by Paul Hampton, Mortgage Banker – Mutual of Omaha Mortgage
After a dismal 2018 we’re all due for some relief in the housing market. Behold! There is light at the end of the tunnel. With an ease on the 10 yr Treasure Note mortgage interest rates are the lowest they’ve been in over a year.
Also, there is quite a bit more education being promoted towards government programs, such as VA (Veterans Affairs) and FHA (Federal Housing Administration) financing. What does this all mean? More first time home buyers are now qualifying for mortgage loans then in recent years.
100% financing isn’t just for veterans. There are lenders out there, such as Mutual of Omaha Mortgage, that have 100% financing for first time home buyers. Amazingly, It’s also not that difficult to qualify.
Guidelines are the most relaxed they’ve been in over a decade. Just about any first time home buyer with a 620 credit score and documenting $3,000.00 in monthly household income can purchase a home. With a little higher credit score and income Fannie Mae and Freddie Mac both offer 97% financing with down payment assistance for the other 3% available through Chenoa Fund, a federally chartered government entity, Home Ready (FNMA), and others.
Bottom line, if there’s a will, there’s more than a “way” then ever.
“Is it really 100% financing?” No one is just going to give you a home free and clear of all its attachments. Property tax’s, homeowners insurance, mortgage interest, HOA’s will be an on going expense that you need to prepare for as a homeowner. These items need to be paid in advance when buying a home, which means you need to have cash on hand. Also, closing costs need to be accounted for. The majority of the time you can elect to have a higher interest rate on your loan in exchange for lender credits.
Also, the seller can contribute up to 6% the purchase price of the home to cover these expenses. However, during a sellers market, when there are multiple bids on the table, asking the seller to forfeit a percentage of their profit to help you buy their home against competing offers will most likely kill your deal.
So at the end of the day don’t expect to be a homeowner with only $23.00 in your bank account. You want to have at least $2,000 – $3,000 saved up for the transition from renter
to homeowner. Imagine, buying a $430,000.00 home with what you’d pay for a MacBook Pro. It’s entirely possible. I recently got a veteran and his family into a
$436,000.00 for $1,536.00 out of pocket.
In closing, if you’re ready to cross over into home ownership now is a better time then ever. Make sure and do your research, save money, and most importantly get pre-approved.