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Well, I've been looking around for a while now, and I'd really like to get out of renting and get back into home ownership. However, like most other people I know, qualifying for a mortgage is becoming a real problem. So far everyone I've talked to wants a minimum of 20% down, which in this local market can be quite a substantial amount of money to have on-hand. Does anyone know of some alternate sources that I might be able to check with that might not require such a large percentage down?
Well, I've been looking around for a while now, and I'd really like to get out of renting and get back into home ownership. However, like most other people I know, qualifying for a mortgage is becoming a real problem. So far everyone I've talked to wants a minimum of 20% down, which in this local market can be quite a substantial amount of money to have on-hand. Does anyone know of some alternate sources that I might be able to check with that might not require such a large percentage down?
MikeJaquish pretty much summed it up. What has gone by the wayside are the no-documentation loans and no-income loans as well as financing for those with recent credit problems. If you have good to excellent credit and have income ratios in line there are plenty of programs out there for you that will not require a hefty down payment.
Your household income has to be less than 75k (?) for the USDA loan.
Also, be prepared to divulge all of your personal information/bank statements etc. Any deposit or withdrawal over 500 dollars is scrutinized. Home ownership is rewarding but it's a task getting through the paperwork.
you should talk to an experienced lender at your bank, or the lender referred to you by your Realtor. For better or for worse, the government has said you can borrow well more than 80% within 3 years of a significant negative financial event.
We closed on a house 3 weeks ago with FHA and did the 3.5% down... only way we would be able to get a house and the mortgage is $60 cheaper than rent!
Woo, you got a good deal. My husband and I upgraded in home style from the rental and because of the PMI, our mortgage is quite a bit higher than rent. I just love knowing it's my house. (Okay, it's the bank's house, but you know what I mean.)
I second the suggestion to talk to a mortgage broker.
They can assess your financial information, credit score, and determine if you can qualify for a loan -- you would 'prequalify' this way. This would also help you determine what kind of home you would be looking for.
You might still qualify for a loan if you put less than 20% down.
If you put less than 20% down, you might also be required to get 'PMI' which stands for Private Mortgage Insurance -- it is an extra amount you would pay each month which is Insurance for the lender that makes up the difference between what you put down and 20%.
Mortgage rates are low and home prices are low so it is a great time to buy. This area also has a really broad range of home prices. You might end up with something older or farther away than you might want, but it is worth looking.
Keep in mind, and you probably already know this, the property tax and homeowners insurance is added into your 'mortgage payment' -- so make sure you include those amounts that into your calculation of what you can afford on a monthly basis.
When buying, you can also request that the seller's contribute toward closing costs to offset the cash out of pocket you will have to expend (lawyer fees, points or origination fee, title insurance, etc).
Good luck!
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