Could Your Mortgage Have a 3% Down Payment?
Aren’t the days of the 3% down payment gone? Maybe not. Freddie Mac and Fannie Mae have announced a new mortgage program that will allow buyers to purchase a home with as little as 3% down. While the move initially drew fire from critics, the lenders were quick to assure everyone that these programs aren’t comparable to subprime lending schemes that led, in part, to recent recessions. The loans may spell good news for consumers thinking about purchasing in the year ahead. Here’s a closer look at what you need to know.
3% Down Payment Loan Programs: Good for First Time Homebuyers
Many people are speculating that the very tight regulations on homebuyers could be easing. In part, that’s true. But the new, lower down payment programs are particularly beneficial for first-time homebuyers. Recent surveys from the Federal Reserve showed that 45% of renters feel that the biggest obstacle to buying is saving the down payment; meanwhile, first-time home buyers are at the lowest level in nearly thirty years. As a result, these programs are particularly being marketed to those who have never owned a home or who haven’t owned a home in three years. Interestingly, there may also be some refinancing options for owners as long as they’re not cashing out the equity in their existing properties.
Credit Matters: Options for Buyers with Good Credit
What many potential buyers may be disappointed to hear is that good credit is important. While there has been no baseline credit requirement released, these programs are primarily geared toward buyers with good to excellent credit. It’s the combination of a strong financial history but limited liquid cash that’s the target sweet spot for these loans. However, that often describes individuals on the market that haven’t owned previously or may have rebuilt their credit from recent problem period. If you’re unsure, discuss your situation with a lender to find out if you qualify.
Interested borrowers should be aware that some of these mortgage options carry an educational requirement. The educational requirements state that prospective buyers must go through a program to help make them aware of the financial aspects and responsibilities of home ownership. In many ways, these courses are beneficial for anyone that is buying a home. But if you’re unwilling to participate for any reason, you may not be eligible for these loans.
Are you in the Las Vegas area and thinking of purchasing a home? Contact Sydnee Johnson today to discuss your unique needs and learn about the financing options that are right for you.