For some borrowers, zero down payment programs or down payment assistance programs are available. Let me explain what this means.
USDA is a program that is available for areas of the USA that are deemed rural areas. This means for a population of 15,000 or less. The program does not require a down payment but does have income limitations that you must meet. It also has tougher debt to income qualification then other loan programs.
Then there is VA loans which if your a veteran, means they will guaranty a loan for you up to $453,100 with zero down payment. VA does not have a maximum loan limit but anything above the loan limit will require a down payment of 25% of the difference between the $453,100 and the actual loan amount.
Down payment assistance programs are not 100% financing programs, but they will lend or give you the down payment. The Golden State Finance Agency program can offer a grant (doesn’t have to be paid back) which will cover the down payment for FHA or Conventional financing. There are income limitations you must meet and the underwriting guides are a bit tougher than the normal FHA or conventional loan, but if you fit, you dont have to pay back this money. Since you are getting free money, expect to pay a higher rate of interest for this program. But, if this will get you into a home today, then its well worth making a bit higher monthly payment to do so!
For any questions regarding any of these programs, please give me a call or email us. We are happy to see if we can qualify you for these programs.
If you have been watching the ten year bond yield over the last two weeks, then you may have noticed that it has been increasing almost every day. Since mortgage rates tend to follow the ten year yield, then what does this mean to mortgage rates? Well, this means that interest rates have been moving up as well. What was a market of 4.125-4.25 is now closer to 4.375-4.5%. These rates assume that you are not paying any origination fee to get that rate. So, what does a 1/4 percent increase in the interest rate really mean?
Let’s use a loan amount of $300,000 and lets start with a rate of 4.25%. The monthly payment on that loan would be $1476 per month. Now let’s look at 4.5% using the same loan amount. That payment would be $1520 per month or an increase of $44 per month. That sure doesn’t sound as bad as rates going up by 1/4? In fact, i think that might be my coffee tab at the local coffee house for the week!
For some i understand that rates going up causes additional mental stress and anxiety because most new homebuyers are already concerned about whether they can afford to pay this new mortgage. But, this is the trend i believe over 2018 and you are going to have to get comfortable with a higher rate of interest. The good news is that i do not think that $44 per month is going to be a deal killer for most!