Cutting-Edge Mortgage Loan Programs and Strategies
Home and condo prices have hit rock-bottom in the last couple years and you can find a great deal on a foreclosure, short sale, or bank-owned property on every block in America. Due to uncertainty in the economy, the potential first time home buyer is looking for programs to keep their mortgage payment down. Also, most foreclosure properties need repairs and buyers want a program to roll the improvements into the loan. Finally, lenders have eliminated most zero down programs, except for the USDA and VA loans which still require 0 down payment, and most first timers don't have funds available for down payment and closing costs. Two cutting edge programs today are the NO PMI program which eliminates mortgage insurance from your loan and the FHA 203k program allows you to fix up a home and roll home improvements into your mortgage.
This program is a 5% down payment 30 year fixed loan with no PMI or mortgage insurance. If you obtain a loan with PMI, then you will pay PMI for full 30 years on FHA program unless you refinance your home. The first time home buyer can pay points or costs up front to eliminate the monthly mortgage insurance payment forever. The minimum credit score for the program is 700. Let's take a closer look at FHA* versus NO PMI scenario:
*FHA loan amount above Includes 1.75% financed mortgage insurance premium.
You find a great deal on a foreclosure but the carpeting is trashed, the owner stripped out the kitchen cabinets and copper pipes, and it looks like the windows have been blown out by a drive-by shooting...now what? The 203k will allow you to purchase new carpets, windows, plumbing, and cabinets and roll the cost into the new mortgage. This program only requires a 3.5% down payment** and the loan is based on the value after making the improvements to the home. The minimum amount of repairs is $5,000 and maximum is $30,000. Most first time home buyers don't have the cash or don't want to use or have access to credit cards to fix up the property and the 203k Streamline Rehab loan can turn a handyman special into your dream home. Below are pics of “Before” & “After” a Rehab: