New Low 3% Down program
This is for primary residence, single family and condo type housing, not for second homes, manufactured homes, investment properties or units.
Freddie Mac is about to end a four-year timeout from its previously popular mortgage that facilitated home financing with as little as 3% down. Taking it off the menu in March 2011, Freddie plans to bring back a version (limited to low- and moderate-income borrowers) called Home Possible Advantage in March 2015.
And, there is always FHA financing that is not restricted to first-time buyers, requiring 3.5% down.
What's the minimum money it will take to get you in? And what's the most affordable mortgage insurance payment you can find now that conventional financing is available with 3% down?
For any purchase, in addition to your down payment, you need to come up with closing costs and possibly escrow impounds for taxes and insurance and prepaid interest. Lenders and mortgage brokers may be able to offset the costs by offering no-point or no-cost loans. The trade-off is you are accepting a higher interest rate.
Shopping does matter. A 2012 Fannie Mae survey indicated that if you shop multiple mortgage brokers you can save $1,000 or more in closing costs.
Obvious ways to come up with the down payment are your own savings or gift funds.
In respect to Fannie Mae's program, acceptable donors are your fiancée, domestic partner, spouse, child or other dependent, or any individual related to you by blood, marriage, adaption or legal guardianship, according to Andrew Wilson, senior director of Media and External Relations at Fannie Mae.
Less obvious ways to come up with the down is from your retirement savings. "You can withdraw, you cannot borrow against your IRA. You can do this without penalty for first-time buyers, subject to normal taxes," said Stuart Friedman, financial consultant at Irvine, Calif., based Burnham Gibson Financial Group.
"Loans are available from your 401(k) if your particular plan allows it. Max loan is 50% of the balance. The plan sets the interest rate. You can amortize and pay yourself back in five years or less and you must pay it back if you leave your employer," Friedman added.
New Mortgage insurance guidelines have changed and the rates are now lower. Call us for details.
