your purchase. For example, FHA allows for 6% seller help, while a conventional loan allows for 3% for a primary residence and only 2% for an investment property. These are important discussions to have with your lender before your real estate agent writes up your contract offer to the seller. Let’s say you could have gotten 6%, but didn't know and you left $1,000’s on the table and then used your money instead of the seller’s? Bummer!

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Does it take a village to close a mortgage loan?

How many people go to work for you when you get a mortgage?

Well, this number may be much higher than you think.  The obvious suspects are your lender and your real estate agent. 

Let’s add to that all the people on their team. In addition to your lender’s loan officer, there’s also their processor, underwriter, closer, doc preparation team and the post closer to name a few more you may not have known about. On your real estate agents team they may also have a closing coordinator.  There’s also the listing agent and their closing coordinator. Wow! 

We’re still not done. Let’s add to the list your home inspector, pest/WDO inspector and your home owner’s insurance agent and their team.  In addition, there’s the appraiser and the appraisal management service company. On average there are over 20 people working hard to help get you into your new home!

Why do I bring this up?  Well, embarking in the pursuit of the American Dream is not to be taken lightly, by you or anyone on your team. Be sure to choose your dream team wisely.  Do online research, such as Zillow reviews, BBB ratings as well as ask for customer surveys from past clients. If this information is not made readily available to you; buyer beware.

In addition, soon there will be even more people involved in the mortgage loan process.

http://www.inman.com/2015/03/19/it-will-take-a-village-to-close-a-mortgage-in-2015/

To get on our waiting list for my new book, How To Get Approved for the Best Mortgage Without Sticking a Fork in Your Eye, go to our website www.bestmortgagebook.com

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Getting the Best Mortgage may help you financially in the long run

Cash is King. Well, maybe not if you want to buy a home. According to the recent Washington Post article, The case for not paying off yourmortgage by retirement by Jonnelle Marte there’s good debt and bad debt.  Jonnelle considers a mortgage good debt. Cash is liquid and you can’t access your cash if it’s tied up in your home. Of course, there’s also the added benefit of deducting the mortgage interest on your home. There are quite a few mortgage options now that allow you to put down a small down payment. If you are a first time home buyer you can put down as little as 3% if you qualify for a conventional loan.  FHA currently allows for down payment of 3.5%.  For all you veterans (thank you for your service!) if you qualify, you don’t have to put anything down.  Yes, VA loans allow for $) down payment, which means 100% financing. The USDA loan also allows for $0 down payment. So, as you can see, there are many loan options available right now. However, it’s important to know the different features of each. For example, VA has $0 monthly mortgage insurance fee.  USDA has .30% monthly mortgage fee.  FHA’s monthly mortgage insurance is .85%. The VA, USDA & FHA loans are government loans and they ALL have up front funding fees, so be sure to discuss those with your mortgage lender. Also, FHA now has monthly mortgage insurance for the life of the loan. It’s not removed once you have over 20% equity in your home like other loan products. Ask your lender all the questions you can about the differences in all the parts of your monthly mortgage payment as well as the costs of the loan, such as the funding fees.

***Please keep in mind this is only an example for illustration purposes.  These interest rates may not be available and/or you may not qualify for this loan type.

For more mortgage tips, tools and info check out bestmortgagebook.info

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Lowest Rates Today?

Spring is here and there's interesting home advice out there. I have helped clients with several purchases this week - watch those bidding price wars! Holly cow those can be rough! After an uptick in rates, they have dropped back down so refinances are keeping us busy too. What's all that mean to you? Well, with Spring comes home buying advice. The Consumer Report article shaking up the mortgage brokers by telling consumers to go to a direct lender is not a shock. However, there's so much more than just shopping the rate. I can't emphasize this enough. Shopping the rate misses the mark in so many aspects. If you call lenders and ask for their best rate, it doesn't take into account the variety of loan programs as well as the cost of mortgage insurance. I'm not a fan of Bankrate as it is very misleading to the consumer; the rates are with fee and many people don't click on the fine print to see exactly how many points they are being charged. Shopping for the best rate or lowest rate misses the mark on so many important pieces of your mortgage, such as funding fee (or not), how down payment affects your interest rate and of course, last, but not least credit score. What if you are interested in one loan with mortgage insurance or a 1st loan with a 2nd loan? That affects interest rate too. What if you ask for the lowest rate, but you don't qualify for it? In order to get the best rate, you need the best lender, who will find you the best loan program. That's how you get the best mortgage. If you get the lowest interest rate, but it has the highest mortgage insurance, your total monthly payment could be more than if you had a higher interest rate and lower mortgage insurance.  How long do you need to keep the mortgage insurance? Good question. FHA now requires you keep the mortgage insurance for the life of the loan! FHA also has an up front funding fee. If you can get a lower interest rate with an FHA loan, but you don't take into account the other fees, can you see how you could have a higher monthly mortgage payment AND payout wasted thousands of dollars over the life of the loan? Is there a better loan for you?  The best lender will help you get the best loan for YOU. Here are 10 questions to help you get started on your search for the best lender.
1. Are you a direct lender or a broker?  How does that affect me?
2. Can you issue a conditional approval on my loan within 2 business days?
3. Can you guarantee you will close my loan in 30 days or less?
4. Do you have any written references? Do you have client surveys you can share with me?
5. What is your closing ratio?
6. What are the upfront costs I will incur during the loan process before I close?
7. Do you attend the closing?
8. How long has your company been in business?
9.Are you a licensed Loan Officer?
10. How long have you been in mortgage industry?

There's a lot more to shopping banks than the rate. I always find that an educated consumer makes for a great client.

***Please keep in mind this is only an example for illustration purposes.  These interest rates may not be available and/or you may not qualify for this loan type.

For more mortgage tips, tools and info check out  bestmortgagebook.info

For quick & easy mortgage video tips subscribe to my youtube channel:
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Zillow vs.Trulia

How many of you use Zillow or Trulia?
What's so great about these real estate websites?
Should you use them as part of your home buying process?
For one reporter's opinion (as well as my comments!) check out this article:
zillow-vs-trulia
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Credit Score Can Affect Your Mortgage Interest Rate

Do you ever wonder how credit score affects your mortgage interest rate and fees?

1. Your Interest Rate May Be Higher Lower credit scores may be subject to higher interest rates and finance charges over the course of any loan. The website myfico.com offers a mortgage payment calculator that is updated regularly to show consumers how their FICO score can affect their interest rate. According to myfico.com, a credit score of 620 versus 720 on a 30-year Fixed Rate Mortgage of $300,000 could cost approximately $110,000 more over the life of the loan in interest charges. Interest rates are determined by many factors but the bottom line is that individuals with lower credit scores will pay nearly three times more in interest than those with higher credit scores.

2.Your Closing Costs May Be Higher Consumers with lower credit scores may be subject to higher closing costs. Known as loan pricing adjustments, these are fees based on your loan amount, implemented by Fannie Mae and Freddie Mac in 2010 to accommodate for the risk associated with lower credit borrowers.

3.You May Pay More For Private Mortgage Insurance (PMI). PMI is insurance that mortgage lenders require from most homebuyers who have less than a 20 percent down payment when purchasing property. Lower credit scores may be subject to higher private mortgage insurance rates.

For more mortgage tips, tools and info check out bestmortgagebook.info

What effects your credit score?

The Five Factors of Credit Scoring Credit scores are comprised of five factors. Points are awarded for each component, and a high score is most favorable. The factors are listed below in order of importance.
1. Payment History – 35% Impact Paying off debts on time has the greatest positive impact on your credit score. Late payments, judgments and charge-offs all have a negative impact. Delinquencies that have occurred in the last two years carry more weight than older items.

2. Outstanding Credit Card Balances – 30% Impact This factor marks the ratio between the amount owed and the remaining available credit. Ideally, the consumer should make an effort to keep balances as close to zero as possible, and definitely below 30 percent of the available credit limit.

3. Credit History – 15% Impact This portion of the credit score indicates the length of time since a particular credit line was established. A seasoned borrower will always be stronger in this area.

4. Type Of Credit – 10% Impact A mix of credit, such as an auto loan and a credit card, is more positive than a concentration of debt from only credit cards.

5. Inquiries – 10% Impact This percentage of the credit score quantifies the number of inquiries made on a consumer's credit within a twelve-month period. Each new credit inquiry can deduct points from a credit score. Note that personal credit inquiries do not impact scores.

***Please keep in mind this is only an example for illustration purposes.  These interest rates may not be available and/or you may not qualify for this loan type.

For quick & easy mortgage video tips subscribe to our YouTube Channel:
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How to Get Approved for the Best Mortgage? Get Pre-Approved for Your Mortgage!

What’s the difference between Pre-Qualification and Pre-Approval for a Mortgage?

The differences between pre-qualification and pre-approval may seem minor, but they can be huge when it comes to actually closing on your dream home. Not all lenders offer the more thorough pre-approval. If your lender only offers pre-qualification, or you choose to start with pre-qualification, make sure that you are as thorough as possible with the information that you supply. Pre-qualification is the process of determining what you may qualify to purchase with a home loan. Pre-approval is the thorough process of providing your name, address history, work history and income documents for the last two years, along with your asset statements. It may not seem like a big difference, just more documents and a few more questions to answer. However, it can save you lots of disappointment and heartache during the loan process. In my book, How to Get Approved for the Best Mortgage Without Sticking a Fork in Your Eye (Available April 2015), I strongly recommend that you at minimum pre-qualify. Get pre-approved if it’s an option!

Mortgage Pre-Qualifying or Pre-Approval Make Home Shopping Much Easier

You should get pre-qualified to find out what price range your dream house needs to be within according to your current financial budget. Pre-qualifying allows you to find out exactly how much money a lender is willing to give you based on your income, assets, and other data. Having a pre-qualification will also give you confidence to make an offer when you find the right home. Pre-qualifying or pre-approval can empower you and take the stress out of your home search— you’ll know which homes to consider and which homes to avoid.

3 Monumental Mortgage Money Mistakes to Avoid

☐ Not getting pre-approved

☐ Not understanding your loan options

☐ Not planning/asking the right questions

I explain these mistakes in full detail in How to Get Approved for the Best Mortgage Without Sticking a Fork in Your Eye (Available April 2015). For a FREE EXCERPT from the book, go to BestMortgageBook.info.
For video mortgage tips, subscribe to our YouTube Channel: https://www.youtube.com/watch?v=YsL6BuJ8b-M

Can Rising Default Risk Affect Getting the Best Mortgage?

Default risk is up for conventional loans! What on earth does this mean? Unfortunately it means that more people are not paying their mortgages. That’s a bummer! It’s not up much, 0.4% since December and 0.8% since January 2014. However, it’s the fifth month in a row that there’s been an increase, so that’s concerning. But, why the uptick? Inquiring minds want to know…

I wish I had the answer, but I’m afraid there’s more research to be done to find out, such as the LTV of these loans, where they are, credit profile-- and that information usually doesn’t get sorted out for a while.

So, why should you care?

The most important thing when purchasing a home is to make sure you get the best mortgage for you. Yes, for you. Not for your parents, not for your neighbor, or co-worker; for you. People talk with each other about getting the lowest rate, but don’t always realize that there’s much more to consider. Getting the best mortgage for you helps you feel confident that you can comfortably make the monthly payment and know your purchasing power. There are many nuances to the mortgage world; the rules and regulations change quickly, and in some cases, often. For example, if you are just shopping for interest rate and don’t have 20% for a down payment, your loan will require mortgage insurance which will increase your monthly payment substantially compared to a payment that a basic mortgage calculator might show you after only calculating an interest rate. Also, different loans have different mortgage insurance rates. Hmm, see how this gets complicated? Also, you may have the option of two loans-- a first and second lien instead of one loan with mortgage insurance.

What does this mean to you?

Shop for the best licensed lender, not the best rate. The best licensed loan officer will take a full loan application from you and let you know all your options. There are many loan programs available, especially for first time homebuyers. Review loan programs in detail and ask questions about each so that you are comfortable and understand each of your options. It’s extremely important to understand all the different pieces of the monthly payment, what can change, when, and, why. Just because you have a fixed-rate mortgage, it doesn’t mean your monthly payment will stay the same over the life of the loan. Your mortgage insurance, property taxes, and homeowners insurance can change and affect your monthly payment.

Please email me directly at info@bestmortgagebook.com for questions and loan program options.

To get on our waiting list for my new book, How To Get Approved for the Best Mortgage Without Sticking a Fork in Your Eye, go to our website www.bestmortgagebook.info 
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How do the higher mortgage rates in 2015 affect homebuyers?

Have you seen the articles about mortgage interest rates being on the rise in 2015?

Wow! Sounds daunting, right? Don’t get too nervous. Overall, interest rates are near record lows considering rates over the past 50 years. The Federal Reserve has not made any changes to the prime rate since 2008. The prime rate is the interest rate at which banks borrow money from the Federal Reserve. So, why the change in mortgage interest rates lately?

Well, there are a few other factors that affect mortgage rates. The stock market affects interest rates; usually there’s an inverse affect. When the stock market is going up, less people are buying bonds (the 10 year bond affects 30 year fixed interest rates), so that propels the interest rates to go up. This is what’s happened over the past week. However, with the introduction of quantitative easing, the inverse relationship is not always the case (just to make economics extra confusing). Also, the mortgage-backed securities prices affect 30-year fixed interest rates, as well.

What does this mean in real numbers?

Here’s an example for you. Let’s assume you are buying a home with a sales price of $300,000. Just to use round numbers, let’s assume you are putting down 20%. (Please email me directly at elysia@bestmortgagebook.com for questions and loan program options.) Okay, so if you are putting down 20% of $300,000, your down payment would be $60,000, leaving you with a loan amount of $240,000. With a $240,000 loan amount, if the interest rate is 3.75%, your principal and interest payment would be $1,111.48.

With a $240,000 loan, if the interest rate is 4.25%, your principal and interest payment would be $1,180.66. That’s a difference of $69.18. Most of this is tax deductable interest, so although it’s seems like it’ll cost you the amount of a Starbucks every other day, it’s a bit less when you factor in the tax savings. (Be sure to consult your CPA for the tax advantages of home ownership.) However, if you’re considering buying a new home and $70 a month is your breaking point, the difference of $69.18 becomes a whole different conversation.

So are the current “higher rates” really all that high?

Let’s look at this historically, when interest rates where 8% (they’ve been as high as 18%!), if you had a $240,000 loan amount, your principal and interest payment would be $1,761.03. That’s $580.37 more than your principal and interest payment of $1,80.66 with the current “high” rate of 4.25%.

So, overall, interest rates are still at all-time lows. The most important thing you can do is to make sure you are getting the best loan for you and the home you want. No sense in rushing and buying something you aren’t thrilled with just to get a “good deal.” Do your due diligence and get pre-approved so that you’re ready to move forward when you find your dream home.

***Please keep in mind this is only an example for illustration purposes.  These interest rates may not be available and/or you may not qualify for this loan type.

To get on our waiting list for my new book, How To Get Approved for the Best Mortgage Without Sticking a Fork in Your Eye, and receive a FREE excerpt, go to our website www.bestmortgagebook.info
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What is the best mortgage option for first-time homebuyers?

There are a variety of loan programs that require little or no down payment. These are great for first-time homebuyers that may not have equity from their current residence to roll into a new home. There’s lots of chatter about the conventional financing for first-time homebuyers that is now available. For those that qualify, the conventional first-time homebuyer loan only requires a 3% down payment. In contrast, FHA loans require a down payment of 3.5%, and also require an up-front funding fee.

Conventional and FHA Loans Both Require Mortgage Insurance, But…

Both the conventional first-time homebuyer loan and the FHA loan require mortgage insurance (MI), which is paid monthly and is part of the monthly mortgage payment. For the conventional first-time homebuyer loan, MI is required if the buyer puts down anything less than 20% of the purchase price. So, if the buyer is approved for and elects the 3% down payment for the conventional loan, MI is required. But, the mortgage insurance requirement drops once the borrower has 20% equity in the home; if you don’t keep track of your payments and equity, the MI is automatically dropped once you have 22% equity in the home. With FHA loans, MI is required no matter how large or small of a down payment is put down; and mortgage insurance is required for the life of the loan. President Obama recently reduced the monthly mortgage insurance factor for FHA loans. The FHA reduction in the monthly mortgage insurance factor reduces the monthly payment for the required FHA mortgage insurance, therefore the total monthly mortgage payment (as compared to the total monthly payment with a higher MI premium).

Apparently more than half of the Millennials age 18-34 plan to buy a house in the next one to five years. Will President Obama’s reduction in FHA mortgage insurance or the lower down payment with conventional first-time homebuyer loans lure these Millenial first-time homebuyers?

What will Millennials do?

Buying a home for the first time-- that’s an exciting prospect to consider… if you qualify for conventional financing, you can put as little as 3% down and buy a house. For example, using a $300,000 sales price, you would only need a down payment of $9,000, plus closing costs. Being a first-time homebuyer offers a big advantage in affordability since conventional financing requires a minimum 5% down payment if you are not a first-time homebuyer. A 5% down payment alone would be $15,000 on a $300,000 sales price, then you would also need cash for the closing costs.

How Many Times Can You Be a First-Time Homebuyer?

What is a first-time homebuyer? Perhaps not quite what you would think. To qualify for first-time homebuyer status, you must not have owned a home in the past 3 years. So, if you bought and sold a house 5 years ago, you qualify for first-time homebuyer status and may qualify for first-time homebuyer programs.

What Are the Advantages and Disadvantages of Small Down Payment Loan Programs?

What about the pros and cons of putting such a small amount of money down on your dream home? The big advantage is that you can buy a house with very little money out-of-pocket. This enables you to start building equity in your home even if you have little set aside or prefer to keep your savings intact when purchasing your first home. Buying a home with a small down payment also allows you a tax write-off for your mortgage insurance (please consult a tax professional). A small down payment can help first-time homebuyers afford their piece of the American Dream.

Hmmmm, the only potential con I see is if the market turns, the buyer could be upside down in their mortgage. If you consider that when listing a house for sale the real estate agents’ commission is usually 6% (3% to the buyer’s agent and 3% to the seller’s agent), that means the seller nets 94% of the purchase price before any other closing costs. If the sellers only have 97% equity in the home, they may have to bring money to the closing table to sell their home. That’s a scary prospect! So, if first-time homebuyers are not sure about their financial future, career, or aren’t in love with their community, a loan with a small down payment may not be a good choice for them.

There are also two other loan programs that can be used by first-time homebuyers-- USDA and VA loans. USDA and VA are also government programs, like FHA, and have up-front funding fees. However, USDA & VA loans have $0 down payment requirements for those that qualify. For more info on any of these loan programs, just email me at elysia@bestmortgagebook.com.

When you are considering purchasing a home, be sure to consider your 3-5 year goals and where you want to be living. If you feel comfortable about where you are buying, your career, and your financial future, then a low down payment is an excellent opportunity to get into the home of your dreams!

***Please keep in mind this is only an example for illustration purposes.  These interest rates may not be available and/or you may not qualify for this loan type.

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