How can
you boost your Home Buying power?
If you’ve gone through the mortgage pre-qualifying
process and are not satisfied with the amount the mortgage lender
will allow you to borrow, you may need to look into buying a home of
lesser value.
You could also wait until your income
increases, which in turn would raise the amount you could borrow
from a mortgage lender when buying a home.
Another option would be to pay-off some of
your current debts.
Mortgage
Insurance
Mortgage insurance provides protection to
the mortgage lender in case the buyer fails to repay a loan. Insured loans by the government (such as FHA
loans and VA
loans) or by a private mortgage
insurer allow the homebuyer to buy a home with a lower down
payment.
Private
Mortgage Insurance (PMI)
With private mortgage insurance, mortgage
lenders will lessen the down payment requirement from 20 percent
to as low as 3 percent of the purchase price.
The cost of PMI will be included in your monthly mortgage
payments and your closing costs.
Government-insured
loans
Mortgage loans are also accessible through
these federal government programs:
FHA
Loans
With FHA mortgage insurance, you can buy a home with
a very low down payment (from 3-5% of the FHA appraisal value or
the purchase price, whichever is lower).
FHA loans have a maximum loan limit that differs and is
determined by the average cost of housing in a given region. For
more information on FHA
loans go to www.fha-home-loans.com
VA
Loans
The VA guarantee permits eligible veterans
to purchase a house costing up to $240,000 with no down payment. Also available is a VA jumbo loan up to $300,000, which requires a
small down payment. The VA qualification guidelines for VA loans are lenient
compared to FHA loans or conventional loans.
If you are a qualified veteran, this can be an appealing
mortgage loan program. For
more information on VA
loans go to www.va-home-loans.com
State
and local first time home buyer programs
Several states sponsor first time home
buyer programs to aid first time home buyers become eligible for a
mortgage loan.
Local housing agencies also offer attractive loan terms to
qualified home buyers in particular areas.
These loan terms often consist of low down payments or low
interest rates to first-time homebuyers.
Below is a useful site that features a
nationwide list of first time home buyer grants:
Alternative
financing mortgages
Most lenders offer a broad variety of
mortgage types with some mainly aimed toward assisting first-time
home buyers be eligible for a larger loan.
Adjustable-rate
mortgage (ARM)
The homeowner’s monthly principal and
interest payments do not change with a fixed rate mortgage due to
the fact that the interest rate is fixed for the life of the loan.
An adjustable
rate mortgage (ARM) differs from a fixed rate mortgage because the
interest paid is adjusted to reflect the changing market rates.
This is reflected by raising your monthly mortgage payments
when interest increase and lowering it when interest rates
decrease.
ARMs can offer a lower interest rate than
fixed-rate mortgages, which can make it appealing to some
borrowers. Because of
this, the first time homebuyer can qualify for a larger loan since
the monthly payments on an ARM start out lower than for a
fixed-rate mortgage.
If you feel confidant that your income will
increase in the next few years, an adjustable rate
mortgage may be right for you.
The
Two-Step Mortgages
The two step mortgage is a type of ARM
where the interest rate is adjusted once at the end of either five,
seven or ten years after settlement. The new rate will stay effective
for the remaining years of the mortgage.
Before the interest rate adjustment, this loan protects
homebuyers from rising interest rates during the early years of
homeownership.
This
type of mortgage may attract those homeowners who expect to move
within five or seven years of buying a home.
Fannie
97SM. The Fannie 97 is low-down-payment mortgage
program. Borrowers need only a 3 percent down payment, while closing
costs may be paid by gifts from family or by grants or loans from
nonprofit organizations or government agencies.
Two choices are available—a 30-year-fixed-rate mortgage
with debt-to-income ratios of 28/36, and a 25-year-fixed-rate
mortgage with ratios of 33/36.
What is most important is to get pre
qualified for a mortgage before buying a home. The mortgage
lender should provide you with all available mortgage loan
programs that you are qualified for.
Below are some links to get a free mortgage
pre qualification for the following types of mortgage loans:
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