In my most recent blog article, So, still believe its a good time to buy, well, in the Pittsburgh area, well, it is! But, there is a catch!! I discuss a product called My Community Mortgage ^TM.  There are many advantages to using the My Community Mortgage ^TM.  This program is available to all homebuyers, including first time home buyers. 

Previously I've also mentioned that an 80/20 option is one that can be used to avoid mortgage insurance (PMI or MI)) I believe this article is even more relevant now since in the current mortgage market we are finding that sources that provided second mortgages at competitive rates are beginning to no longer offer second mortgages with a CLTV of 100%.

The My Community Mortgage ^TM is one that has many benefits.  Traditionally, it is a product that is geared towards low to moderate income borrowers, but, that is not always the case.  Please read on.

The product offers the following key features as stated at their web site as the following:

• No minimum borrower contribution required
• 40 year term possible
• Options for lower initial monthly payments
• Funds for down payment and closing costs can come from gift or borrowers own funds
• LTV's permitted up to 100 percent for 1-unit properties.
• Extra flexibility on credit histories, including consideration of nontraditional credit histories.
• Cash reserves at closing not required in most cases.

Most lenders will require a minimum middle credit score of 620 in order to utilize this product.  On top of this, this product does allow for up to 6% sellers assist for 100% financing!!  Of course, mortgage insurance is required for this product for LTV's greater than 80%.

Let's now compare this to a conventional fixed rate product (that allows 100% financing):

• Loan-to-value ratios permitted up to 100 percent for 1-unit properties
• Up to a 40-year term
• Some flexibility on credit histories.
• Cash reserves at closing required in most cases.
• Funds must be sources and seasoned.

Most lenders will require a minimum middle credit score of 680 in order to utilize this product. Of course, mortgage insurance is required for this product for LTV's greater than 80%.

Alright, by now, your probably wondering why I am writing this...well...there are some really great features to a My Community Mortgage ^TMthat really assist a potential homebuyer/borrower.

Here is a classic example:

Husband and Wife, both employed and have steady incomes, and they seek to purchase their first home after renting for several years.  They have limited reserves in the bank for both a down payment and closing costs, but have the closing costs, since most of their savings go towards their retirements since they have no children at this time.  They are seeking to purchase a home to live into for at least ten years as they plan to settle down and have kids, so the school district where they are living at is very important and they have combined incomes of 80k.  The middle credit score of the wife, who is the primary borrower (since she has the higher income), is 680.   Both incomes are required to qualify for the mortgage.

An offer has been accepted for the purchase of a three bedroom, 2 bath, single family residence, purchase price 120k.  They've been fortunate enough to obtain 6% sellers concessions since there is a large inventory of homes in the area they are seeking.

Well, I see that this couple has a combined income of 100k.  Didn't I just state that the My Community Mortgage is for low to moderate income borrowers?? And example of this would be the Washington County HUD median income of 57k.  My Community Mortgage uses the HUD Median Income for the respective area you are purchasing in BUT if your neighbors are eligible for the My Community Mortgage ^TMand a knowledgeable loan professional can determine that, then you are eligible for the program, no matter what your annual income.  For those in the Pittsburgh area, the South Side is a classic example of where this applicable - where house pricing/sales prices typically are 200k plus. 

Let's take this one more step further...the mortgage insurance.  In our example, the Husband and Wife are long term buyers, seeking 100% financing, and, well, in 10 years their mortgage insurance will be no longer needed.  The My Community Mortgage ^TM Program offers reduced mortgage insurance compared to the Conventional Mortgage.

            So, in closing, if you are considering 100% financing with one mortgage, where sellers concessions can be obtained, a My Community Mortgage ^TM just might be the number that gets you in your home and provide you with additional savings.

Michael Sally

Victory Lending Group

http://www.mortgagesbymike.com/ or http://www.michaelsally.com/ - two great domains, same great destination!

Here are the numbers...enjoy!

1. The difference in the cash to close over 10 years represents a 5% return over 10 years;
2. Interest rates used are examples.  Actual rates may vary and change daily.