Premier Nationwide Lending » Down Payment http://rob-spring.com Premier Nationwide Lending Wed, 05 May 2010 18:38:15 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 The Down Payment http://rob-spring.com/the-down-payment http://rob-spring.com/the-down-payment#comments Mon, 23 Nov 2009 22:23:55 +0000 Rob Spring http://swf-mortgage101.com/?p=269 The Down Payment

The amount you have available for a down payment will affect what types of loans for which you can qualify. Down payments typically range from 3 to 20 percent of the sales price for the property.

Tips for Accumulating a Down Payment

  • Save
    Look for ways to reduce your monthly expenditures to save toward a down-payment. You could enroll for an automatic savings plan at your bank to have a portion of your payroll automatically transferred into savings. Most people save a couple of years for their down payment.
  • Borrow the down payment from your retirement plan
    Check the provisions of your retirement plan. You can borrow funds from a 401(k) plan for a down payment or make a withdrawal from an Individual Retirement Account. Be sure you understand the tax consequences, repayment terms and/or possible early withdrawal penalties.
  • Move
    You may be able to save additional funds if you can move into less expensive housing.
  • Reduce other higher interest rate debt
    Paying off credit cards will initially reduce your savings, but the money you will save from higher interest rates will pay-off in the long run.
  • Make a deal with the seller
    In some circumstances, it is appropriate to ask the seller to carry a second-mortgage to cover your down payment. Typically, you will pay a slightly higher rate for this second mortgage.
  • Sell some investments
  • Get a second job and save your earnings
  • Skip a year’s vacation
  • Gift from Family
    Parents and other family members are often anxious to help children buy their first home and may have the means to give you a gift of money for a portion or all of your down payment.

 

Alternative Sources

  • No-down and low-down Mortgages
    • FHA Loans
      The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in helping low- to moderate-income families qualify for mortgages. FHA assists first-time buyers and others who would not qualify for a conventional loan, by providing mortgage insurance to private lenders. Interest rates for an FHA loan are usually the going market rate, while the down payment requirements for an FHA loan are lower than conventional loans. The required down payment can be as low as 3 percent and the closing costs can be included in the mortgage amount.
       
    • VA Loans
      VA Loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can qualify for a VA Loan, which usually offers a competitive fixed interest rate, no down payment and limited closing costs. While the VA does not issue the loans, it does issue a certificate of eligibility required to apply for a VA loan.
       
    • Piggy-back Loans
      A second mortgage that closes with the first. Often the first mortgage is for 80% of the purchase price and the “piggyback” is for 10%. The home buyer covers the remaining 10% with their down payment. (Some lenders will write a second mortgage of 15% or even 20% of the purchase price.)
       
    • “Carry Back” Mortgage
      In the case of the seller “carrying back a second mortgage”, the seller loans you part of his or her equity. In this scenario, you would finance the majority of the loan with a traditional mortgage lender and finance the remaining amount with the seller. Typically you will pay a slightly higher interest rate on the loan financed by the seller.

 

  • Housing Finance Agencies
    These agencies offer special loan programs to low- and moderate-income buyers, buyers interested in rehabilitating a home in a targeted area, and other groups as defined by the agency. Working through a housing finance agency, you can receive a below market interest rate, down payment assistance and other incentives.

    • The primary mission of Housing Finance Agencies is to boost home ownership in targeted areas, among first-time buyers and those with little money for down payments. Most of these non-profit agencies were funded with state government seed money and now operate independently.

Click here for a list of Housing Finance Agencies.

 

  • Documenting Your Down Payment

Documenting that the down payment comes from your savings and that you will have savings and/or assets over and above the down payment gives the lender confidence in your strength as a borrower and your ability to repay the loan.

Take extra care to document the sources for any monies to be used for the down payment or closing costs.

Acceptable Down Payment & Closing Costs Sources

  • Cash in a bank account
  • Mutual funds / stocks / IRA / 401K
  • Proceeds from the sale of another property
  • Gift from an immediate relative
     

Click here to learn more about verifying your down payment, closing costs, income and debt.
]]> http://rob-spring.com/the-down-payment/feed 0 Down Payment Alternatives http://rob-spring.com/down-payment-alternatives http://rob-spring.com/down-payment-alternatives#comments Mon, 23 Nov 2009 22:20:30 +0000 Rob Spring http://swf-mortgage101.com/?p=267 Down payment funding alternatives

For many buyers, especially first-time buyers, saving up the funds for the down payment can be a seemingly insurmountable hurdle to home ownership. This doesn’t have to be the case. As your mortgage broker, I can help you find creative ways to come up with your down payment.


Using a gift for your down payment
One way to fund a down payment is by using a gift. For many loan programs, a gift may be used for a portion or all of the required down payment.  Money given as a gift for a down payment can’t come from anyone.  Family members are the usual source.  And sometimes an employer may also be acceptable.   If this is an option open to you, please let me know.  I can help you determine which loan programs accept gift funds for down payments and who may give the gift.   I’ll also supply the gift letter that the person giving the gift is required to sign.  The gift letter states that the funds are a gift and will not be paid back.

Down payment assistance charities

If a willing and able family member is not available, buyers now have the option of turning to a non-profit for down payment assistance. 

Caution should be taken when searching for a down payment assistance charity (aka down payment assistance program).  There are many reputable organizations providing buyer assistance, but there are dubious ones as well.  You may want to research the charity with the Home Gift Providers Association (HGPA) (http://www.downpaymentalliance.org/) before making a commitment.

Generally, a down payment assistance charity will give the buyer money for a down payment that does not have to be repaid.  The seller will contribute an equal sum to the charity at closing or soon after.  The seller will also pay an administration fee to the charity.  Sounds good, right? 

This can be a good option for buyers who don’t have other means of securing a down payment.  However, you should be aware that this means of funding the down payment may inflate the selling price of the house.  You’ll want to consult with your real estate professional about how such a program may affect the selling price.

Zero down mortgage loans

Service persons and veterans can qualify for a VA Loan that requires no down payment.  VA Loans are guaranteed by the U.S. Department of Veterans Affairs.  In addition to no down payment, these loans usually offer a competitive fixed interest rate and limited closing costs.  While the VA does not issue the loans, it does issue a certificate of eligibility required to apply for a VA loan.

There are also private sector alternatives that offer 100% financing of the home purchase price.  Let me help you find the down payment and mortgage alternative that’s right for you.

]]> http://rob-spring.com/down-payment-alternatives/feed 0 Verifying Your Down Payment Sources http://rob-spring.com/verifying-your-down-payment-sources http://rob-spring.com/verifying-your-down-payment-sources#comments Mon, 23 Nov 2009 17:55:45 +0000 Rob Spring http://swf-mortgage101.com/?p=257 Verifying Your Down Payment,
Closing Costs, Assets, Income and Debts

A critical step in the mortgage loan application process is to verify the sources for your down payment, closing costs and assets, as well as documenting income and debts. The lender uses this step to determine your qualifications as a borrower. 

Down Payment & Closing Costs

Documenting that the down payment comes from your savings and that you will have savings and/or assets over and above the down payment gives the lender confidence in your strength as a borrower and your ability to repay the loan.

Take extra care to document the sources for any monies to be used for the down payment or closing costs.

Acceptable Down Payment & Closing Costs Sources

  • Cash in a bank account
  • Mutual funds / stocks / IRA / 401(K)
  • Proceeds from the sale of another property
  • Gift from an immediate relative
     

Assets

Collect information about your personal assets that add to your net worth and help to prove your credit worthiness.

 Common Assets Considered in a Mortgage Loan Application

  • Stocks, bonds, mutual funds, 401(K) and retirement accounts
  • Life insurance
  • Personal property estimate – cars, boats, antiques, jewelry, etc.
  • Other real estate or property

Income and Employment

The lender will want to confirm your current gross income and have evidence of stable employment. Documentation requirements vary depending upon a number of factors – including the source of income (hourly, salary, salary + bonuses, salary + commission, commission, self-employed, etc.).

Debts

Your lender will want to review a list of all your current debts. This along with your credit report will provide the lender with a snapshot of your obligations. The lender will want to confirm that you will not be overextended when the mortgage payment is added to your current debt load.

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