With interest rates at historical lows and home prices being more affordable than they have been in decades, many people know that now is a great time to buy a home, but they may be worried about large down payment requirements.
When looking to finance a home, two of the most common questions asked include:
What loan options require a low (or no) down payment?
Is down payment assistance available?
Traditional loan options
While it is true that a 20 percent down payment is still required to avoid mortgage insurance for conventional loans, there certainly are mortgage options that require a low or no down payment. Almost all mortgage lenders offer at least these options: Read more
It is pretty well known these days that mortgage applicants are liable to undergo scrutiny more thorough than just about anyone in the business can remember. I don’t know about the rest of the country, but in our neck of the woods (Orange County, California) we are also seeing the emergence of a parallel trend. Not only are borrowers getting a more thorough examination, but also the properties themselves are being scrutinized as never before.
I am not talking about the value of the property — those kinds of appraisal issues have been with us for some time now. Today, I am referring to the physical condition of the property. Read more
By Robert Freedman, Senior Editor, REALTOR® Magazine
Borrowers trying to get an FHA-backed loan will face uncertainty and delay if the federal government shuts down on Monday, April 11, because of the impasse among lawmakers in Congress over the government’s fiscal 2011 budget. Lawmakers have until midnight tonight, April 8, to come to an agreement on their differences for funding the federal government, either for the rest of the fiscal year or for a limited period of time through a temporary budget measure called a continuing resolution.
The shutdown would impact much, but not all, of the government. For real estate, FHA, which insures mortgages for low- and moderate-income buyers who are unable to obtain affordable financing in the conventional market, will be the program most impacted. Other federal mortgage programs, through the Rural Housing Service (RHS) and VA, will be less impacted, NAR analysts say.
On FHA, home buyers whose mortgage applications have already been assigned case numbers by FHA shouldn’t be impacted by the shutdown. That’s because, with assignment of the case numbers, FHA has OK’d the applications, so lenders can go forward with funding of the loans with the understanding that the loans have been endorsed by the agency. For buyers whose applications haven’t been assigned case numbers, the shutdown likely means the applications won’t be processed until business resumes at the agency. You can learn if an application has been assigned a case number by asking the lender originating the loan.
It’s possible the lender can proceed with funding of the loan without the FHA endorsement, but applicants can’t expect many if any lenders to take that step, since lenders would be making the loan without any assurance the application will receive an endorsement after the agency resumes operations. “If the lender has a good idea of what FHA will and will not endorse, then they might be willing to take a little more risk than other lenders who don’t do as much FHA,” say NAR analysts.
The process through which the federal government backs loans under the VA and RHS programs is different, and officials at those agencies have said they expect little disruption for loan applicants during the shutdown. “They’ve indicated to us they’re operating under normal business procedures with respect to their housing programs,” NAR analysts say.
The two secondary mortgage market companies Fannie Mae and Freddie Mac, which back conventional mortgage financing, are not treated as federal agencies for purposes of the shutdown, even though they’ve been under federal conservatorship for the last two years or so. For that reason, applicants for conventional loans shouldn’t see any disruption.
Loan applicants in areas needing flood insurance should also face no disruption, even though the national flood insurance program (NFIP) is administered by a federal agency, the Federal Emergency Management Agency (FEMA). That agency has indicated activity under NFIP will proceed.
One set of borrowers who will be impacted by the shutdown, beyond those applying for FHA-backed loans, are those waiting for federal tax refunds and planning to use those funds for their down payment or closing costs. Although core IRS operations will continue through the shutdown, the agency has indicated it won’t be sending out refund checks. So home buyers looking to that money for their purchase will have to wait.
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