Friday, November 4, 2011

Buy now with 3.5% down payment...

If you have a stable income and if you are paying too much for rent, it can definitely make sense to buy with an FHA loan. 
Many people believe that to even think of becoming a homeowner you must secure a 20% down payment.  This is difficult to do for a lot of aspiring-to-be-homeowners.  But there is another way:
think: " FHA loans ".

FHA facts to keep in mind:

- 3.5% down.  Low down payment - less money out of pocket and 96.5% loan-to-value.
- 100% Gift allowed for down payment and closing costs,
- Any buyer can buy like this, not just first-time home buyers,
- minimum FICO 640,
- Long term financing:  30 year fixed, or adjustable,
- Loan limits up to $625,500, depending on the County,
- Non occupant co-borrowers are ok
- Purchase and "refis" are allowed,
Prior bankruptcies?: yes very possibly.  See the specific rules, but on-time payments allow FHA borrowing fairly quickly afterwards.

  There are some very nice homes that one can buy for less than $500,000 in Santa Clara for instance, and you'd only need ... about $20k.  With an FHA loan you do pay what is called mortgage insurance, a way for the lender to be insured against potential future defaults.  But even with this mortgage insurance, these loans can be pretty attractive when everything is said and done, because banks do not mind doing such loans: they have ... mortgage insurance.  Hence the very attractive rates.

If this gives you food for thoughts, let me know: I can help!  ...or for someone you know, pass it along!.. 


PS:  Mortgage rates: Week ending 11/3/2011
- 30-yr. fixed: 4.0 fees/points: 0.7%
- 15-yr. fixed: 3.31 fees/points: 0.7%
- 1-yr. adjustable: 2.88% Fees/points: 0.6%
(Source: Freddie Mac)

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