Tag Archive for down payment assistance

19 Mar 2012
Down Payment Assistance

Down Payment Assistance Programs

Down payment assistance programs are generally SECOND LOANS against the home you are purchasing.  These programs are set up to loan an amount of money to the home buyer that will be paid back with interest over a period of time.  The interest and monthly repayment amounts for these programs tend to be fairly low.

This will have an effect on what your total mortgage payment will be.  In most cases the mortgage payment will consist of: your first loan (principal and interest), your second Down payment assistance loan (principal and interest), property taxes, homeowners insurance and your monthly mortgage insurance premium.

Down payment assistance programs can be a great fit for many would be homeowners, who wouldn’t otherwise be able to purchase a home on their own.  After educating yourself on how different down payment assistance programs function, you may well discover that it is the perfect way to turn you from a renter into a homeowner.

There are many different types of down payment assistance programs available.  We have programs fit for different geographic regions as well as different personal situations.  There are general programs offering $1,000 to $10,000 in assistance, as well as more specific programs offering up to $45,000.

The amount of down payment assistance a person is eligible for will depend on their financial situation.  A needs assessment form will take several factors into consideration to determine the amount of assistance alloted.  The amount will depend on such things as a person’s income, liquid assets (not including retirement accounts or 401Ks) and the purchase price of the home.

You must attend one of our Home Buyer workshops to be eligible for our programs.  The Washington State Housing Finance Commission requires that you attend one of our workshops in order to apply for down payment assistance.  The workshop is FREE, and there is no obligation to move forward in the process if you decide the programs are not a good fit for you.  If you would like to  learn more about the programs, or gather more information on the home buying process in general, go to our Calendar/Reservations page and sign up for one of our free Home buyer workshops.

Share
| One comment | Tags: ,
18 Oct 2011
Mortgage

FHA vs. Conventional Financing

Whether you are a First Time Homebuyer or have previously owned a home, an FHA loan may be the right choice to buy your single family residence, condominium or townhouse. FHA is a government backed program and stands for Federal Housing Administration. FHA offers great interest rates on 30 year fixed rate loans and Adjustable Rate Mortgages making owning a home much more affordable than many people might think. FHA allows buyers to secure great financing by charging borrowers an Up Front Mortgage Insurance Premium of 1% of the loan amount (which is tacked onto your loan balance and paid off over 30 years). There is also an annual Mortgage Insurance Premium which is broken down and paid on a monthly basis. That premium starts at 1.15% of the loan amount annually (and decreases as the down-payment increases). The minimum down-payment is 3.5% of the purchase price for the home.

Now for how a conventional loan works… Conventional loans are not backed by the government. They are also a great fit for many buyers whether first time homebuyer or not, buying a single family residence, condominium or townhouse. Conventional lending offers great fixed and ARM programs just as FHA financing does. Conventional lending does not have the backing/insurance of the government against a potential default of the loan. Therefore if a person is putting a down-payment of less than 20%(no mortgage insurance necessary over 20% down with conventional), there will be a different type of Mortgage Insurance secured. These mortgage Insurance programs come with a much wider array of structures. With Conventional, there is no mandatory up-front Mortgage Insurance Premium. There is an annual Mortgage Insurance Premium broken down and paid monthly. There are also programs available where the lender will pay these premiums for you in exchange for a higher interest rate on the loan, or even programs where the buyer can pay the premiums up front in full or partially. The minimum down-payment for conventional lending is 3%. However at a 3% down-payment, securing mortgage insurance can prove to be difficult and expensive. A popular down-payment amount for conventional lending begins at 5% where the mortgage insurance is more easily attainable and less expensive.

Here are a few key points in determining whether FHA or Conventional is best for you… FHA financing is generally more lenient on credit ratings, income history and debt to income ratios. It is generally easier to navigate through the FHA underwriting process. If a borrower has a marginal credit rating, a relatively high debt to income ratio or an unstable work history an FHA loan will most likely be the best option for them over a conventional loan. On the positive side for conventional lending, if a borrower has a good credit rating, a stable employment history and a relatively low debt to income ratio there will often be some Mortgage Insurances choices for them that will be beneficial over the FHA’s Mortgage Insurance program.

While the above information gives you some idea of the differences, comparing FHA financing against Conventional financing is something that should be seriously considered on a case by case basis. There are many factors that need to be taken into consideration in determining which type of financing will best suit your needs/goals as a homebuyer. If you would like to learn more about financing options, please go to our Calendar page and reserve a spot in one of our FREE First Time Home Buyer seminars.

Share
| No comments | Tags: , , , , , , ,
12 Aug 2011
Mortgage

Do I Need a Down Payment to Buy My First Home?

I just read an article on CNN Money called “Secrets to getting a mortgage with so-so credit”. It had some interesting information about different lending parameters with major institutions like Fannie Mae, Freddie Mac and FHA. One of the guidelines listed in the article for Fannie and Freddie is a 20% down payment. I was a little confused by this, as from my experience you can generally secure one of these conventional type of loans with as little as 5% down. The article may have meant that “to secure the best interest rate” a borrower must put 20% down, which is true. The article goes on to say that if a borrower cannot afford this size of down payment, that FHA may be a better option with only a minimum down payment of 3.5%. Also, FHA allows for a much lower credit score than conventional loans without penalizing the borrower with a higher interest rate. Now may be a great time to buy your first home, but in this economy many families may struggle with the ability to save up a minimum down payment of 3.5%. If you’re interested in buying your first home, but even a 3.5% down payment seems out of your reach, there are also great down payment assistance programs offered by the Washington State Housing Finance Commission. First time home buyers (who haven’t owned a home in the last 3 years) may be eligible for up to $45,000 in down payment assistance from the state. You may be able to own your first home for little to no money down. If you would like to find out more about these down payment assistance programs, please go to our Calendar/Reservations page and register for one of our FREE First Time Home Buyer seminars.

Share
| No comments | Tags: , , , , , ,
  Recent Entries »