What Are My Options for A Low Down Payment Mortgage?
Many people who're in the market for a home don't have much of a down payment. But if they're still interested in buying one, then they have to seek out low down payment mortgage opportunities.
Your mortgage loan is based mainly on your income and credit history. Some financial institutions such as banks and credit unions offer mortgages to people. So does the federal government. The main programs that the government provides are run by the Federal Housing Administration, or FHA, and HUD, or the Housing and Urban Development department.
An FHA loan can give people seeking a mortgage a low down payment opportunity. If you already own a home and you want to fix it up, then getting an FHA rehab loan is a good idea. It's important to learn to know how to talk in the 203k FHA mortgage voice when speaking to government mortgage officials.
If you're using a mortgage broker, you have to understand a mortgage broker talking to a customer. If you do, you'll be able to comprehend all that's been said, and it will help you fully evaluate the entire low down payment mortgage process.
There is also an option for something better than a low down payment mortgage. This is a zero down payment mortgage. The Veteran's Administration offers this to veterans who served in any one of the major branches.
On most low down payment mortgages, the interest rate can vary. It's quite low on some. And it's high on others. There are also several creative financing options to obtain a low down payment loan for your house purchase. One way is to enter into a transaction with a home seller and ask him to hold a second mortgage.
This means that instead of giving him an upfront down payment as is traditionally done, you instead have him hold the paper for several years while you make regular payments to him. For example, if a lender says you need a $30,000 down payment for a $150,000 mortgage to buy his house, and you don't have that amount of cash, you could simply have the seller finance that $30,000 over five to seven years.
You would then make affordable monthly payments to him as you pay down the entire sum of $30,000.
There are, however, plenty of lenders who offer traditional mortgage programs with very low down payment options. You simply have to search them out. Some lenders have programs where you have to only put down three to five percent. This amount is quite affordable to most prospective home purchasers.
Even ten percent down is considered low by many individuals. Plenty of banks offer a maximum of ten percent to have to put down.
The thing to remember is that with most low down payment programs from traditional lenders, in return for the little down, you'll have to usually pay much higher closing costs and associated fees. But many buyers easily agree to this, as the amount needed to pay the costs are much less than a higher down payment would be. Sometimes it's also possible to carry these costs into the mortgage if you're willing to pay a slightly higher interest rate for the mortgage.