Where to Look for Loan Providers
You should plan to contact
several mortgage lenders, including the lender to whom you
presently make your payments (if applicable), to discuss the
mortgages they have available, their rates, closing costs, and
other fees. A good place to start is in the real estate section
of your local newspaper, or in the yellow pages of your phone
book under "Mortgages." Mortgages are available from mortgage
companies, savings and loan associations, banks, credit unions,
and other financial institutions.
AHA's Approved Mortgage Lending Program for specially arranged
savings on points and closing costs for AHA members from national
mortgage lenders.
Shop for the Best Mortgage Deal
Another common mistake
first-time homebuyers make is mixing apples and oranges while looking for
their best mortgage deal. Avoid comparing dissimilar loans.
Compare fixed-rate loans to fixed-rate loans, not to adjustable
rate loans. Create a chart that lists different types of loans,
fees and interest rates. Read all disclosures, especially the
closing costs, so you can compare the entire cost of the
mortgage. If you are required to have private mortgage insurance
and an escrow account, make sure you understand the terms. Make
sure there are no prepayment penalties so that you can use an
accelerated prepayment plan.
A good mortgage reduction plan can save you tens of thousands in
interest costs, and shorten your loan term, with only small extra
monthly pricipal payments. AHA's Intellipay Program can cut 11
years and over $100,00 of interest payments off a typical
150,000, 30-year mortgage. For more information, see the AHA
HomeCentral Web site at www.ahahome.com
First-Time Homebuyer Programs
Sticker Shock
Nothing's more sobering to the first-time
homebuyer than perusing the local real estate ads. Home
ownership can lose its appeal when it comes with such a high
price tag. What many first-time homebuyers don't realize is that
easier payments are available through various loan programs that
put the American Dream within reach.
FHA and VA Programs
The Federal Housing Administration (FHA)
insures loans to help make homeownership more accessible and
affordable. Among other things, FHA provides lower down payments
and less stringent income requirements. The Department of
Veterans Affairs (VA) also provides government-insured loans to
make it easier for veterans and active military to qualify, with
very low or no down payments. Recent legislation allows the FHA
to insure larger loans, up to $197,621 in 36 major metropolitan
regions that qualify as "high-cost" for real estate.
MCC Program
Apart from the HUD and VA loan programs, the
Mortgage Credit Certificate is yet another "benny" to help lower
the financial hurdles involved in buying your first home. The
MCC offers a way of reducing your federal tax burden which in
turn, makes more of your income available for monthly mortgage
payments. Any upward tweaks of your income allow you to qualify
for a higher mortgage--and a bigger or better first home! The MCC
allows you to take a federal tax credit of 15 percent on your
annual mortgage interest expense. But you must meet certain
requirements to qualify.
Fannie Neighbors Program
Fannie Mae
The federally chartered corporation that purchases
loans from lenders, makes a wide range of affordable programs
available to lenders. Check with your local lender because income
eligibility is set according to the local economy and housing
prices.
Start-Up Mortgage.
You pay 5% down for this 30-year, fixed-rate
mortgage. The payments are lower the first year because you pay
interest only, no principal, so you get to deduct the entire
monthly payment from your taxes. The catch? None of the 5% down
payment can come from a grant, family gift or another loan--it
has to be money you saved.
3/2 Option.
This could be called the Family Philanthropy option.
2 percent of the down payment may come from a grant, family gift
or another loan while only the remaining 3 percent must come from
savings.
Fannie 97.
Here's a deal for people with a good credit
history--only 3 percent down total. The down payment has to come
from your personal savings but closing costs may come from gifts,
grants or other loans.
Fannie Neighbors.
This program is designed to encourage home
ownership in designated central urban areas (min. population
250,000), areas with higher minority populations, or
neighborhoods with a median income at or below 80 percent for the
particular metropolitan area.
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