With all the changes in the mortgage industry in the past year, buyers have found it increasingly difficult to find the assistance they need to purchase a new home. In previous years, there have been several ways for buyers to buy with no money down - 100% loans being the #1 choice. But even with the elimination of most 100% loan programs and seller-paid down payment assistance programs, buyers can still get the help they need to overcome what is typically the biggest barrier in their paths.
100% LOANS ARE NOT JUST A THING OF THE PAST
While it's true that most conventional loans no longer allow a buyer to borrow 100% of the home's value - there are still options available! One option many people don't know about is the VA Loan. While you have to be active or former military to qualify - a large number of Americans can access this type of loan. It is the only true 100% value single-loan program out there - and interest rates are competitive. The only downside is the VA funding fee, which increases each time a veteran uses their VA certificate. However, this fee is minimal, and for most VA buyers, the benefits of getting into a home with no money down greatly outweigh the funding fee that is charged.
GIVE THE GIFT OF HOME OWNERSHIP
While it is no longer allowed for the seller of a home to participate in a down payment assistance program for buyers - closing costs can still be worked into the contract! Most loans still allow the seller to pay 3-5% of the purchase price in "concessions" - which can help reduce or eliminate the amount of money a buyer needs to pay for their loan fees and "pre-paids" (loan interest, insurance, taxes, etc.) at closing. In addition, most loans also allow monetary gifts from family members to help buyers with their down payment needs. With the combination of these two strategies, many buyers can come to the closing table with no money at all "out of pocket."
DOWN PAYMENT ASSISTANCE PROGRAMS ARE STILL AVAILABLE
The Missouri Housing Development Commission (MHDC) has just announced a new program which will allow home buyers to access their federal first-time home buyer tax credit at closing - rather than waiting until tax time. The tax-credit advance works in the form of a fixed-rate 30 year "second mortgage." Buyers can access up to 6% of the purchase price of the home (with a maximum of $6,750), and the money is used to cover down payment and closing costs. The home buyers then file for their federal tax credit, and use the refund to repay the MHDC tax credit advance. If the loan is repaid before the deadline (June 2010), no interest is due, and only a negligible funding fee is charged. If the loan is not paid in full before the deadline, then principal and interest payments to repay the loan over 10 years automatically begin.
Although mortgage lending standards have been tightened, and many programs previously available to buyers have been eliminated - buyers can still find help! With several great financing options, and fantastic mortgage rates - now is a great time to buy! If you would like more information about buying or selling a home in your area, please don't hesitate to contact me! I am always available to answer your questions - and ready to serve your real estate needs. Your complete satisfaction is my goal - because I want to be your Realtor for life!
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