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LOW OR NO DOWN PAYMENT LOANS
Buckeye Mortgage Company offers a variety of mortgage
loans that
require little or no down payment. They are especially attractive
to first-time homebuyers who have decent income and credit, but may
not have accumulated enough savings to offer a substantial down payment.
Some of these loan programs may require private Mortgage Insurance*
(“MI”) while others are designed to eliminate the need
for MI.
Several examples are outlined below:
• 80/20, No MI - This is combination of a conventional
loan on 80% of the appraised or purchased value, combined with a second
mortgage for the remaining 20%. The second may be a 15 year fixed
rate or a 30 year balloon due in 10 or 15 years. A minimum credit
score of 680 is required to qualify. The second mortgage carries a
higher rate than the first, but MI is avoided.
•
VA 100% - This Veterans Administration loan is
available to veterans who have earned a certificate of eligibility.
There is no minimum
credit score and no MI is required. VA’s up-front funding
fee of 2.5% of the loan amount may be financed.
•
100% Loan – This loan is available to borrowers
who do not own another home at the time of closing. MI is required
but may be financed
or paid monthly. Homebuyer education and quiz is mandated. Minimum
credit score is 620.
•
103% Loan – This loan is for purchase transactions
only and enables up to 3% of the loan amount to be financed to
cover closing
costs. There is no maximum income limitation. MI is assessed and
paid monthly. Minimum credit score is 700.
•
Rural Development (“RD”) 0% Down – This
100% financing option also allows closing costs to be financed.
It is available three
years after a bankruptcy has been discharged. There is a 1.75%
up-front funding fee for a purchase and 0.5% for refinance, but
no MI. No credit
score is ok and no minimum credit score is required. A home inspection
is required.
•
Sub-Prime 100% Loan – This loan is available
to borrowers with a good mortgage history or rental reference,
with credit scores as
low as 600. There must have been no bankruptcy for the past two
years. No MI is required.
•
West Virginia Housing Development Fund (“WVHDF”) – First
mortgage available at the current bond rate of 5.46%, as of May,
2004. If WV employer is approved by WVHDF, a 3% fixed rate second
mortgage
is available. Employer, at its option, may pay all or part of
closing costs. MI is required.
•
Stated
Income Loan 0% Down - This loan is available to borrowers with
a good mortgage history or rental reference with credit scores as
low as 640. Loans may be adjustable or fixed rate amortizing over
15, 20 or 30 years. There is no monthly MI required.
*Mortgage Insurance
Statistics show that loans with small or no down payments experience
much higher default rates than those with borrower equity of 20%
or more. To compensate for this, mortgage lenders often require
the borrower to purchase MI to reduce the lender’s exposure
to an effective loan-to-value of approximately 75%.
The cost of
MI varies according to several factors, such as: fixed or adjustable
rate loan, cash-out or not, owner-occupied or investor property,
borrower’s credit rating, loan term and the loan-to-value.
For example, a $100,000 fixed rate, no cash-out loan for 30 years
with a 10% down payment for borrowers whose loan has been approved
by Fannie Mae’s or Freddie Mac’s automated underwriting,
would cost $380 per year or $31.67 per month.
A 15 year loan with
the same characteristics would cost $280 per year or $23.33 per
month. The mortgage insurance is dropped when the property’s
LTV drops to 78%. This may be achieved by principal reduction
or property appreciation, verified by an independent appraisal,
or
both.
Serving West Virginia & Ohio
Wheeling, Fairmont, Parkersburg, Huntington, Charleston, Toledo,
Columbus
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