The old saying goes, there is good news and bad news. As an experienced 14 year mortgage consultant we’ll let the author give you some helpful tips and facts for buying a home with a low downpayment.
Good News Tip #1. A low downpayment could mean three to five percent using FHA loan programs. If you’re a veteran with eligibility VA loans offer 100 percent financing to those with reasonable FICO credit scores as does FHA.
Good News Tip #2. FHA and VA lenders allow you to purchase any type property. Condo, single family or multi-family, mobile home, manufactured home or modular home. You get to pick your town, your street, your neighborhood and so on. Both offer 30 year fixed terms. Both offer adjustable loans but you might want to think twice about going that route. Both are nice people to do business with.
Bad News Tip #1. Both loans have monolithic closing costs and fees which are recurring and non-recurring in structure. Some of these fees must be paid upfront. Most all FHA and VA fees and closing cost are non-recurring which means you only pay them once. They do not continue over the 30 year mortgage term. Recurring means ongoing.
Bad News Tip #2. Most banks and other lender funded loans also have tons of restrictions, fees and costs. If you like jumping through hoops you’ll get plenty of that action dealing with these types. The paperwork will give you writers cramp and a possible migraine. You’ll also need a permanent smile on your face for fear your chosen lender might say no.
Good News Tip #3. If you have the propensity to be your own person and are not choosy where your home is located, consider buying from a FSBO and deal directly with the property owner. If the home has no mortgage, terrific. Offer a small down and have the seller carry the paper for five years then refinance. Or, get all the mortgage information, see if you can assume the existing loan, negotiate a small down with the seller. No fees. No headaches.