First Time Homebuyer Information & Education
Buying a Home With a Low Down Payment
Buying a Home With a Low Down Payment - If you are a first time home buyer that is in the market for a new home there are many mortgage programs availible to you that offer low down payment or no down payment. These mortgage programs are availible through FHA, con forming and sub prime lenders.
A Low or No Down Payment mortgage is an excellent way for many people to buy their first home. If the sellers pays closing costs it is often possible to get a mortgage to cover 100% of the sales price of the new home. In many instances the monthly payment will still be lower than rent for an apartment. More people than ever can now enjoy the benefits of home ownership.
Down payment assistance and community redevelopment programs offer affordable housing opportunities to first-time homebuyers, low-income and moderate-income individuals and families who wish to achieve homeownership with little to zero money down.
Buying a home with a low down payment is the most common way that first time homebuyers enter the market. The home ownership rate is the highest on record because lenders have been extremely accommodative to buyers with a low down payment.
In order to have a true $0 down payment or a low downpayment, you should have the seller pay closing costs in most cases. For first time homebuyers, the seller generally pays 3% of your closing costs. Keep in mind that if the closing costs are less than 3%, you will not receive that money as cash back at closing.
Fannie Mae offers an excellent program called The MyCommunity Program. You can qualify for excellent financing terms with as little as $500 of your own money invested into the transaction.
Many people who are looking to buy a home with a low down payment, or even no down payment, often obtain a combo loan. A combo loan is one of the most common ways to buy a home with little to 0 money down. A combo loan is also referred to as an 80/20 loan, an 80/15 loan, or an 80/10 loan. These mean that you will have two mortgages on the property and the first one will be at 80% of the purchase price and the 2nd mortgage will be at either the 20%, the 15% or the 10% of the purchase price. Combo loans can help you to avoid paying PMI, they can help sometimes to avoid having to escrow for property taxes and insurance and they can often provide an overall lower payment than other financing options.
It is important to note when talking about a no or low down payment mortgage you can still accrue costs associated with the purchase. Often times you will see no closing costs, or no out of pocket expenses paid at closing. These offers should be closely looked at to insure you are not going to be paying money out of your pocket. You should verify the lender is including all costs in their no cost mortgage quote: including appraisal fee's, inspections, Title costs, escrow costs, and tax's.
If you are a Veteran with an honorable discharge, you may qualify for 100% financing with a VA Loan. Contact your mortgage professional for more details.
Buying a home with little or low down payment will result in a higher monthly mortgage payment.
Buying a home with a low down payment is a great example of utilizing your power of leverage. Using the banks money to purchase real estate while putting very little of your own puts the majority of the risk on the bank. This methodology of investing in real estate potentially has a greater Return on Investment than other investment vehicles, like paper assets.
OH down payment assistance programs - Questions about down payment assistance programs are a very common question for a homeowner to ask a mortgage professional. These types of programs are usually for first time home-buyers, and each community or program usually has its own rules, guidelines and procedures for figuring out who qualifies for them.
Contrary to popular belief, you do not have to be a minority or a low income borrower to qualify for down payment assistance. There are programs available for many different scenarios.
Information listed above is to be used for educational purposes only and is not guaranteed
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