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Yes, we’ve all heard of the nightmarish stories where lenders are asking for anything from a DNA sample to a receipt for the cash you got from the tooth fairy last time you checked. So with all this “jumping through hoops of fire” it’s no wonder that many prospective homebuyers are very wary of what the market holds for them. If you do a Google search on the current market conditions, you will find that mortgage-lending practices have tightened considerably lately, almost to the point where even those people with pristine credit are having a hard time accessing funds to purchase a property.
Interesting catch-22, huh? On the one hand, there is a plethora of homes on the market, just waiting to be snagged by the perfect buyer – and at unbelievably and historic interest rates, while the flip side of the story is it seems that getting any money these days is next to impossible.
But is that really the case?
We’re here to tell you that there is plenty of money available out there. In fact, there are so many options that we don’t have enough space to list all the details. For a snapshot of some of the options you have when you go to visit your loan officer or Realtor, here is some useful information:
FHA Financing
One of the most popular financing choices today, the FHA program has several features that are very attractive to many borrowers these days. The minimum down payment required is only 3.5% and any or all of it can be funds received as gifts from friends, family or coworkers (as long as the giver has no vested interest in the sale of the property). There are other loans in the FHA program that allow for buyers to repair and/or renovate the home being purchased, even including rental expense while rolling in the mortgage payments into the loan. Seller concessions are also allowed with FHA loans.
Conventional Loans
So many prospective homebuyers hold on to the conventional wisdom that putting down at least 20% is the best way to buy a home. And for those people, there is always the straight conventional loan available. Not only does this eliminate the need for PMI (private mortgage insurance) tacked on to each monthly payment, but it also provides instant equity in the home.
USDA-Guaranteed Financing
The single best feature of loans that are guaranteed by the USDA home loan program is that up to 100% of the loan amount can be financed. In fact, borrowers can borrow 102% and roll into their mortgage the lending fee as well. To learn more about this program, visit the official site here.
Jumbo Loans for Jumbo Purchases
There is a ceiling for how much a purchase must be after which Fannie Mae or Freddie Mac will not guarantee it. For borrowers that want to purchase a larger home or borrow beyond the limits set by Fannie or Freddie, jumbo loan financing is an option. Though there is an increased credit risk to the lender, slightly higher interest rates compensates for it.
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Additional programs are out there for Veterans, first-time buyers and businesses as well. During the consultation with your Realtor, the perfect fit can be figured out and you can be on your way to owning a property!
Keep in mind – that there are still some very strict guidelines in place that must be adhered to and the home buying process is nothing like it used to be. You must be able to prove sustainable income (of at least 2 years at one job in most cases), demonstrate credit-worthiness, have all financial data (bank statements and tax returns) line up and also have a reasonable debt-to-income ratio.
Before embarking on the journey to buying a new home, one of the best things you can do is to consult with a trusted, reputable and experi
