One of the most exciting adventures you will ever encounter is purchasing a home. If you are a first-time buyer or an experienced investor we will make the process quick and easy. Below is some helpful information to get you started.
LOW DOWN PAYMENT QUALIFICATIONS
Many factors are considered when applying for a low down payment home loan. These factors include a good credit background, sufficient appraisal value, and adequate income to pay the monthly mortgage payment. While these factors are important other considerations are also taken. Your home loan professional will be able to discuss your qualifications with you on an individual basis. At this time other factors including your ability to pay the closing costs will be discussed. Closing costs are typically 2% to 3% of the price of the house. Your home loan officer will also discuss with you certain formulas that are used to determine your long-term ability to pay for the home loan.
DOWN PAYMENT GIFTS, LOANS, AND YOUR 401K
Loans and gifts from family, friends, and other organizations can help you put together a down payment sufficient for your home loan needs. The percentage of the loan or gift that is available for use as a down payment can vary depending on the type of home loan you qualify for. It is important to discuss any loans or gifts you plan to use as a down payment with your mortgage lender.
Many companies also offer programs to their employees to make the home buying experience easier. 401K plans are often used for this purpose and employees are permitted to withdraw from their 401K plans without penalty to provide a down payment on a home loan. Making use of your 401K program can be useful and beneficial but there can be drawbacks that must be examined.
DOWN PAYMENT ASSISTANCE PROGRAMS
Purchasing a home is a goal shared by many people but it can be difficult for some to collect the funds needed for a down payment. Fortunately, there are many programs to assist those who need help with down payments. There are national assistance programs and programs specifically for residents of your state. The precise requirements of the individual programs will need to be discussed with your mortgage broker but many assistance programs do not require repayment of the gift. First Rate Lending is constantly adding new down payment assistance programs, however, in our experience more often than not the additional costs, rate increase, and strict requirements often greatly reduce the appeal of down payment assistance.
WHAT IS ESCROW?
Escrow is a deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of an event. In simpler terms, escrow is where the transaction changes hands and prevents the seller from not receiving the money from the sale and prevents the buyer from not receiving the home that was purchased. Escrow is important to both buyers and sellers during the mortgage process.